Economic freedom, institutional quality, and manufacturing development in African countries

Figures & data

Table 1. Summary of the descriptive statistics.

Variable		Mean	Std. Dev.
Control of corruption (CC)	overall	−0.58	0.59
	between		0.10
	within		0.60
Government effectiveness (GE)	overall	−0.65	0.64
	between		0.12
	within		0.66
Regulatory quality (RQ)	overall	−0.67	0.75
	between		0.13
	within		0.64
Rule of law (RL)	overall	−0.59	0.60
	between		0.11
	within		0.60
Share of manufacturing	overall	−12.67	7.11
	between		0.69
	within		7.12
Financial development (FD)	overall	37.67	17.65
	between	-	2.67
	within		17.49
Per capita GDP (gdpper)	overall	2437.84	2556.12
	between		313.89
	within		2524.62
Population growth rate (PGR)	overall	2.33	0.95
	between		0.13
	within		0.95

CC, GOE, PS, RL, and RQ stand for Control of corruption, government effectiveness, political stability and absence of violence, rule of law, and regulatory quality, respectively.

Figure 1. Graphs of annual per capita income (constant 2015 US$) for different regions’ trends.

Figure 2. Manufacturing value added (% of GDP) growth trends. It describes the share of manufacturing to GDP trends the y-axis refers to manufacturing, value added measured using constant 2015 US$; the x-axis refers to the time periods over the period 1996–2022.

Figure 3. Manufacturing, value added (% of GDP) growth trends the y-axis refers to manufacturing, value added measured using constant 2015 US$; the x-axis refers to the time periods over the period 1996–2022.

Figure 4. Manufacturing, value added (constant 2015 US$) trend overtime. The y-axis refers to manufacturing, value added measured using constant 2015 US$; the x-axis refers to the time periods over the period 1996–2022.

Table 2. Results of the cross-sectional dependence test with the help of pesaran CD test.

EO	FD		PGR	EO	GDPer
−0.70***(0.14)		−1.92***(0.32)	−0.03**(0.01)	−0.54***(0.008)	−0.65***(0.11)
GE		PS	RL	RQ	Wage
0.41*** (0.07)		0.63***(0.22)	0.48*** (0.12)	0.57***(0.17)	0.52*** (0.16)

CD indicates the cross-sectional dependence test, while ***, ** and, *, indicate significance at 1%, 5%, and 10%, respectively. FDI stands for volume of FDI inflows. FD refers to financial development. PGR, EO, and GDPpc represent population growth rate, economic openness, and per capita GDP, respectively. GOE, PS, RL, and RQ stand for government effectiveness, political stability and absence of violence, rule of law, and regulatory quality, respectively.

Table 3. The effect of institutional quality on structural transformation in the short-run.

	Model1	Model2	Model3	Model4	Model5	Model6
Variable	Coeff	Coeff	Coeff	Coeff	Coeff	Coeff
ECT	−1.04^a(0.04)	−0.97^a(0.04)	−0.99^a(0.04)	−1.01^a(0.04)	−0.98^a(0.04)	−1.03^a(0.04)
FDI	0.23^a(0.05)	0.22^a(0.04)	0.25^a(0.04)	0.21^a(0.05)	0.24^a(0.04)	0.26^a(0.04)
FD	0.12^a(0.01)	0.06^a(0.02)	0.07^a(0.03)	0.10^a(0.01)	0.16^a(0.02)	0.11^a(0.03)
IFSQ	0.03 (0.03)	−0.12 (0.04)	−0.20 (0.04)	0.06 (0.03)	−0.05 (0.04)	−0.03 (0.04)
NRR	−0.50^c(0.27)	−0.55(0.43)	−0.83(0.51)	−0.50^c(0.27)	−0.55(0.43)	−0.83(0.51)
INF	−0.05^a(0.02)	−0.11^a(0.01)	−0.10^a(0.02)	−0.05^a(0.02)	−0.11^a(0.01)	−0.10^a(0.02)
PGR	1.27^a(0.23)	1.14^a(0.31)	0.44^a(0.31)	1.37^a(0.33)	1.24^a(0.31)	0.34^a(0.31)
EO	0.5^a(0.05)	0.5^a(0.01)	0.4^a(0.01)	0.5^a(0.04)	0.5^a(0.01)	0.4^a(0.01)
GDPpc	0.65^a(0.13)	0.67 ^a (0.12)	0.64 ^a (0.14)	0.65^a(0.13)	0.69 ^a (0.15)	0.68 ^a (0.14)
EFI	0. 11^a(0.03)	0.12 ^a (0.03)	0.13 ^a(0.04)	0.12 ^a (0.03)	0.13 ^a(0.03)	0.12^a(0.03)
Wage	−0.13(0.08)	−0.14(0.08)	−0.14(0.08)	−0.13(0.08)	−0.14(0.08)	−0.14(0.08)
CC	1.32^a(0.24)
GE		3.44^a(0.34)
PS			0.21^a(0.01)
RL				0.21^a(0.01)
VC					3.44^a(0.34)
RQ						1.32^a(0.24)
Cons	7.08^a(2.21)	4.08^a(1.16)	4.87^a(0.98)		21.00^a(4.14)	24.98^a(8.11)

