Abstract This study examines the relationship between institutional quality, domestic investment, and inclusive growth in selected oil- and non-oil-exporting Sub-Saharan African countries over the period 2000-2023. Despite sustained economic growth in the region, inclusive development outcomes remain weak, raising concerns about the effectiveness of institutions and investment in translating growth into broad-based welfare gains. Inclusive growth and institutional quality indices are constructed using principal component analysis, while gross capital formation proxies domestic investment. Guided by endogenous growth theory, the study employs second-generation panel econometric techniques, Feasible Generalized Least Squares (FGLS), and pairwise Granger causality tests to address cross-sectional dependence, heteroskedasticity, and endogeneity issues. The results show that institutional quality has a positive and statistically significant effect on inclusive growth in both country groups, with a stronger impact in oil-exporting economies (β = 0.7880) than in non-oil exporters (β = 0.6976). Domestic investment significantly promotes inclusive growth in oil-exporting countries (β = 0.0669) but has no significant effect in non-oil-exporting economies. The study concludes that policymakers should prioritize strengthening governance institutions, improving regulatory quality, and enhancing accountability mechanisms to maximize the inclusive growth benefits of domestic investment in Sub-Saharan Africa. JEL Classification Codes: O43; E22; O55.
YANRIN et al. (Fri,) studied this question.