Tax revenue mobilisation and economic growth across African economies under entrepreneurial fiscal and institutional conditions
Year: 2026
Type: article
Abstract: Tax revenue mobilisation, entrepreneurial ecosystem development, fiscal sustainability, and institutional quality are widely recognised as important determinants of economic performance, yet their combined relationships remain insufficiently understood within the African context. This study examines the relationships among these factors and economic growth across 35 African economies over the period 1991–2024 using a harmonised balanced panel comprising 1,190 country-year observations. Economic growth is measured by annual GDP per capita growth, while regulatory quality, operationalised as a dimension of institutional quality, is examined as the conditioning institutional factor. The empirical analysis employs a Two-Way Fixed Effects estimator with Driscoll–Kraay standard errors, complemented by Panel Threshold Regression, Panel Quantile Regression, Feasible Generalised Least Squares, and Panel-Corrected Standard Errors to evaluate the robustness and heterogeneity of the estimated relationships. In addition, XGBoost and Random Forest algorithms, interpreted using SHAP feature importance analysis, provide complementary evidence on the predictive contribution of the explanatory variables. The findings indicate that tax revenue mobilisation, domestic credit to the private sector, regulatory quality, and the interaction between tax revenue mobilisation and regulatory quality are significantly associated with economic growth across the principal econometric specifications. The threshold and quantile regression analyses further reveal that several estimated relationships vary across institutional regimes and different segments of the conditional growth distribution, highlighting important heterogeneity in the fiscal-growth relationship. The complementary machine-learning analysis consistently identifies regulatory quality, tax revenue mobilisation, and domestic credit to the private sector as leading predictors within the fitted models, although their predictive importance does not imply causal importance or economic effect size. Overall, the findings suggest that the relationship between fiscal policy and economic growth is conditioned by institutional quality. Accordingly, the results indicate that domestic revenue mobilisation may be more supportive of growth when accompanied by stronger regulatory institutions, more effective financial intermediation, and supportive entrepreneurial conditions. By integrating complementary econometric and machine-learning approaches within a unified analytical framework, this study provides evidence of heterogeneous conditional associations and complementary predictive relationships among fiscal policy, institutions, entrepreneurship, and economic growth across African economies.
Source: Discover Global Society
Author: Solberg Horve Mishiwo
Institution: University of Education, Winneba
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: gold
Estimated APC paid: $1,390
OpenAlex ID: W7221818648