ECT refers to error correction term. FDI stands for volume of FDI inflows. FD refers to financial development. IFSQ is a proxy variable for infrastructure quality. NRR, INF, PGR, EO, EFI, and GDPpc represent natural resource rent, inflation, population growth rate, economic openness, economic freedom index, and per capita GDP, respectively. CC, GOE, PS, RL, VC and RQ stand for control of corruption, government effectiveness, political stability and absence of violence, rule of law, voice and accountability, and regulatory quality, respectively. a represents the significance level at 1%, b denotes the significance level at 5%, and c represents the significance level at 10%. Standard errors are represented in parentheses.

Table 4. The effect of institutional quality on structural transformation in the long run.

	Model1	Model2	Model3	Model4	Model5	Model6
Variable	coeff	Coeff	Coeff	coeff	coeff	coeff
FDI	−0.20^a(0.04)	−0.17^a(0.05)	−0.18^a(0.05)	−0.21^a(0.05)	−0.22^a(0.05)	−0.23^a(0.05)
FD	0.14^a(0.03)	0.03(0.04)	0.10^b(0.04)	0.12^a(0.03)	0.13(0.05)	0.10(0.05)
IFSQ	0.00 (0.00)	0.02(0.02)	0.02 (0.01)	0.02 (0.01)	0.02(0.02)	0.02(0.02)
NRR	−0.51^a(0.15)	−0.63^a(0.15)	−0.64^a(0.15)	−0.71^a(0.17)	−0.68^a(0.18)	−0.67^a(0.15)
INF	−0.05^c(0.03)	−0.08 ^c (0.05)	−0.05^c(0.03)	−0.07 ^c(0.03)	−0.06 (0.05)	−0.06 (0.05)
PGR	−3.55^a(0.32)	−3.55^a(0.33)	−3.16^a(0.29)	−3.21^a(0.32)	−3.32^a(0.33)	3.10(0.31)
EO	−0.05^b(0.02)	−0.05^b(0.02)	−0.05^b(0.02)	−0.06^b(0.02)	−0.04^b(0.02)	0.05(0.02)
GDP	0.65^a(0.03)	0.13^a(0.01)	0.11^a(0.01)	0.23^a(0.02)	0.32^a(0.01)	−0.21^a(0.02)
EFI	−0.07^a(0.02)	−0.07^a(0.02)	−0.09^a(0.02)	−0.06^a(0.02)	−0.06^a(0.02)	−0.06^a(0.02)
Wag	−0.12(0.10)	−0.12(0.10)	−0.07(0.02)	−0.11^a(0.02)	−0.06^a(0.02)	−0.06^a(0.02)
CC	−2.24^a(0.43)
GOE		−5.03^a(0.54)			-
PS			0.06^a(0.01)
RL				5.03^a(0.54)
VC					−3.24^a(0.43)
RQ						−0.24^a(0.03)
Cons	5.21^a(1.04)	10.12^a(2.09)	9.32^a(2.54)		5.08^a(0.94)	9.28^a(3.11)

a represents the significance level at the 1%, b denotes the significance level at the 5%, and c represents the significance level at the 10%. Standard errors are represented in parentheses. According to Hausman test results, the Chi-square test or χ² test (Chi-value= −152.43, P-value= 0.24), indicating that there are homogeneous coefficients across groups. It suggests that the PMG estimator is more appropriate than MG.