Convergence and divergence of adjusted net national income per capita and GDP per capita in Sub-Saharan Africa

Barthlomeow Reuben Kadigi; Gody J. Sanga; Charles P. Mgeni; Michael L. Kadigi

doi:10.51867/ajernet.7.1.7

Authors

Barthlomeow Reuben Kadigi Sokoine University of Agriculture, Tanzania https://orcid.org/0000-0001-8676-1852
Gody J. Sanga Sokoine University of Agriculture, Tanzania https://orcid.org/0009-0000-3435-5027
Charles P. Mgeni Sokoine University of Agriculture, Tanzania https://orcid.org/0000-0002-8054-1928
Michael L. Kadigi Sokoine University of Agriculture, Tanzania https://orcid.org/0000-0001-6860-9902

DOI:

https://doi.org/10.51867/ajernet.7.1.7

Keywords:

Income Convergence and Divergence, Institutional Factors, Gross Fixed Capital Formation, Spatial Lag and OLS Regression Models, Total Labour Force

Abstract

This paper uses a novel approach that combines a non-conventional indicator of income inequality (the "Adjusted Net National Income per capita" – ANNIPC) together with the traditional indicator (the "GDP per capita" – GDPPC) to test for income convergence and divergence. In addition, the paper evaluates the effects of inflation, gross fixed capital formation, unemployment, labour force, and institutional factors on ANNIPC and GDPPC using the spatial lag and OLS regression models. The results of income convergence and divergence tests for both ANNIPC and GDPPC reveal comparable patterns, with a diverging trend being apparent in the initial period (1971–1994) succeeded by a converging trend in the subsequent years (i.e., 1995 to the early 2020s). The results of the spatial regression indicated that overall, the models were statistically significant due to the inclusion of spatial components. However, the individual predictors did not significantly explain the variability in ANNIPC and GDPPC. On the other hand, the Ordinary Least Squares (OLS) results revealed that GDPPC was significantly influenced by gross capital formation, unemployment, and the total labour force. We underscore the need for policymakers and stakeholders aiming to enhance the economic prospects of Sub-Saharan Africa (SSA) to consider the complex relationships between inflation, gross capital formation, and labour dynamics. Strategies should not only address immediate economic concerns but also focus on promoting sustainable and inclusive growth for the future.

Downloads

Download data is not yet available.

References

Abid, I. (2025). Drivers of labour force participation and economic growth in the Gulf Cooperation Countries region: A dynamic panel analysis. International Journal of Sustainable Development and Planning, 20(5), 2065-2077. https://doi.org/10.18280/ijsdp.200523 DOI: https://doi.org/10.18280/ijsdp.200523

Aboagye, S. (2013). An empirical investigation of per capita convergence hypothesis in sub-Saharan Africa [Master's thesis, University of Ghana, Legon]. University of Ghana, Legon. https://ugspace.ug.edu.gh/bitstreams/f2f95c78-092b-4ae1-ba7c-f8c48f33f0d7/download

Acemoglu, D. (2002). Technical change, inequality, and the labour market. Journal of Economic Literature, 40(1), 7-72. https://doi.org/10.1257/0022051026976 DOI: https://doi.org/10.1257/jel.40.1.7

Acemoglu, D., Johnson, S., & Robinson, J. A. (2001). The colonial origins of comparative development: An empirical investigation. American Economic Review, 91(5), 1369-1401. https://www.sciencedirect.com/science/article/pii/S1574068405010063#bbib006

https://doi.org/10.1257/aer.91.5.1369 DOI: https://doi.org/10.1257/aer.91.5.1369

Acemoglu, D., Johnson, S., & Robinson, J. A. (2005). Institutions as a fundamental cause of long-run growth. In P. Aghion & S. N. Durlauf (Eds.), Handbook of Economic Growth (Vol. 1, Pt. A, pp. 385-472). Elsevier. https://doi.org/10.1016/S1574-0684(05)01006-3 DOI: https://doi.org/10.1016/S1574-0684(05)01006-3

Aitken, A. (2019). Measuring welfare beyond GDP. National Institute Economic Review, 249(1), R3-R16. https://doi.org/10.1177/002795011924900110 DOI: https://doi.org/10.1177/002795011924900110

