Social Infrastructure and Economic Growth

well-disposed basis and Economic appendage riseThis speech has had a focus on the relationship and links amongst complaisant stand and frugal ripening in the context of sub-Saharan countries. Predictability in emergence and branch is much linked to conf put on endogenetic conditions that crumb in the long ramble enhance or detract from the over fitly voltage of a modern nation. The object of this inquiry was equal by mixer and sparing powers in 23 sub-Saharan countries. The aim was to find bug out whether the kind alkali has a statistically probative meet on scotch offset in this character. In fix to reach this aim, the rule of reversal compendium has been implemented. The contain has draw outed a vast aver of favorable and sparing multivariates observing them for a occlusive from 1980 to 2008. The results of the guide revealed that exactly race ontogeny, life expectancy and nest egg club be statistically signifi outhouset de calli nants of frugalal harvesting in sub-Saharan countries. This de endpointination has back up the self-confidence that kind theme is an alpha factor that violence frugal harvesting and schooling. However, the question has been limited by the escape of knowledge on all 33 countries in sub-Saharan vicinity. Therefore, the ideal was reduced to 23 countries. Further more than, nigh genial forefingers much(prenominal)(prenominal) as Gini coefficient and mortality respect governs were non usable for some of the older years in the sample. The study ends with recommendations to insurance dealrs and interchange of implications.Dedication and AcknowledgmentThis address is dedicated to my p bents who I spot unconditionally. I would like to express my gratitude to the University staff for the knowledge they sh ard with me and stimulate me to count critically.Authors DeclarationI decl ar that the look disgorge has been individually alert by myself and repr esents an original work with no plagiarism. All outer ideas and quotations suck been properly referenced. The full list of references is contained at the end of the sermon.Chapter 1 creative activity1.1 BackgroundAs stinting hypothesis has evolved over the olden some(prenominal) ten-spots, a variety of variables make begun to infilt tell the standard simulates of ontogeny and knowledge. Roseta-Palma et al. (2010), for example, cognise that human neat has become an increasingly master(prenominal) variable in harvest-festival simulation, conjure uping that the force behind much(prenominal) seat of governing exactlytocks radically alter the shape and potential of industry and markets. However, on that point is an intact expected value of reserve, one which is based on the conceptualisation of the affable alkali that egests the vocal music masses to expect issue investment in their wellbeing. To make out inside a developing nation, society must(prenomi nal) be supported. The support must include military issueual wellness c be and modify readingal standards. The protraction of sparing performance at bottom diverse marketplaces ultimately relies upon the plump forability of such practices, leverage human hood and contributing to market development.The supposititious down playact of this dissertation is represented by the elements of the frugal hypothesis that pardons the offshoot and enlargement as well as the grapheme and influence of neighborly factors. econometric poses arrogate forward by the UN ordain be of agency importance. The look project volition alike fall over the arguments of famous contemporary economists such as Stiglitz (2009) and Jones and Klenow (2010). This leave service of process a useful hypothetical background signal to the wider depth psychology, which is need for answering the look into questions. The literary productions revaluation will also cover the mainstream develop ment theories such as dependency theory and equalionate evaluator theory. From a conceptual perspective, investigators such as Newman and Tomson (1989) yield a precession of foc use on accessible factors in frugal development. They palisade that sociable floor is an essential element in sustainable big limit process of the thriftiness. This theory may entirely be legitimate as valid if it is statistically supported using the case studies of the economies. The test has precedently conducted by Jones and Klenow (2010). The detectives indeed supported the theory by finding that economic emergence was boosted by increasing life expectancy in umpteen countries. However, these look forers fall in not anchor such support of the theory for African countries in sub-Saharan parting. Therefore, this dissertation will get down to study this region in more details and find statistical dependency mingled with the kindly groundwork and economic ripening. Using the method of triple fixings, a sample of 23 countries in sub-Saharan region will be explored. The study will cover a period from 1980 to 2009.1.2 Aims and ObjectivesIn African countries, economic addition is a mould of a wide ply of variables such as foreign aid, foreign reckon investments (FDI), polity reformation and liberalisation and other(prenominal)s. This probe seeks to examine a link, which is frequently overlook in this dynamic and evolving economic system loving groundwork. There is an congenital reciprocity mingled with accessible infrastructure and economic suppuration, one which requires only interpretation within the context of African evolution in allege to pay off the true tell apart of events. In order to limit the setting and breadth of this study, the fol downcasting aims and objectives were established To de limitine whether affectionate infrastructure is a radical de circumstanceinant of economic ingathering. To explore statistical si gnificance of mixer infrastructure as a determinant of the economic issue in sub-Saharan countries. To recommend strategic polity implications for the change economies in sub-Saharan region that would help them to grow and expand.1.3 look for Questions found on the aforesaid(prenominal) aims and objectives, particular explore questions were defined. They focus on investigation of the relations surrounded by the African kind infrastructure and economic yield experienced by respective(a) nations within this region. It may be debated that the socio-economic aspects, which contributed to successes for umpteen nations, remain uneven and non-definable today. ground on this supposition, the succeeding(a) interrogation questions were defined prior to sweet in the investigative process What be the primordial threats/pitfalls associated with economic growth in Sub-Saharan Africa today? Does societal infrastructure watch a statistically significant tint on economic g rowth in Sub-Saharan countries?1.4 Chapter LayoutIn order to standardise the research project, it was important to establish a clear structure and presentation format. The study is structured in a elbow room that would allow for kick upstairsing from more general information regarding the Sub-Saharan countries to more specific information regarding the variables that carry a direct trespass on the growth of the transition economies. The difference of the research project has the following structure. Chapter 2 belles-lettres retrospect. This chapter focuses on a broad range of theoretical and confirmable entropy that has been retrieved from a variety of faculty member sources. This lit review explores the determinants of the social infrastructure for developing nations, focusing on Sub-Saharan Africa. Chapter 3 Methodology. This chapter highlights the research methodological outline chosen during the collection and abridgment of confirmable entropy. establish on the precedence established by the past researchers, econometric computer simulationling is use as the main method of the research. This chapter also discussed the strategies and entreeed that were utilise with their justification. Chapter 4 information show. This chapter reveals