Harnessing Agriculture for Economic Growth: A Study of Sub-Saharan Africa using the Arellano-Bover/Blundell-Bond Estimation Model
Abstract
Despite facing various challenges, agriculture remains a vital pillar for economic development in Sub-Saharan African countries. This paper examines the role of agricultural growth in promoting economic development across fifteen SSA nations from 1990 to 2024, utilizing the Arellano-Bover/Blundell-Bond (ABBB) estimation model. A significant contribution of this paper is its use of Dynamic Panel Data analysis to explore the complex relationship between agricultural sector development and economic growth while controlling for the dynamics of the manufacturing industry and population growth. The findings reveal a significant positive correlation, indicating that a 1% increase in agricultural growth leads to a 0.2% increase in GDP per capita. This underscores agriculture's essential role as a catalyst for economic progress, consistent with the Dual Economy framework. Additionally, the results show a positive effect of the manufacturing sector on economic growth, where a 1% increase in manufacturing output results in a 0.03% increase in GDP per capita. Conversely, the study identifies a negative impact of population growth, with a 1% increase correlating to a 1.1% decrease in GDP per capita, highlighting the challenges posed by rapid demographic changes. The study recommends that policymakers prioritize investments in agricultural technology and infrastructure, enhance educational initiatives to develop a skilled workforce, and implement effective population management strategies. Furthermore, fostering public-private partnerships can stimulate investments in agriculture and manufacturing, leading to diversified economies. Thus, by adopting these strategies, SSA countries can leverage their agricultural potential to achieve sustainable economic growth and improved living standards, ultimately enhancing global economic competitiveness.
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