Alemu, M., Jayamohan, M. K., & Mulugeta, W. (2025). Convergence in sectoral value-added and income per capita: Comparing fragile, resource, and emerging economies in Africa. Research in Globalisation, 11, 100302. https://doi.org/10.1016/j.resglo.2025.100302 DOI: https://doi.org/10.1016/j.resglo.2025.100302

Allard, C. (2017). The informal economy in Sub-Saharan Africa. IMF eLIBRARY. https://www.elibrary.imf.org/display/book/9781475574463/ch003.xml

https://doi.org/10.5089/9781484305942.001 DOI: https://doi.org/10.5089/9781484305942.001

Assèdé, E. S. P., Biaoua, S. S. H., Chirwa, P. W., Tonouéwa, J. F. M. F., & Valdés Velarde, E. (2023). Low-cost agroforestry technologies for climate change mitigation and adaptation in Sub-Saharan Africa: A review. Bois et Forêts des Tropiques, 356, 29-42. https://doi.org/10.19182/bft2023.356.a36908 DOI: https://doi.org/10.19182/bft2023.356.a36908

Barro, R. J. (1991). Economic growth in a cross section of countries. Quarterly Journal of Economics, 106(2), 407-443. http://piketty.pse.ens.fr/files/Barro91.pdf

https://doi.org/10.2307/2937943 DOI: https://doi.org/10.2307/2937943

Barro, R. J., & Sala-i-Martin, X. (1992). Convergence. Journal of Political Economy, 100(2), 223-251. https://doi.org/10.1086/261816 DOI: https://doi.org/10.1086/261816

Baten, J. (2018). Global inequality: A new approach for the age of globalisation (Book review). By B. Milanovic. The Journal of Economic History, 78(1), 316-318. https://doi.org/10.1017/S0022050718000025 DOI: https://doi.org/10.1017/S0022050718000025

Baumol, W. J. (1986). Productivity growth, convergence, and welfare: What the long-run data show. American Economic Review, 76, 1072-1085. http://piketty.pse.ens.fr/files/Baumol1986.pdf

Bergeaud, A., Cette, G., & Lecat, R. (2020). Convergence of GDP per capita in advanced countries over the twentieth century. Empirical Economics, 59(5), 2509-2526. https://doi.org/10.1007/s00181-019-01761-x DOI: https://doi.org/10.1007/s00181-019-01761-x

Bosworth, B. P., & Collins, S. M. (2003). The empirics of growth: An update. Brookings Papers on Economic Activity, 34(2), 113-206. https://www.brookings.edu/wp-content/uploads/2003/06/2003b_bpea_bosworth.pdf

https://doi.org/10.1353/eca.2004.0002 DOI: https://doi.org/10.1353/eca.2004.0002

Breusch, T. S., & Pagan, A. R. (1979). A simple test for heteroscedasticity and random coefficient variation. Econometrica, 47(5), 1287-1294. https://doi.org/10.2307/1911963 DOI: https://doi.org/10.2307/1911963

Burkett, P., & Hart-Landsberg, M. (2003). Development, crisis, and class struggle in East Asia: A reply. Historical Materialism, 11, 129-145. https://doi.org/10.1163/156920603321624767 DOI: https://doi.org/10.1163/156920603321624767

Choi, C., Mark, N. C., & Sul, D. C. (2006). Unbiased estimation of the half-life to PPP convergence in panel data. Journal of Money, Credit, and Banking, 38(4), 921-938.

https://doi.org/10.1353/mcb.2006.0052 DOI: https://doi.org/10.1353/mcb.2006.0052

Cyrek, M. (2025). Structural conditions of income inequality convergence within the European Union. Sustainability, 17, 6318. https://doi.org/10.3390/su17146318 DOI: https://doi.org/10.3390/su17146318

Deaton, A. (2001). Health inequality, and economic development (NBER Working Paper No. 8318). National Bureau of Economic Research. https://www.nber.org/system/files/working_papers/w8318/w8318.pdf

Ebi, B. O., & Nyong, I. N. (2020). Evaluation of convergence of per capita income and its determinants in Southern African Development Community. Journal of Economic Cooperation and Development, 41(4), 55-83. https://jecd.sesric.org/pdf.php?file=ART19091001-2.pdf