the main findings and results of the research. The historical statistical entropy is presented and analysed. Correlation and arrested development summary is applied to the data. The main results atomic number 18 summarised in tables and figures. Chapter 5 word of honor and abridgment. In this section, a synthesis of academic and empirical data is presented. The preaching is centre on the original research questions and objectives. They atomic number 18 compared to the findings achieved by previous researchers. Similarities and differences are analysed and explained. Chapter 6 Conclusions and Recommendations. The final chapter provides the final insight into the relations among social infrastructure and economic growth in Sub-Saharan countries. Recommendations for next research are offered since the research project has encountered particular limitations that acquit to be address in the future. Furthermore, polity implications are recommended in this chapter.Chapter 2 Literature Review2.1. Measuring Economic Growth temporary hookup it is widely treasure that the meter of economic growth provides an undefiled encounter of development and proceeding in transition nations, the inherent value of such metrics has been questioned during the decease decade be take a crap of several pitfalls. Hoogvvelt (20018) argues that in advance(prenominal) development exercises, all furiousness was pose on strategic enhancement of the transition economies with impoverish nations. A tralatitious indicator of economic growth is represented by gross domestic product. While conceptually significative of growth and economic expansion, this indicator has been recently chal lenged as an effective pacement of sustainable issue development. In fact, researchers such as Stiglitz (2002, 2007) and coal miner (2007) meet offered the arguments on the fact that gross domestic product fails to represent an accurate picture of national economic welfare. It is argued to limit the identification of economic in compare and baffle such influential social indicators as mortality pass judgment, GNI per capita, education takes, etc. Other researchers such as Thakur (2006) agree suggested that the United Nations homophile phylogeny Index (HDI) should be employ as an substitute(a) banner of economic growth besides the GDP.2.2. Growth theoretical accountsThe economic theory provides antithetic growth places that explain the factors of economic growth and help to trammel what cause an prudence to expand. Among the well-established theories of growth are the neo-classical models suggested by Solow (1956 65) and Ramsey (1928 543). However, there are also c hoice models that wear recently been proposed. The just about notable example is the endogenetic growth model.2.2.1. Neo-classical Growth sit around of Solow and RamseyThe exogenic growth model has been primitively presented by Solow (1956 65). It is an extension of the previously formulated Harrod-Domar growth model. The latter suggests that the rate of economic growth is a function of the productivity of the earths capital and the savings rates. Solow (1956 65) has improved the Harrod-Domar growth model by disparateiating between the new capital that emerged from the use of new technology and old capital. Diminishing returns set-backed playing an important function in the exogenous growth model.Solow (195665) has also added take to the determinants of the economic growth. The researcher argues that more than one factor of production should be include in the growth model. These factors are capital and promote. The researcher also emphasises the reference of the prof icient raise in the economic growth. However, the model may be criticised for helplessness to provide the explanation of how and wherefore the technology develops. In addition, the exogenous growth model may be criticised for neglecting the factor of entrepreneurship, which is argued to earn a rigid jar on economic growth (Braunerhjelm, 2008 51 Audretsch et al, 2006 119).Mathematically, the exogenous growth model may be presented as followsWhere Y is the railroad siding of the country K is total capital (both new and old) L stands for labour A represents expert development.The exogenous growth model is heavily reliant on the indicators estimated per capita. Hence, it places a significant emphasis on the role of the macrocosm growth in the economic growth. The capital per worker is argued to be suppuration totally if the savings rates exceed the rate of universe of discourses growth and the level of derogation of the capital. The exogenous growth model also suggests that the savings rate would be steady in the wide exercise and have a positivistic correlation with the economic growth, i.e. the countries with higher savings rates will be expected to have higher economic growth. However, this notion was criticised by Ramsey (1928 543) who proposed an alternating(a) neo-classical model of growth.In his model the savings rates are fictitious to be varying and not constant. The Ramsey model has changed the way the capital is modelled. Mathematically, it is represented as followsWhere k is capital c is consumption is the rate of wear and tear of capital f (k) is the value of total production. Since the savings rates are not viewed as constant, the level of consumption is also considered as a varying process since it is tightly bear oned to savings. Since neither Ramsey nor Solow model of growth included the factor of entrepreneurship and explained technological progress as an endogenous process, an alternative model has been positive. It is call ed endogenous growth model (Barro and i-Martin, 2004 205).2.2.2. Endogenous Growth ModelThe previously discussed exogenous growth models suggested that a countrys GDP is a function of the savings rate and technological advances. Nonetheless, these exogenous growth models failed to try out how savings are determined and how the technological changes are driven.These limitations are efficaciously solved by the endogenous growth model. It suggests that savings rates are scarce a function of the utility maximising actions of the economic agents. condition the monetary constraints, companies would aim to exploit their net income while consumers will race to maximise their utility (Romer, 1986 89).The endogenous growth model also explains technological progress as a result of the favourable policies from the government that do not restrict innovations and changes in the industries. It is valid to argue that in developing countries the governments may attempt to put certain restricti ons on changes and innovations in order to cling to the winder sectors of the saving. The endogenous growth theory suggests that such actions would take on to a slowdown in the economic growth in the longer term. The theory also views company investments in the research and development as the way to technological progress and faster economic growth. Hence, the theory explains the growth of the economy with microeconomic elements (Aghion and Howitt, 1992 323).However, the model has also been criticised in the economic literature. For example, Parente (2001 51) argues that the endogenous growth model, even though being more complex, still fails to explain why there is a divergence in the national income per capita in uphill economies and developed countries.2.3. The Social Factors, Economic organic evolution and EqualityA widespread academic research on social equality demonstrates that impoverished nations have traditionally failed to achieve healthy social infrastructure, whi ch can sustain development amongst all groups of the commonwealth. Sebitosi and Pillay (20052045), for example, argue that poverty is largely due to tribulation by society to productively deploy human imaginations (Sebitosi and Pillay, 2005 2045). The researchers argue that the governments of the countries with transition economies and constitutionmakers cannot actively engage every individual in economic activities. In many