Institutions, Innovation and Economic Growth in Sub-Saharan Africa: A Literature Review

Abstract

Based on the theory of institutions and empirical literature survey from Sub-Saharan African economies, this review article examines the state of development in institutional quality, and absorptive capacity and the implication these bear for economic performance in the region. Drawing on the theory of institution by North, D.C. (1990), and Acemoglu, D., & Johnson, S. (2005), and the indigenous growth theories by Schumpeter (1934), Romer (1986) and Lucas (1988), to assess the state affairs in institutions, innovation, and economic growth in Sub-Saharan Africa. Empirical evidence points out that institutions and absorptive capacity are underdeveloped in most of the Sub-Saharan countries. However, institutions and innovative capacity of the region is gradually evolving with substantial implication over the economic growth record of the Sub– Saharan region. This study claims that if current trends of institutional development (i.e., democratic and governance institutions) and improvement in innovation infrastructure continue: Sub-Saharan Africa will become more democratic with strong rule of law in the near future; innovative capability of Sub-Saharan African states will be improved; and Africa will maintain its momentum in terms of economic growth.