Knowledge-Based Economy Capacity Building for Developing Countries: A Panel Analysis in Southern African Development Community

• Main Authors: Koketso Phale, Li Fanglin, Isaac Adjei Mensah, Akoto Yaw Omari-Sasu, Mohammed Musah
• Format: Article
• Language: English
• Published: MDPI AG 2021-03-01
• Series: Sustainability
• Subjects: knowledge-based economy; economic growth; panel analysis; capacity building; Southern African Development Community
• Online Access: https://www.mdpi.com/2071-1050/13/5/2890

The Southern African Development Community is lagging behind in terms of knowledge economy relative to other regions worldwide. This dramatically reduces the chances of keeping up with their economically established counterparts in terms of sustainable development. This paper therefore, applies multivariate panel data analysis which is predicted on the Cobb–Douglas production function to analyze the affiliation flanked by knowledge-based economy pillars and economic growth from 1998–2018. The World Bank knowledge-based economy framework is employed. To achieve the study goal, the long-run effect regarding proxies of each pillar in the knowledge-based economy on economic growth is first estimated. Afterwards, the average impact of each pillar is examined using the average impact index (AII). Employment of both conventional unit root and co-integration tests showed all observed series are stationary and co-integrated. Further estimation of the long-run relationship using both static and dynamic models (fixed effect and generalized method of moment) portrayed that government effectiveness, adjusted savings on education expenditure, tertiary enrollment, scientific and technical journals, and mobile cellular subscriptions have significant positive impact on economic growth. Finally, the AII estimation unveiled that the innovation pillar is the most impactful aspect on economic growth followed by education and skills with the least being information and communication technology infrastructure. Feasible policy recommendations are further suggested.