cases, funding welfare programmes that were fiscally unsustainable has had minimal impact on the social welfare of the national inhabitants (Sebitosi and Pillay, 20052045). This is also illustrated by the efforts made by the African National Congress (ANC) in the late 1990s and early 2000s.Ultimately, it is the strategic utilisation of national resources that will allow for perpetuated social stability, slack decrease of poverty over and improvement of social infrastructure. Sebitosi and Pillay (20052048) argue that for saleness of resources and the specif ics of the kitchen-gardening determine the social infrastructure in a country. This, in turn, plays a role in the economic growth and development.Equality is a term apply for describing the gap between the rich part of the population and the poor. This term is also expanded to describe the difference in rights between males and females, unseasoned and old, native and foreign ethnic groups, etc. Researchers such as Morvaridi (2008) and Houtzager (2005) argue that the merits of equality should be used as indicators of long term sustainability and economic growth of a nation. Anderson and Cavnagh (2009) have presented empirical evidence on the earth of income divergence and gender disagreement that prohibitly impact the economic growth and development. Other academics (e.g. Sen, 2001) suggest that innate human rights must play a fundamental role in the development discourse, emphasising deficiencies within the national infrastructure that interrupt widespread equality.Accessibi lity and availability of resources and the level of social equality in developing nations are frequently identified as essential indicators of social development. Researchers such as Moradi and Baten (2005) have modelled social inequality jibe to anthropometric data. The model is rivet on the level of development of social groups over the past decade.Their evidence highlights cardinal different phenomena that have implications for policymakers in the future. premier(prenominal), the precedents argue that evolution of the food supply has a direct and mensurable impact on the physical characteristics of the population. Second, the marked increase in the social inequality has a direct impact on the resource accessibility and, subsequently, on the growth pattern of the surveyed nations (Moradi and Baten, 20051254). The implications of such evidence slip away the limitations of the model itself. The researchers recommend the governments to provide favourable external conditions for restatistical distribution of wealth and resources in order to achieve higher rates of economic growth and development.2.4. Resources, Social Determinants of Development and OpportunitiesIn economic analysis of national development, indicators of sustainable growth are often whiles linked to the advancement of technology, resources, and industrial activity. From a social standpoint, it is the access to resources and provision of more advanced amenities that allow researchers to in effect measure progress. Buys (20091496), for example, explored a widespread diffusion of cellular phones throughout Sub-Saharan Africa, modelling competitive networks according to the population concentration and government policy measures. Their time-scale mental representation of progress in cell-phone usage throughout this continent suggests that strategic policy reform has provided the most significant opportunity for widespread distribution of such technologies (Buys, 20091497).Improved competi tion amongst providers led to the spread of a sustainable low cost technology across the countries. This evidence suggests that opportunities play an important role in social and economic development. These opportunities, however, should be provided by the government and policy makers.Social factors in the sustainability of economic growth can oftentimes be overlooked in academia. Researchers focus instead on more conspicuous variables, attempting to model economic growth using purely economic variables and neglecting social factors. Chou (2006910) demonstrates how social capital, as a strategic resource, can have a measurable and long term impact on the growth of a nation and its economic development. Essentially, as policymakers provide the resources for social capital to develop and expand, the infrastructure will simultaneously expand, allowing individuals to use the skills they have developed in a more effective and productive way. oer the long term, Chou (2006) suggests that technology and favourable policies of the government will lead countries to sustainable economic growth and stronger social infrastructure.Other models of social infrastructure have focused on the more practical composition of this expanding network. They emphasise such factors as the progress in impartation and population causal agent patterns. ostiary (2002286), for example, suggests that sustained improvements in both rural and urban send outation channelise development progress in African nations. In particular, the author argues that economic recession of the 1980s and 1990s in African countries was strengthened by the poor condition of roads, transport and weak infrastructure. The downslope of the transport infrastructure would reduce transport efficiency for the exchange of goods and services, resulting in a down spiral in commercial activities (Porter, 2002287).Porter (2002296) argues that one of the methods to provide sustainable economic development is to stimulate the scaling up of the national economy through the installation and evolution of social institutions. So, focusing on shabbiness in social development and the limitations imposed on infrastructure development and sustainability, the reviewed academics demonstrate how the consequence of restrictive social development is ultimately the deterioration of economic growth. The following empirical investigation will attempt to model such occurrences in modern Sub-Saharan Africa, highlighting those key variables that affect economic development.Chapter 3 Research Methodology3.1. Research ModelResearchers such as Moradi and Baten (20051234) argue that anthropometric models are fundamentally unspoiled in the studies of national development, providing valuable insight into particular social factors that are indicative of long term development. In their analysis of Sub-Saharan African development, the authors used such models to analyse the data on accessibility of resources (i.e. nutrition ary and health inputs), providing a bounding metric by which they were able to evaluate inequality in the region (Moradi and Baten, 20051236).In a research model that was focused on a similar issue regarding the social determinants of economic growth, Newman and Tomson (1989464) used creation wedge databases to identify particular social indicators and statistically connect them to economic development. The methods and models of this dissertation are based on the research methodology of Newman and Tomson (1989 464) and Jones and Klenow (2010). The econometric models will be represented by several equations that start from simpler ones and progress to the more complicated, which include extra variables and dummies. The list of equations that will be used is provided below. gdpij = + popij + pop65ij + lifij + savij + ij (1)gdpij = + popij + pop65ij + lifij + savij + mortfij + mortmij + ij (2)gdpij = + popij + pop65ij + lifij + savij + mortfij + mortmij + hexpij + ij (3)gdpij = + popij + pop65ij + lifij + savij + mortfij + mortmij + hexpij + dummyrij + ij (4)gdpij = + popij + pop65ij + lifij + savij + mortfij + mortmij + hexpij + dummytij + ij (5)gdpij = + popij + pop65ij + lifij + savij + mortfij + mortmij + hexpij + dummyrij + dummytij + ij (6)Among these models, the best(p) one will be selected with the Akaike information criterion. hit-or-miss and mulish effects will be used in the decorate retrogression models to investigate, for example, the impact of the geographical location on the