The business environment and economic development: How the ease of doing business in sub-Saharan Africa relates to its economic growth

This paper investigates the business environment in sub-Saharan Africa. Previous studies show that the ease of doing business is associated with economic growth as it affects the level of business. This study aims to examine whether the ease of doing business performance is related to economic growth in sub-Saharan Africa and whether certain ease of doing business indicators are particularly important. Using panel data for 44 countries from 2006–16 and fixed effects analysis, I find mixed effects on gross domestic product for the different ease of doing business indicators. However, principal component analysis reveals that the combined ease of doing business index is positively related to a country’s gross domestic product. Similar results are obtained when the sample is classified by income and democracy levels. It is therefore important for sub-Saharan African countries to make efforts to create a conducive business environment as this will promote business prosperity and economic development.