Income inequality and economic complexity in Africa: the moderating role of governance quality

Figures & data

Table 1. (Annex Table): List of 24 African countries (with years average value of main variables).

Sunol	Country	Inequality (Gini %)	Economic Complexity	GDP Growth	Composite Governance Index
1.	Algeria	34.9895	−1.2453	3.4105	−0.3180
2.	Angola	49.7105	−1.6393	5.8105	−1.5862
3.	Botswana	58.3437	−0.4817	4.2105	2.0015
4.	Burkina Faso	43.0754	−0.7724	5.6632	0.3948
5.	Cameroon	44.5532	−1.1455	4.2579	−1.2119
6.	Côte d’Ivoire	53.5105	−0.9178	3.3316	−0.6971
7.	Egypt	40.0100	−0.2221	4.3737	−0.2777
8.	Ethiopia	32.9263	−1.0329	9.0895	−0.2388
9.	Gabon	40.7895	−1.3211	2.2158	−0.6471
10.	Ghana	42.7105	−0.9226	5.9842	0.5683
11.	Kenya	46.0211	−0.4402	4.6000	−0.9434
12.	Malawi	45.7895	−1.0225	4.2158	−0.2448
13.	Mauritania	38.7737	−1.4806	3.4263	−0.3052
14.	Mauritius	37.9368	−0.1941	4.0947	1.4933
15.	Morocco	41.1421	−0.5115	4.1947	0.3767
16.	Mozambique	45.8632	−1.2001	6.7474	−0.2374
17.	Namibia	65.5421	−0.3862	3.6895	1.4379
18.	Nigeria	42.9211	−1.9044	6.2789	−1.2591
19.	Senegal	41.3737	−0.5462	4.1105	0.4722
20.	South Africa	62.7737	0.1466	2.7737	1.2286
21.	Tanzania	44.4842	−0.8186	6.5368	−0.2364
22.	Tunisia	39.7053	0.2049	3.2263	0.6446
23.	Uganda	44.1368	−0.7337	6.4947	−0.8465
24.	Zambia	54.9789	−0.7328	6.0842	−0.0843

Table 2. Summary statistics for main variables used in the model.

Variable	Obs	Mean	Std. Dev	Min	Max
Gini Coefficient	456	45.502	8.088	32.6	66.1
Economic Complexity	456	−0.805	0.564	−2.337	0.513
Composite Governance Index	456	2.70e-09	1.000	−1.931	2.50
GDP Growth	456	4.784	3.209	−7.70	18.30
Inflation	456	8.722	18.807	−8.238	324.996
Population Growth	456	2.338	0.781	0.055	3.789
Public Expenditure	456	23.760	8.118	9.760	55.801

Table 3. Empirical results with and without moderating effect.

Dependent variable (Gini)	Model 1(with ECI only)		Model 2 (with CGI only)		Model 3 (ECI*CGI)
	Coef	Std. Err	Coef	Std. Err	Coef	Std. Err
Gini Coefficient (-1)	1.0092***	.003097	1.0062***	.0022938	1.0007***	.0030039
Economic Complexity Index	.22801***	.0419858
Composite Governance Index			.05919*	.0353643
ECI*CGI					−.15755***	.0259503
GDP growth	.00267	.0050412	−.00038	.0047452	.04167***	.0126303
Inflation Rate	.00179**	.0007135	.00129 *	.0007323	.00379***	.0008344
Financial Institution Index	−1.3245***	.2015946	−.99874***	.1572571	−1.2587***	.1944986
Population Growth Rate	−.06561***	.0203965	−.08192***	.0237168	−.0678***	.0190942
Public Expenditure	.00045	.0011531	−.00186	.0011315	−.00295**	.0011567
_cons	−.23324***	.073971	−.25121***	.0647566	−.62933***	.1281773
Arellano-Bond test AR (1)	P-value = 0.000		P-value = 0.000		P-value = 0.000
Arellano-Bond test AR (2)	P-value = 0.319		P-value = 0.405		P-value = 0.487
Sargan test (P-value)	(0.125)		(0.291)		(0.282)
Hansen test (P-value)	(0.282)		(0.350)		(0.313)
Instruments	22		22		22

Table 4. Disaggregated effect of governance quality on income inequality.

Variable	Model 1 (with CC)	Model 2 (with GE)	Model 3 (with PS)	Model 4 (with RQ)	Model 5 (with RL)	Model 6 (with VA)
	Coeff	Coeff	Coeff	Coeff	Coeff	Coeff
Gini (-1)	1.0077***	1.0175***	1.0059***	1.0067***	1.0205***	1.096***
GDP Growth	.00167	.00256	−.0028	.0019	.0056	.0061
Inflation	.00263***	.0026***	.0018**	.0030***	.0027***	.0026***
ECI*CC	−.1667***
ECI*GE		−.18433***
ECI*PS			−.0512***
ECI*RQ				−.1660***
ECI*RL					−.1655***
ECI*VA						−.2462***
Financial Institution Index	−1.1186***	−1.0964***	−.9075***	−1.0507***	−1.267***	−1.333***
Population Growth	−.0694***	−.0643***	−.1022***	−.0746***	−.0909***	−.0748***
Public Expenditure	−.0007	−.0005	−.0021*	.0006	.0005	.0024*
Constant	−.2787***	−.2867***	−.1779**	−.2866***	−.3683***	−.3651***
Arellano-Bond test AR (1)	Pv-0.000	Pv-0.000	Pv-0.000	Pv-0.000	Pv-0.000	Pv-0.000
Arellano-Bond test AR (2)	Pv-0.441	Pv-0.418	Pv-0.396	Pv-0.520	Pv-0.423	Pv-0.707
Sargan test (P-value)	(0.150)	(0.190)	(0.484)	(0.391)	(0.164)	(0.123)
Hansen test (P-value)	(0.678)	(0.648)	(0.899)	(0.898)	(0.787)	(1.000)

Pv is the p-value.

Availability of data and materials

The data used for the current study are available from the following sources and can be openly accessed.

1. World Bank Database (World Development Indicators)

   https://datacatalog.worldbank.org/dataset/world-development-indicators.

2. World Bank Database (Worldwide Governance Indicators database)

   https://databank.worldbank.org/source/worldwide-governance-indicators.

3. Standardized World Income Inequality (Gini coefficient)

   https://dataverse.harvard.edu/dataset.xhtml?persistentId=doi:10.7910/DVN/LM4OWF.

4. Observatory of economic complexity

   https://www.Library.hbs.edu/citations/the-observatory-of-economic complexity.