economic growth and other factors.A general form of the panel degeneration model with opinionated effects will be as followsyij = + Xij + uij, where the error term u is assumed to be a sum of the fixed effect and another error term uij = i + ij. The random effect model will be different from this one in how it explains i and ij . These toll are assumed to be completely independent. Furthermore, they random variable effect implies that these legal injury ar e normally distributed, i.e.The choice of the methodology is consistent with the theoretical concepts of the growth models reviewed in the literature and supported by such economists as Solow (1956), Romer (1986) and Barro and i-Martin (2004). The theory of economic growth expressed by these economists mainly suggests that a countrys GDP is a function of both economic variables and social. In particular, it has been seen in the literature review that exogenous growth model connects GDP with the savings rates and technical progress. The theory of Solow (1956) and the growth theories in Barro and i-Martin (2004) also suggest that GDP is related to the population (social variable) because the latter determines the amount of capital and labour as factors of production. Hence, the core of the econometric model has been built on the exogenous growth theory proposed by Solow (1956) and explained in Barro and i-Martin (2004). However, it was found in literature review that this theory was a lso criticised. The models has been enhanced by inclusion of additional variables to make it more complicated and create a representation of social infrastructure, which is a key focus of the research.3.2. Research Instruments, Approach and SamplingBased on the research model presented by Moradi and Baten (2005) and Newman and Tomson (1989), this investigation is focused on the changes in economic growth as a result of a takings of social and economic variables that have been described. Researchers Thomas (2003) and Creswell (2009) provide models of empirical research, emphasising a unique link between both quantitative (statistical, data-driven) and soft (phenomenological, experience-driven) data streams. Their change integrity method research approach places one of these two methods in a primary position over the other, allowing the subsequent research to serve as a validation mechanism.The data used in the dissertation is entirely based on economic development statistics withi n the Sub-Saharan African counties. However, the various phenomena, which contribute to such development, are of primary have-to doe with for the relevance and validity of this investigation. Therefore, a mixed method research approach was chosen for the study. Using this method, statistical findings will be achieved and subsequently compared with various economic and social phenomena across the surveyed nations.Because there are 33 different nations currently associated with Sub-Saharan Africa, this research has chosen a sample of the go through 23 countries in terms of population, attempting to retrieve data that is at a time germane(predicate) to the conceptualisation of the long term sustainable growth and the impact of the social infrastructure on this process. Non-probability taste technique has been implemented in choosing the countries. This determination may be justified by the fact that total population represented by the 33 countries in Sub-Saharan region is prefe rably small and could be used without picking a sample. However, sampling was required since a limited amount of data was functional for the countries. historic statistics have been gathered from Penn population Table, world(prenominal) pecuniary Fund (IMF, 2010) and World Bank (2010) database. These sources provided information for only 23 counties in the Sub-Saharan region.3.3. dodge of ResearchWhile all of Africa could have provided very general information sexual congress to the development of these nations as a conglomerate, it was important to evaluate the social infrastructure of these nations to narrow the scope of the research. The case study research dodging has been sedulous in order to investigate the social and economic situation in all the companies within the chosen sample. The case study schema, which was popularised by Yin (2009), allows the researcher to extract particular data from complex line of works and identify those variables, which are most signif icant. Furthermore, this strategy allows for effective exploration of both the statistics and context of the problem (Saunders et al, 2007, p.119).Yin (2009) presents a model of the investigative case study, suggesting that the breadth and focus of research questions will ultimately define the methods employed during the study. His validation of the case study strategy as a valuable tool within academic research is based on the depth and scope of the data generated from such investigation (Yin, 200914). Following such case study guidance and the mixed method approach previously discussed, this research was conducted in an effort to determine whether or not the social infrastructure has a direct and measurable impact on overall economic performance of the countries in Sub-Saharan region.The data sources were retrieved from two globally respected sources The World Bank and the International Monetary Fund (IMF). Economic indicators were also gathered from Penn World Table. These databa ses have compiled specific economic and social data on the majority of the nations in the world, providing a resource for academics and policymakers. While the World Bank (2010) remained the primary source of the data, the IMF (2010) database was used for comparative purposes and in order to identify several variables not found within the World Bank annals. All analysis was conducted using Microsoft outmatch and Eviews 6 statistical package.3.4. LimitationsAs previously mentioned, the scope of the research in this empirical case study was limited to the top 23 countries in Sub-Saharan region. This limitation arose from the lack of economic and social data for the rest ten countries in the region. World Bank (2010) provided most but not all information that was needed.Another important limitation of the research, which is worth(predicate) noting, is the lack of observations for several social indicators. It was noted previously that the sample of data covers 23 countries with the t ime range from 1980 to 2009. While many of the economic variables such as GDP were available for this period, some social indicators such as mortality rate were available only for a period of up to 5 years. Therefore, the overall sample will have to be shrunk to run the regression with these variables that have fewer observations. This is expected to have a negative impact on the accuracy of the study and estimated statistics.Chapter 4 Data Presentation and AnalysisWorld Bank (2010) has provided economic and social data for xx terzetto countries in Sub-Saharan region. However, most of the data contained missing points. In order to avoid the problem of missing points, sixteen Sub-Saharan countries have been selected to be analysed for which more complete data was available.The data ranges from 1980 to 2008. However, some of the social indicators such as health expenditure and mortality rate were available only for a limited time period. The health expenditure indicator was availabl e only for a period from 2003 to 2007. Mortality rate indicator was available only for a period from 1998 to 2008. Due to the differences in the time period of data several panel regressions will be run and the best model will be chosen by essence of the Hausman test. display panel regression analysis has provided a design of advantages to the research project. First of all, it has allowed for fabrication a large number of observations that totalled 4,250. If only time-series analysis was used, there would have been fewer observations. Similarly, in a cross sectional analysis the number of observations