Elvis, N. T., Cheng, H., & Ingabire, P. B. (2022). The illustrative understanding on the informal sector and its influence in firm productivity in Sub-Saharan Africa (SSA): Evidence from Cameroon. Sustainability, 14(15), 9789. https://doi.org/10.3390/su14159789 DOI: https://doi.org/10.3390/su14159789

Galor, O., & Tsiddon, D. (1997a). The distribution of human capital and economic growth. Journal of Economic Growth, 2, 93-124. https://doi.org/10.1023/A:1009785714248 DOI: https://doi.org/10.1023/A:1009785714248

Galor, O., & Tsiddon, D. (1997b). Technological progress, mobility and economic growth. American Economic Review, 87(3), 363-382. https://www.jstor.org/stable/2951350

Gibescu, O.-M. (2010). Does the gross fixed capital formation represent a factor for supporting the economic growth? MPRA Paper, University Library of Munich, Germany. https://econpapers.repec.org/RePEc:pra:mprapa:50135

Gollin, D., Lagakos, D., & Waugh, M. E. (2011). The agricultural productivity gap in developing countries (IGC Working Paper F-5019-NOC-1). International Growth Centre (IGC). https://www.theigc.org/sites/default/files/2011/02/Gollin-Et-Al-2011-Working-Paper.pdf

Hartmann, D., Guevara, M. R., Jara-Figueroa, C., Aristarán, M., & Hidalgo, C. A. (2017). Linking economic complexity, institutions, and income inequality. World Development, 93, 75-93. https://doi.org/10.1016/j.worlddev.2016.12.020 DOI: https://doi.org/10.1016/j.worlddev.2016.12.020

Horvat, T., Bendix, H., Bobek, V., & Skoko, H. (2021). Impacts of investments in infrastructure projects on emerging markets' growth: The case of East African countries. Economic Research-Ekonomska Istraživanja, 34(1), 2135-2161. https://doi.org/10.1080/1331677X.2020.1860799 DOI: https://doi.org/10.1080/1331677X.2020.1860799

Huffman, N., & Huffman, W. (2021). Convergence theory and conditional income convergence among Sub-Saharan African countries. Agricultural Economics, 52(6), 915-925. https://doi.org/10.1111/agec.12670 DOI: https://doi.org/10.1111/agec.12670

Isser, D., Raballand, G., Watts, M., & Zovighian, D. (2024). Governance in Sub-Saharan Africa in the 21st century: Four trends and an uncertain outlook (Policy Research Working Paper 10713). The World Bank Group, Governance Global Practice. https://documents1.worldbank.org/curated/en/099808303042442715/pdf/IDU143e8beba17307142d319f8b1504c365946ed.pdf

Jegede, O. (2025). Leveraging innovation and global value chains participation for industrialization: An agenda for research in Africa. African Journal of Science, Technology, Innovation and Development, 17(1), 109-120. https://doi.org/10.1080/20421338.2024.2427490 DOI: https://doi.org/10.1080/20421338.2024.2427490

Jena, D., & Barua, A. (2020). Trade, governance and income convergence in the European Union: Evidence on the "theory of relative backwardness." Research in Globalisation, 2, 100013, 1-11. https://doi.org/10.1016/j.resglo.2020.100013 DOI: https://doi.org/10.1016/j.resglo.2020.100013

Kant, C. (2019). Income convergence and the catch-up index. The North American Journal of Economics and Finance, 48, 613-627. https://doi.org/10.1016/j.najef.2018.07.017 DOI: https://doi.org/10.1016/j.najef.2018.07.017

LeSage, J. P., & Pace, R. K. (2009). Introduction to spatial econometrics. CRC Press. https://doi.org/10.1201/9781420064254 DOI: https://doi.org/10.1201/9781420064254

Macuane, J. J. (2018). Mozambique's private sector in the context of conflict. International Growth Centre (IGC). https://www.theigc.org/sites/default/files/2018/10/Mozambique-case-study.pdf

McCoskey, S. K. (2002). Convergence in Sub-Saharan Africa: A nonstationary panel data approach. Applied Economics, 34(7), 819-829. https://doi.org/10.1080/00036840110061668 DOI: https://doi.org/10.1080/00036840110061668

