Current Account and Institutional Quality in Sub-Saharan Africa: an Empirical Investigation

This paper investigates the effects of institutional quality on current account balance in a sample of 44 sub-Saharan African countries over the period 1996–2019. The system generalized method of moments approach is privileged for estimations. Our findings show that institutional quality is a determinant of current account balance for sub-Saharan African countries. Specifically, political stability and absence of violence, regulatory quality, control of corruption, and government effectiveness are indicators that are robust and significant determinants of current account balance. Some robustness tests performed confirm our results. These findings indicate that governments in this region should improve institutional quality through strengthening the political environment, reducing corruption, and enabling conditions of private sector development.