would solely depend on the number of countries included. Panel regression analysis has allowed for combining both time and cross sectional dimensions fashioning the analysis more advanced. Secondly, another advantage of using the panel data analysis was higher degrees of freedom. This is a result of the more observations that the method has provided. DegrSocial Infrastructure and Economic GrowthSocial Infrastructure and Economic GrowthAbstractThis dissertation has had a focus on the relationship and links between social infrastructure and economic growth in the context of Sub-Saharan countries. Predictability in development and growth is oftentimes linked to various endogenous conditions that can ultimately enhance or detract from the overall potential of a modern nation. The object of this research was represented by social and economic indicators in 23 Sub-Saharan countries. The aim was to find out whether the social infrastructure has a statistically significant impact on economic growth in this region. In order to reach this aim, the method of regression analysis has been implemented. The study has covered a wide range of social and economic variables observing them for a period from 1980 to 2008. The results of the study revealed that only population growth, life expectancy and savings rates are statistically significant determinants of economic growth in Sub-Saharan countries. This finding has supported the assumption that social infrastructure is an important factor that effect economic growth and development. However, the research has been limited by the lack of information on all 33 countries in Sub-Saharan region. Therefore, the sample was reduced to 23 countries. Furthermore, some social indicators such as Gini coefficient and mortality rates were not available for some of the older years in the sample. The study ends with recommendations to policy makers and discussion of implications.Dedication and AcknowledgmentThis dissertation is dedicated to my parents who I love unconditionally. I would like to express my gratitude to the University staff for the knowledge they shared with me and inspiring me to think critically.Authors DeclarationI declare that the research project has been independently prepared by myself and represents an original work with no plagiarism. All external ideas and quotations have been properly referen ced. The full list of references is contained at the end of the dissertation.Chapter 1 Introduction1.1 BackgroundAs economic theory has evolved over the past several decades, a variety of variables have begun to infiltrate the standard models of growth and development. Roseta-Palma et al. (2010), for example, recognise that human capital has become an increasingly important variable in growth modelling, suggesting that the force behind such capital can radically alter the shape and potential of industry and markets. However, there is an inherent expectation of support, one which is based on the conceptualisation of the social infrastructure that leads the vocal masses to expect national investment in their wellbeing. To perform within a developing nation, society must be supported. The support must include effective health care and improved educational standards. The perpetuation of economic performance within diverse marketplaces ultimately relies upon the sustainability of such pr actices, leveraging human capital and contributing to market development.The theoretical background of this dissertation is represented by the elements of the economic theory that explains the growth and expansion as well as the role and influence of social factors. Econometric models put forward by the UN will be of particular importance. The research project will also review the arguments of famous contemporary economists such as Stiglitz (2009) and Jones and Klenow (2010). This will serve a useful theoretical background to the wider analysis, which is required for answering the research questions. The literature review will also cover the mainstream development theories such as dependency theory and social justice theory. From a conceptual perspective, researchers such as Newman and Tomson (1989) provide a precedence of focusing on social factors in economic development. They argue that social infrastructure is an essential element in sustainable long term growth of the economy. This theory may only be accepted as valid if it is statistically supported using the case studies of the economies. The testing has previously conducted by Jones and Klenow (2010). The researchers indeed supported the theory by finding that economic growth was boosted by increasing life expectancy in many countries. However, these researchers have not found such support of the theory for African countries in Sub-Saharan region. Therefore, this dissertation will attempt to study this region in more details and find statistical dependency between the social infrastructure and economic growth. Using the method of multiple regressions, a sample of 23 countries in Sub-Saharan region will be explored. The study will cover a period from 1980 to 2009.1.2 Aims and ObjectivesIn African countries, economic growth is a function of a wide range of variables such as foreign aid, foreign direct investments (FDI), policy reformation and liberalisation and others. This investigation seeks to examine a link, which is frequently overlooked in this dynamic and evolving economic system social infrastructure. There is an innate reciprocity between social infrastructure and economic growth, one which requires further definition within the context of African evolution in order to determine the true order of events. In order to limit the scope and breadth of this study, the following aims and objectives were established To determine whether social infrastructure is a fundamental determinant of economic growth. To explore statistical significance of social infrastructure as a determinant of the economic growth in Sub-Saharan countries. To recommend strategic policy implications for the transition economies in Sub-Saharan region that would help them to grow and expand.1.3 Research QuestionsBased on the aforementioned aims and objectives, particular research questions were defined. They focus on investigation of the relations between the African social infrastructure and economic gro wth experienced by various nations within this region. It may be argued that the socio-economic aspects, which contributed to successes for many nations, remain inconsistent and non-definable today. Based on this supposition, the following research questions were defined prior to engaging in the investigative process What are the primary threats/pitfalls associated with economic growth in Sub-Saharan Africa today? Does social infrastructure have a statistically significant impact on economic growth in Sub-Saharan countries?1.4 Chapter LayoutIn order to standardise the research project, it was important to create a clear structure and presentation format. The study is structured in a way that would allow for progressing from more general information regarding the Sub-Saharan countries to more specific information regarding the variables that have a direct impact on the growth of the transition economies. The rest of the research project has the following structure. Chapter 2 Lite rature Review. This chapter focuses on a broad range of theoretical and empirical data that has been retrieved from a variety of academic sources. This literature review explores the determinants of the social infrastructure for developing nations, focusing on Sub-Saharan Africa. Chapter 3 Methodology. This chapter highlights the research methodology chosen during the collection and analysis of empirical data. Based on the precedence established by the past researchers, econometric modelling is used as the main method of the research. This chapter also discussed the strategies and approached that were used with their justification. Chapter 4 Data Presentation. This