Economic growth in Central Africa: examining the effects of electricity access, agricultural development, industrialization, governance, finance, and trade

This study provides strong evidence on the interconnected linking access to electricity (AE), agriculture (AGR), industrialization (IND), financial development (FD), trade openness (TO), and government effectiveness (GE) on economic growth over the period 2000 to 2024. Drawing on a panel of Central African nations and applying both the Panel Vector Error Correction Model (ECM) and the System GMM methodology, the VECM results reveal a speed of adjustment and confirm the existence of a stable long-run equilibrium among GDP, AE, AGR, IND, FD, TO, and GE, as demonstrated by the negative and statistically significant error correction terms at the 1% level across all equations. Additionally, access to electricity contributes to GDP and is positively associated with the 5% significance level. Agriculture and industrialization contribute strongly to GDP at the 1% significance level; thus, agriculture is still a strong base of growth, and industrialization is the strongest contributor to structural transformation and value addition. Financial development continually demonstrates a positive relationship with GDP at the 1% significance level. Government’s effectiveness demonstrates a positive and significant contribution to GDP at the 1% significance level. Conversely, trade openness does not appear to have an impact on GDP as evidenced by a lack of statistically significant results; thus, Middle African countries continue to experience structural limitations and remain less competitive and disconnected from the global value chain. Therefore, System GMM estimates confirm the VECM results and that growth of Middle African Countries resulted from multiple interrelated factors rather than a single driver.