Macroeconomic Determinants of Economic Growth in Sub-Saharan Africa: A Panel CS-ARDL Approach

Abstract

This study examines the macroeconomic determinants of economic growth in 49 Sub-Saharan African countries using a Panel Cross-Sectionally Augmented Autoregressive Distributed Lag (CS-ARDL) approach over the period 1980–2024. Empirical results indicate that, in the short run, government expenditure (coefficient = 0.178, p < 0.001) and gross capital formation (coefficient = 0.009, p = 0.037) significantly promote economic growth. In contrast, other variables, such as exports, imports, Foreign Direct Investment (FDI), inflation, and exchange rates, do not exhibit statistically significant short-run effects. The lagged GDP term (coefficient = –0.661, p < 0.001) and the Error Correction Term (ECT = –1.661, p < 0.001) indicate a strong adjustment mechanism, suggesting that deviations from long-run equilibrium are corrected rapidly over the period. In the long run, only government expenditure (coefficient = 0.097, p < 0.001) and marginally gross capital formation (coefficient = 0.0065, p = 0.07) show significant positive effects on growth. At the same time, other variables remain statistically insignificant, reflecting structural heterogeneity and the limited long-run influence of trade, FDI, and inflation across the region. The study recommends prioritizing public investment in productive sectors, promoting private sector participation and high-quality foreign direct investment, supporting export diversification, and strengthening governance and macroeconomic stability to foster sustainable economic growth in the region