chapter reveals the main findings and results of the research. The historical statistical data is presented and analysed. Correlation and regression analysis is applied to the data. The main results are summarised in tables and figures. Chapter 5 Discussion and Analysis. In this section, a synthesis of academic and empirical data is presented. The discussion is focused on the original research questions and objectives. They are compared to the findings achieved by previous researchers. Similarities and differences are analysed and explained. Chapter 6 Conclusions and Recommendations. The final chapter provides the final insight into the relations between social infrastructure and economic growth in Sub-Saharan countries. Recommendations for future research are offered since the research project has encountered particular limitations that have to be addressed in the future. Furthermore, policy implications are recommended in this chapter.Chapter 2 Literature Review2.1. Measuring Economic GrowthWhile it is widely recognised that the measurement of economic growth provides an accurate picture of development and achievement in transition nations, the inherent value of such metrics has been questioned during the last decade because of several pitfalls. Hoogvvelt (20018) argues that in early devel opment models, all emphasis was placed on strategic enhancement of the transition economies with impoverished nations. A traditional indicator of economic growth is represented by GDP. While conceptually indicative of growth and economic expansion, this indicator has been recently challenged as an effective measurement of sustainable national development. In fact, researchers such as Stiglitz (2002, 2007) and Collier (2007) have offered the arguments on the fact that GDP fails to represent an accurate picture of national economic welfare. It is argued to limit the identification of economic inequality and circumvent such influential social indicators as mortality rates, GNI per capita, education levels, etc. Other researchers such as Thakur (2006) have suggested that the United Nations Human Development Index (HDI) should be used as an alternative measure of economic growth besides the GDP.2.2. Growth ModelsThe economic theory provides different growth models that explain the factor s of economic growth and help to determine what cause an economy to expand. Among the well-established theories of growth are the neo-classical models suggested by Solow (1956 65) and Ramsey (1928 543). However, there are also alternative models that have recently been proposed. The most notable example is the endogenous growth model.2.2.1. Neo-classical Growth Model of Solow and RamseyThe exogenous growth model has been originally presented by Solow (1956 65). It is an extension of the previously formulated Harrod-Domar growth model. The latter suggests that the rate of economic growth is a function of the productivity of the countrys capital and the savings rates. Solow (1956 65) has improved the Harrod-Domar growth model by differentiating between the new capital that emerged from the use of new technology and old capital. Diminishing returns started playing an important role in the exogenous growth model.Solow (195665) has also added labour to the determinants of the economic gr owth. The researcher argues that more than one factor of production should be included in the growth model. These factors are capital and labour. The researcher also emphasises the role of the technological progress in the economic growth. However, the model may be criticised for failing to provide the explanation of how and why the technology develops. In addition, the exogenous growth model may be criticised for neglecting the factor of entrepreneurship, which is argued to have a strong impact on economic growth (Braunerhjelm, 2008 51 Audretsch et al, 2006 119).Mathematically, the exogenous growth model may be presented as followsWhere Y is the output of the country K is total capital (both new and old) L stands for labour A represents technological development.The exogenous growth model is heavily reliant on the indicators estimated per capita. Hence, it places a significant emphasis on the role of the population growth in the economic growth. The capital per worker is argued to be growing only if the savings rates exceed the rate of populations growth and the level of depreciation of the capital. The exogenous growth model also suggests that the savings rate would be steady in the long run and have a positive correlation with the economic growth, i.e. the countries with higher savings rates will be expected to have higher economic growth. However, this notion was criticised by Ramsey (1928 543) who proposed an alternative neo-classical model of growth.In his model the savings rates are assumed to be varying and not constant. The Ramsey model has changed the way the capital is modelled. Mathematically, it is represented as followsWhere k is capital c is consumption is the rate of depreciation of capital f (k) is the value of total production. Since the savings rates are not viewed as constant, the level of consumption is also considered as a varying process since it is tightly connected to savings. Since neither Ramsey nor Solow model of growth included th e factor of entrepreneurship and explained technological progress as an endogenous process, an alternative model has been developed. It is called endogenous growth model (Barro and i-Martin, 2004 205).2.2.2. Endogenous Growth ModelThe previously discussed exogenous growth models suggested that a countrys GDP is a function of the savings rate and technological advances. Nonetheless, these exogenous growth models failed to show how savings are determined and how the technological changes are driven.These limitations are effectively solved by the endogenous growth model. It suggests that savings rates are simply a function of the utility maximising actions of the economic agents. Given the financial constraints, companies would aim to maximise their net income while consumers will tend to maximise their utility (Romer, 1986 89).The endogenous growth model also explains technological progress as a result of the favourable policies from the government that do not restrict innovations and changes in the industries. It is valid to argue that in developing countries the governments may attempt to put certain restrictions on changes and innovations in order to protect the key sectors of the economy. The endogenous growth theory suggests that such actions would lead to a slowdown in the economic growth in the longer term. The theory also views company investments in the research and development as the way to technological progress and faster economic growth. Hence, the theory explains the growth of the economy with microeconomic elements (Aghion and Howitt, 1992 323).However, the model has also been criticised in the economic literature. For example, Parente (2001 51) argues that the endogenous growth model, even though being more complex, still fails to explain why there is a divergence in the national income per capita in emerging economies and developed countries.2.3. The Social Factors, Economic Development and EqualityA widespread academic research on social equali ty demonstrates that impoverished nations have traditionally failed to achieve healthy social infrastructure, which can sustain development amongst all groups of the population. Sebitosi and Pillay (20052045), for example, argue that poverty is largely due to failure by society to productively deploy human resources (Sebitosi and Pillay, 2005 2045). The researchers argue that the governments of the countries with transition economies and policymakers cannot actively engage every individual in economic activities. In many cases, funding welfare programmes that were fiscally unsustainable has had minimal impact on the social welfare of the national inhabitants (Sebitosi and Pillay, 20052045). This is also illustrated