McKnight, A. (2019). Understanding the relationship between poverty, inequality and growth: A review of existing evidence (CASEpaper 216/LIPpaper 8). Centre for Analysis of Social Exclusion, London School of Economics. https://sticerd.lse.ac.uk/dps/case/cp/casepaper216.pdf

Mensah, P. (2020). Growth convergence across countries and regions in the long run: An empirical study using panel analysis (1980-2018) [Master's thesis, Eastern Illinois University]. https://thekeep.eiu.edu/cgi/viewcontent.cgi?article=5829&context=theses

Meyer, D., & Sanusi, K. A. (2019). A causality analysis of the relationships between gross fixed capital formation, economic growth and employment in South Africa. Studia Universitatis Babe-Bolyai Oeconomica, 64(1), 33-44. https://doi.org/10.2478/subboec-2019-0003 DOI: https://doi.org/10.2478/subboec-2019-0003

Nikou, V., & Sardianou, E. (2025). The determinants of ecological footprint of production: A spatial panel data estimation. Sustainable Futures, 9, 100508. https://doi.org/10.1016/j.sftr.2025.100508 DOI: https://doi.org/10.1016/j.sftr.2025.100508

OECD. (2020). Employment outlook: Employment trends and challenges in Africa. OECD Publishing. https://www.oecd.org/content/dam/oecd/en/publications/reports/2020/07/oecd-employment-outlook-2020_19b4fc0d/1686c758-en.pdf

Ogede, J. S., Odusanya, I. A., Oduola, M. O., & Atoyebi, O. E. (2023). The role of remittances, financial inclusion and governance on economic growth in Sub-Saharan Africa. Tanzanian Economic Review, 13(1), 65-84. https://doi.org/10.56279/ter.v13i1.106 DOI: https://doi.org/10.56279/ter.v13i1.106

Onatunji, O. G. (2024). Achieving sustainable development in Sub-Saharan Africa: Do human capital and foreign direct investment matter? Managerial and Decision Economics, 45(7), 4464-4482. https://doi.org/10.1002/mde.4258 DOI: https://doi.org/10.1002/mde.4258

Ongo, E. K., & Vukenkeng, A. W. (2014). Does gross capital formation matter for economic growth in the CEMAC sub-region? EuroEconomica, 2(33), 79-88. https://ideas.repec.org/a/dug/journl/y2014i2p79-88.html

Papava, V. (2016). The problem of the catch-up effect and post-crises economic growth in the world leading countries. Bulletin of The Georgian National Academy of Sciences, 10(4), 97-104. https://www.researchgate.net/publication/311703665_The_Problem_of_the_Catch-Up_Effect_and_Post-Crises_Economic_Growth_in_the_World_Leading_Countries

Plosser, C. I., & Schwert, G. W. (1979). Potential GNP: Its measurement and significance: A dissenting opinion. Carnegie-Rochester Conference Series on Public Policy, 10, 179-186. https://doi.org/10.1016/0167-2231(79)90009-5 DOI: https://doi.org/10.1016/0167-2231(79)90009-5

Ray, V. (2019). A theory of racialized organizations. American Sociological Review, 84(1), 26-53. https://doi.org/10.1177/0003122418822335 DOI: https://doi.org/10.1177/0003122418822335

Rodrik, D. (2008). One economics, many recipes: Globalization, institutions, and economic growth (pp. 160-175). Princeton University Press. https://press.princeton.edu/books/paperback/9780691141176/one-economics-many-recipes?srsltid=AfmBOoof_KedF-NJdR4Cg_jDoYc6t7PCHEzUaD9rnAj2dSwT5Og2uxP0

Rodrik, D., Subramanian, A., & Trebbi, F. (2004). Institutions rule: The primacy of institutions over geography and integration in economic development. Journal of Economic Growth, 9, 131-165. https://doi.org/10.1023/B:JOEG.0000031425.72248.85 DOI: https://doi.org/10.1023/B:JOEG.0000031425.72248.85

