Divergent growth paths: conflict, state capacity, and convergence clubs in Sub-Saharan Africa

Abstract

Understanding the patterns of economic convergence in Sub-Saharan Africa (SSA) is crucial for explaining the diverse growth trajectories observed across the region. This study investigates the presence of convergence clubs in GDP among 37 SSA countries from 1992 to 2022, departing from the foundational neoclassic economic theories. Employing the Phillips and Sul club convergence methodology, the study identifies four distinct convergence clubs, rejecting the hypothesis of overall convergence towards a single equilibrium. This finding highlights the developmental challenges across SSA. A subsequent analysis using an ordered logit model explores the determinants of club membership, revealing that state capacity, conflict, and business environment significantly influence SSA countries likelihood of belonging to a higher GDP club while foreign direct investment impact appears to be conditional on these very same factors. These results highlight the critical need for development organizations such as the World Bank or the United Nations to take a more nuanced and context-specific approach to their projects in Sub Saharan African countries. Aligning development interventions with the root causes of divergence identified in this study, such as weak state capacity or conflict, can unlock the potential for transformative and equitable progress in SSA.