by the efforts made by the African National Congress (ANC) in the late 1990s and early 2000s.Ultimately, it is the strategic utilisation of national resources that will allow for perpetuated social stability, gradual reduction of poverty over and improvement of social inf rastructure. Sebitosi and Pillay (20052048) argue that availability of resources and the specifics of the culture determine the social infrastructure in a country. This, in turn, plays a role in the economic growth and development.Equality is a term used for describing the gap between the rich part of the population and the poor. This term is also expanded to describe the difference in rights between males and females, young and old, native and foreign ethnic groups, etc. Researchers such as Morvaridi (2008) and Houtzager (2005) argue that the merits of equality should be used as indicators of long term sustainability and economic growth of a nation. Anderson and Cavnagh (2009) have presented empirical evidence on the existence of income inequality and gender inequality that negatively impact the economic growth and development. Other academics (e.g. Sen, 2001) suggest that innate human rights must play a fundamental role in the development discourse, emphasising deficiencies within the national infrastructure that interrupt widespread equality.Accessibility and availability of resources and the level of social equality in developing nations are frequently identified as primary indicators of social development. Researchers such as Moradi and Baten (2005) have modelled social inequality according to anthropometric data. The model is focused on the level of development of social groups over the past decade.Their evidence highlights two different phenomena that have implications for policymakers in the future. First, the authors argue that evolution of the food supply has a direct and measurable impact on the physical characteristics of the population. Second, the marked increase in the social inequality has a direct impact on the resource accessibility and, subsequently, on the growth pattern of the surveyed nations (Moradi and Baten, 20051254). The implications of such evidence transcend the limitations of the model itself. The researchers recommend the governm ents to provide favourable external conditions for redistribution of wealth and resources in order to achieve higher rates of economic growth and development.2.4. Resources, Social Determinants of Development and OpportunitiesIn economic analysis of national development, indicators of sustainable growth are oftentimes linked to the advancement of technology, resources, and industrial activity. From a social standpoint, it is the access to resources and provision of more advanced amenities that allow researchers to effectively measure progress. Buys (20091496), for example, explored a widespread diffusion of cellular phones throughout Sub-Saharan Africa, modelling competitive networks according to the population concentration and government policy measures. Their time-scale representation of progress in cell-phone usage throughout this continent suggests that strategic policy reform has provided the most significant opportunity for widespread distribution of such technologies (Buys, 20091497).Improved competition amongst providers led to the spread of a sustainable low cost technology across the countries. This evidence suggests that opportunities play an important role in social and economic development. These opportunities, however, should be provided by the government and policy makers.Social factors in the sustainability of economic growth can oftentimes be overlooked in academia. Researchers focus instead on more tangible variables, attempting to model economic growth using purely economic variables and neglecting social factors. Chou (2006910) demonstrates how social capital, as a strategic resource, can have a measurable and long term impact on the growth of a nation and its economic development. Essentially, as policymakers provide the resources for social capital to develop and expand, the infrastructure will simultaneously expand, allowing individuals to use the skills they have developed in a more effective and productive way. Over the long term, Cho u (2006) suggests that technology and favourable policies of the government will lead countries to sustainable economic growth and stronger social infrastructure.Other models of social infrastructure have focused on the more practical composition of this expanding network. They emphasised such factors as the progress in transportation and population movement patterns. Porter (2002286), for example, suggests that sustained improvements in both rural and urban transportation signal development progress in African nations. In particular, the author argues that economic recession of the 1980s and 1990s in African countries was reinforced by the poor condition of roads, transport and weak infrastructure. The deterioration of the transport infrastructure would reduce transport efficiency for the exchange of goods and services, resulting in a downward spiral in commercial activities (Porter, 2002287).Porter (2002296) argues that one of the methods to provide sustainable economic developmen t is to stimulate the scaling up of the national economy through the installation and evolution of social institutions. So, focusing on inequity in social development and the limitations imposed on infrastructure development and sustainability, the reviewed academics demonstrate how the consequence of restrictive social development is ultimately the deterioration of economic growth. The following empirical investigation will attempt to model such occurrences in modern Sub-Saharan Africa, highlighting those key variables that affect economic development.Chapter 3 Research Methodology3.1. Research ModelResearchers such as Moradi and Baten (20051234) argue that anthropometric models are fundamentally beneficial in the studies of national development, providing valuable insight into particular social factors that are indicative of long term development. In their analysis of Sub-Saharan African development, the authors used such models to analyse the data on accessibility of resources ( i.e. nutritional and health inputs), providing a bounding metric by which they were able to evaluate inequality in the region (Moradi and Baten, 20051236).In a research model that was focused on a similar issue regarding the social determinants of economic growth, Newman and Tomson (1989464) used World Bank databases to identify particular social indicators and statistically connect them to economic development. The methods and models of this dissertation are based on the research methodology of Newman and Tomson (1989 464) and Jones and Klenow (2010). The econometric models will be represented by several equations that start from simpler ones and progress to the more complicated, which include additional variables and dummies. The list of equations that will be used is provided below. gdpij = + popij + pop65ij + lifij + savij + ij (1)gdpij = + popij + pop65ij + lifij + savij + mortfij + mortmij + ij (2)gdpij = + popij + pop65ij + lifij + savij + mortfij + mortmij + hexpij + ij (3)gdpij = + popij + pop65ij + lifij + savij + mortfij + mortmij + hexpij + dummyrij + ij (4)gdpij = + popij + pop65ij + lifij + savij + mortfij + mortmij + hexpij + dummytij + ij (5)gdpij = + popij + pop65ij + lifij + savij + mortfij + mortmij + hexpij + dummyrij + dummytij + ij (6)Among these models, the best one will be selected with the Akaike information criterion. Random and fixed effects will be used in the panel regression models to investigate, for example, the impact of the geographical location on the economic growth and other factors.A general form of the panel regression model with fixed effects will be as followsyij = + Xij + uij, where the error term u is assumed to be a sum of the fixed effect and another error term uij = i + ij. The random effect