Ross, M. L., & Werker, E. (2024). Diversification in resource-rich Africa, 1999-2019. Resources Policy, 104437. https://doi.org/10.1016/j.resourpol.2023.104437 DOI: https://doi.org/10.1016/j.resourpol.2023.104437

Simard, D., & Viseth, A. (2022). Chapter 3: Three strong governance performers in Sub-Saharan Africa: Achievements and way forward. IMF eLIBRARY. https://www.elibrary.imf.org/display/book/9781513584058/CH003.xml

Sofi, A. A., & Durai, A. R. S. (2016). Income convergence in India: A nonparametric approach. Economic Change and Restructuring, 49, 23-40. https://doi.org/10.1007/s10644-015-9169-3 DOI: https://doi.org/10.1007/s10644-015-9169-3

Solow, R. M. (1956). A contribution to the theory of economic growth. Quarterly Journal of Economics, 70(1), 65-94. http://piketty.pse.ens.fr/les/Solow1956.pdf

https://doi.org/10.2307/1884513 DOI: https://doi.org/10.2307/1884513

Son, H. H. (2010). Human capital development (ADB Economics Working Paper Series No. 225). Asian Development Bank. https://www.adb.org/sites/default/files/publication/28427/economics-wp225.pdf

Stupnikova, E., & Sukhadolets, T. (2019). Construction sector role in gross fixed capital formation: Empirical data from Russia. Economies, 7(2), 42. https://doi.org/10.3390/economies7020042 DOI: https://doi.org/10.3390/economies7020042

Swan, T. W. (1956). Economic growth and capital accumulation. Economic Record, 32(2), 334-361. http://dx.doi.org/10.1111/j.1475-4932.1956.tb00434.x DOI: https://doi.org/10.1111/j.1475-4932.1956.tb00434.x

Taiwo, K. (2020). Do remittances spur economic growth in Africa. Munich Personal RePEc Archive. https://mpra.ub.uni-muenchen.de/121947/1/MPRA_paper_121947.pdf

Tapkigen, J., Harding, S., Pulkki, J., Atkins, S., & Koivusalo, M. (2024). Climate change-induced shifts in the food systems and diet-related non-communicable diseases in sub-Saharan Africa: A scoping review and a conceptual framework. BMJ Open, 14, e080241. https://doi.org/10.1136/bmjopen-2023-080241 DOI: https://doi.org/10.1136/bmjopen-2023-080241

Traoré, O. (2021). Convergence in public health expenditure across the Sub-Saharan African countries: Does club convergence matter? Health Economics Review, 11, 21. https://doi.org/10.1186/s13561-021-00316-0 DOI: https://doi.org/10.1186/s13561-021-00316-0

United Nations Development Programme. (2017). Income inequality trends in sub-Saharan Africa: Divergence, determinants and consequences. Regional Bureau for Africa. https://www.undp.org/sites/g/files/zskgke326/files/migration/africa/undp-rba_Income-Inequality-in-SSA_Chapter-1.pdf

United Nations Industrial Development Organisation. (2005). Industrial development report 2005: Capability building for catching-up - Historical, empirical and policy dimensions. Vienna. https://www.unido.org/sites/default/files/files/2019-03/UNIDO_Industrial_Development_Report_2005.pdf

United Nations. (2010). Political definition of 'major regions', according to the UN. https://web.archive.org/web/20100420040243/http://esa.un.org/unpp/definition.html

World Bank Group. (2020). Sub-Saharan Africa: Poverty and equity brief. The World Bank. https://databankfiles.worldbank.org/public/ddpext_download/poverty/33EF03BB-9722-4AE2-ABC7-AA2972D68AFE/Global_POVEQ_SSA.pdf

World Bank Group. (2024). The World Bank in Africa: Overview. World Bank Group. https://www.worldbank.org/en/region/afr/overview

World Bank. (2023). Africa's pulse: An analysis of issues shaping Africa's economic future. World Bank Publications. https://thedocs.worldbank.org/en/doc/879d032aba08ace8b0b81b83503d3531-0360012023/original/Africa-s-Pulse-October-2023-Edition.pdf

Xaba, J., Horn, P., & Motala, S. (2002). Employment sector: The informal sector in Sub-Saharan Africa (Working Paper on the Informal Economy). International Labour Office. https://www.ilo.org/media/307376/download