Technological Innovation, Governance Institutions, Infrastructure Development, and Economic Complexity in Africa: Evidence from Dynamic Panel Data

Abstract

Africa continues to face persistent development challenges, including poverty, income inequality, limited access to healthcare services, and disparities in education. These challenges contradict the objectives of the Sustainable Development Goals (SDGs), which emphasize the importance of innovation, infrastructure development, and strong institutions. Technological innovation has increasingly been recognized as a key channel for promoting infrastructure development, improving economic complexity, and strengthening institutional performance. Motivated by these considerations, this study examines the combined effects of technological innovation, governance institutions, human capital development, infrastructure, and foreign direct investment on economic complexity in Africa. In addition, the study investigates how technological innovation, governance institutions, remittances, foreign direct investment, and economic complexity influence infrastructure development across African economies. The analysis employs the system generalized method of moments (system GMM) estimator using panel data for 31 African countries covering the period from 2011 to 2020. The results reveal that technological innovation has a positive and statistically significant effect on both economic complexity and infrastructure development in Africa. However, the indicators of governance institutions are largely negative and statistically insignificant in their influence on economic complexity and infrastructure. Furthermore, governance institutions do not significantly moderate the relationship between technological innovation and these development outcomes. These findings highlight the importance of strengthening technological innovation systems while addressing institutional weaknesses to promote sustainable economic development across the African continent.