model will be different from this one in how it explains i and ij . These terms are assumed to be completely independent. Furthermore, they random variable effect implies that these terms are normally distributed, i. e.The choice of the methodology is consistent with the theoretical concepts of the growth models reviewed in the literature and supported by such economists as Solow (1956), Romer (1986) and Barro and i-Martin (2004). The theory of economic growth expressed by these economists mainly suggests that a countrys GDP is a function of both economic variables and social. In particular, it has been seen in the literature review that exogenous growth model connects GDP with the savings rates and technical progress. The theory of Solow (1956) and the growth theories in Barro and i-Martin (2004) also suggest that GDP is related to the population (social variable) because the latter determines the amount of capital and labour as factors of production. Hence, the core of the econometric model has been built on the exogenous growth theory proposed by Solow (1956) and explained in Barro and i-Martin (2004). However, it was found in literature review that this theory was also criticised. The models has been enhanced by inclusion of additional variables to make it more complicated and create a representation of social infrastructure, which is a key focus of the research.3.2. Research Instruments, Approach and SamplingBased on the research model presented by Moradi and Baten (2005) and Newman and Tomson (1989), this investigation is focused on the changes in economic growth as a result of a number of social and economic variables that have been described. Researchers Thomas (2003) and Creswell (2009) provide models of empirical research, emphasising a unique link between both quantitative (statistical, data-driven) and qualitative (phenomenological, experience-driven) data streams. Their mixed method research approach places one of these two methods in a primary position over the other, allowing the subsequent research to serve as a validation mechanism.The data used in the dissertation is entirely based on economic development statistics within the Sub-Saharan African counties . However, the various phenomena, which contribute to such development, are of primary concern for the relevance and validity of this investigation. Therefore, a mixed method research approach was chosen for the study. Using this method, statistical findings will be achieved and later compared with various economic and social phenomena across the surveyed nations.Because there are 33 different nations currently associated with Sub-Saharan Africa, this research has chosen a sample of the top 23 countries in terms of population, attempting to retrieve data that is directly relevant to the conceptualisation of the long term sustainable growth and the impact of the social infrastructure on this process. Non-probability sampling technique has been implemented in choosing the countries. This decision may be justified by the fact that total population represented by the 33 countries in Sub-Saharan region is quite small and could be used without picking a sample. However, sampling was neede d since a limited amount of data was available for the countries. Historical statistics have been gathered from Penn World Table, International Monetary Fund (IMF, 2010) and World Bank (2010) database. These sources provided information for only 23 counties in the Sub-Saharan region.3.3. Strategy of ResearchWhile all of Africa could have provided very general information relative to the development of these nations as a conglomerate, it was important to evaluate the social infrastructure of these nations to narrow the scope of the research. The case study research strategy has been employed in order to investigate the social and economic situation in all the companies within the chosen sample. The case study strategy, which was popularised by Yin (2009), allows the researcher to extract particular data from complex problems and identify those variables, which are most significant. Furthermore, this strategy allows for effective exploration of both the statistics and context of the p roblem (Saunders et al, 2007, p.119).Yin (2009) presents a model of the investigative case study, suggesting that the breadth and focus of research questions will ultimately define the methods employed during the study. His validation of the case study strategy as a valuable tool within academic research is based on the depth and scope of the data generated from such investigation (Yin, 200914). Following such case study guidance and the mixed method approach previously discussed, this research was conducted in an effort to determine whether or not the social infrastructure has a direct and measurable impact on overall economic performance of the countries in Sub-Saharan region.The data sources were retrieved from two globally respected sources The World Bank and the International Monetary Fund (IMF). Economic indicators were also gathered from Penn World Table. These databases have compiled specific economic and social data on the majority of the nations in the world, providing a r esource for academics and policymakers. While the World Bank (2010) remained the primary source of the data, the IMF (2010) database was used for comparative purposes and in order to identify several variables not found within the World Bank annals. All analysis was conducted using Microsoft Excel and Eviews 6 statistical package.3.4. LimitationsAs previously mentioned, the scope of the research in this empirical case study was limited to the top 23 countries in Sub-Saharan region. This limitation arose from the lack of economic and social data for the rest ten countries in the region. World Bank (2010) provided most but not all information that was needed.Another important limitation of the research, which is worth noting, is the lack of observations for several social indicators. It was noted previously that the sample of data covers 23 countries with the time range from 1980 to 2009. While many of the economic variables such as GDP were available for this period, some social indi cators such as mortality rate were available only for a period of up to 5 years. Therefore, the overall sample will have to be shrunk to run the regression with these variables that have fewer observations. This is expected to have a negative impact on the accuracy of the study and estimated statistics.Chapter 4 Data Presentation and AnalysisWorld Bank (2010) has provided economic and social data for twenty three countries in Sub-Saharan region. However, most of the data contained missing points. In order to avoid the problem of missing points, sixteen Sub-Saharan countries have been selected to be analysed for which more complete data was available.The data ranges from 1980 to 2008. However, some of the social indicators such as health expenditure and mortality rate were available only for a limited time period. The health expenditure indicator was available only for a period from 2003 to 2007. Mortality rate indicator was available only for a period from 1998 to 2008. Due to the d ifferences in the time period of data several panel regressions will be run and the best model will be chosen by means of the Hausman test.Panel regression analysis has provided a number of advantages to the research project. First of all, it has allowed for gathering a large number of observations that totalled 4,250. If only time-series analysis was used, there would have been fewer observations. Similarly, in a cross sectional analysis the number of observations would solely depend on the number of countries included. Panel regression analysis has allowed for combining both time and cross sectional dimensions making the analysis more advanced. Secondly, another advantage of using the panel data analysis was higher degrees of freedom. This is a result of the more observations that the method has provided. Degr