Exploring Growth Inducing Knowledge in Africa: A System GMM Approach

Abstract

The paradigm shift orchestrated by evolving New Growth Theory has “endogenized” technical change with its production embedded in the positive neoclassical belvedere. Knowledge no longer assumed as naturally endowed but demands a conscious organization and production by rationally optimizing the behavior of economic agents. The divergence in knowledge in Africa supports the assumption that confirmed the tacit nature of technological knowledge. This suggests that knowledge requires to build competitive economy is inarticulate and may not be easily transmitted at zero marginal cost. To this end, technological knowledge possesses the feature of an ordinary private good and can only be transmitted at a cost via imitation and apprenticeship. This study assesses the role of the knowledge types—basically codified (scientific knowledge) and tacit (technological and entrepreneurial knowledge) on the growth process in Africa for the period 1990–2017. The data used for the empirical investigation were obtained from the World Bank 2018 World Development Indicators and World Governance Indicators. The study adopted the System Generalized Method of Moments in performing empirical investigation. In addition, statistics from World Economic Forum’s Global Competitive Index and World Bank’s Human Capital Index were analyzed. The study found evidence supporting a strong link between technological knowledge (and entrepreneurial) and economic growth while the responsiveness of growth to scientific knowledge infinitesimally approaches zero. The paper recommends a framework that builds competitive knowledge capable of addressing developmental challenges. As domestic sufficiency is attained, trans-border transfers in terms of products and processes will attract wealth.

Keywords

• knowledge
• innovation
• growth
• ssa