What Really Drives Economic Growth in Sub-Saharan Africa? Evidence from The Lasso Regularization and Inferential Techniques

Isaac Ofori (), Camara Kwasi Obeng and Simplice Asongu
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Isaac Ofori: University of Insubria, Varese, Italy

No 22/061, Working Papers from European Xtramile Centre of African Studies (EXCAS)

Abstract: The question of what really drives economic growth in sub-Saharan Africa (SSA) has been debated for many decades now. However, there is still a lack of clarity on variables crucial for driving growth as prior contributions have been executed at the backdrop of preferential selection of covariates in the midst several of potential drivers of economic growth. The main challenge with such contribution is that even tenuous variables may be deemed influential under some model specifications and assumptions. To address this and inform policy appropriately, we train algorithms for four machine learning regularization techniques— the Standard lasso, the Adaptive lasso, the Minimum Schwarz Bayesian information criterion lasso, and the Elasticnet to study patterns in a dataset containing 113 covariates and identify the key variables affecting growth in SSA. We find that only 7 covariates are key for driving growth in SSA. Estimates of these variables are provided by running the lasso inferential techniques of double-selection linear regression, partialing-out lasso linear regression, and partialing-out lasso instrumental variable regression. Policy recommendations are also provided in line with the AfCFTA and the green growth agenda of the region.

Keywords: Economic growth; Elasticnet; Lasso; Machine learning; Partialing-out IV regression; sub-Saharan Africa (search for similar items in EconPapers)
JEL-codes: C52 C53 C55 O11 O4 O55 (search for similar items in EconPapers)
Pages: 39
Date: 2022-01
New Economics Papers: this item is included in nep-big, nep-dev and nep-fdg
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Citations: View citations in EconPapers (4)

Forthcoming: Journal of the Knowledge Economy

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http://publications.excas.org/RePEc/exs/exs-wpaper ... b-Saharan-Africa.pdf Revised version, 2022 (application/pdf)

Related works:
Journal Article: What Really Drives Economic Growth in Sub-Saharan Africa? Evidence from the Lasso Regularization and Inferential Techniques (2024)
Working Paper: What Really Drives Economic Growth in Sub-Saharan Africa? Evidence from The Lasso Regularization and Inferential Techniques (2022)
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