Modeling Institutional Reengineering for Inclusive Development (IRID) in Africa

Abstract

Inclusive development is a newly emerging notion that is gaining substantial attention, especially in international civil societies. The aim of this study, therefore, is to discuss the drivers of inclusive development in Africa, paying special attention to the political economy and structural change variables. Ordinary Least Squares regression is run in STATA 14 to test if there are statistically significant correlations between the five-year average scores of inclusive development index (IDI) as an endogenous variable and (proxies of) the five-year trend in economic growth, technology, structural change, trade, and political economy as exogenous variables. The panel data are pooled from 21 African countries among which 9 countries are landlocked. The regression is run in two scenarios. As an alternative scenario, IDI is pooled from the World Economic Forum (WEF) 2017 report and used as a dependent variable. In the other scenario, IDI is computed by incorporating variables relevant to the African context then used as a dependent variable. In the IRID customized version, the five-year trends of GDP, health facility, the institutional and structural change variables viz. democracy and employment opportunity in the industry sector are statistically significant determinants of inclusive development. Accordingly, an inference is drawn claiming that inter alia a nation is as prosperous, inclusive and resilient as the quality of its governance institutions and enforcement capability. This is in line with the conventional thought in African studies which claim that a natural resource endowment per se is not the sole determinant of development. Finally, to anchor IDI with a pragmatic paradigm, a three-stage institutional reengineering model is proposed which could be applied in different development governance endeavors.