Impact of social protection policies on inclusive growth in Sub-Saharan Africa: evidence from bias-corrected dynamic panel

Abstract

This study examines the role of social protection policies as a driver of inclusive growth. While some research argues that social protection policies empower marginalized groups, promote human capital, reduce inequality, alleviate poverty and contribute to long-term sustainable development, other studies contend that these policies can create disincentives and potentially exacerbate poverty. This inconclusive evidence may stem from the complex nature of these welfare indicators. We deviate from existing literature by examining the potential role of social protection policies on inclusive growth. As such, we aim to elucidate the inconclusive debate on the impact on social protection policies on welfare at the macro level. We used a panel of 48 countries in sub-Saharan Africa (SSA) over the period 1990–2022. By using the least squares dummy variable corrected (LSDVC) estimator the results confirm that social protection policies significantly contribute to inclusive growth. This finding is consistent with the Rawlsian theory of justice. We also show that factors such as real effective exchange rate (REER), foreign direct investment (FDI), CO2 emissions and infrastructure positively influence inclusive growth whereas corruption and inflation exert a negative effect. The study underscores the urgency for policy interventions to reinvigorate social protection systems to facilitate inclusive growth in the SSA region.

Keywords

• Social Protection
• Inclusive Growth
• Least Squares Dummy Variable Corrected
• Principal Component Analysis
• Sub-Saharan Africa
• Development Policy