Abstract:

This paper employs a generalized mixture model approach to empirically determine if Sub-Saharan African countries henceforth (SSA) follow a homogenous growth pattern based on the conditional distribution of their growth rates. Latent effects are employed to determine the growth experience of SSA countries and to examine the structural characteristics of the clusters if any exist. Affirmation of clusters might imply significant productivity divergence among Sub-Saharan economies, helping explaining the structural imbalances in the region. Results strongly buttress the existence of clusters and little evidence of a common growth path, implying divergence among Sub-Saharan economies and specific economic reforms are required in the identified clusters to guarantee sustainability and equality of growth in the SSA region. We also observed a positive and significant effect of investment even though the estimated long run effects of investment on economic growth are smaller than expected.

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