Institutional Quality and Sustainable Development: Empirical Evidence from Anglophone West African Countries

Abstract

This study examines the relationship between institutional quality and sustainable development outcomes in four Anglophone West African countries consisting of Ghana, The Gambia, Nigeria, and Sierra Leone, over the period 1996 – 2024. Utilising a balanced panel of 116 country-year observations and employing three complementary estimation strategies, pooled fixed effects with Driscoll-Kraay standard errors, the Pooled Mean Group (PMG) estimator of Pesaran, Shin, and Smith (1999), and a Dynamic Fixed Effects (DFE) robustness check. The study tests whether all six dimensions of the World Bank's Worldwide Governance Indicators (WGI) systematically influence SDG Index scores. Panel unit root tests confirmed integration of order one for all series; Pedroni and Kao cointegration tests establish a stable long-run equilibrium, justifying the error-correction framework. The PMG results reveal that government effectiveness (θ̂ = 0.287, p < 0.001) and rule of law (θ̂ = 0.261, p < 0.001) are the dominant long-run drivers of sustainable development performance. The speed-of-adjustment coefficient (φ̂ = −0.312, p < 0.001) implies that approximately 31% of deviations from the long-run equilibrium are corrected annually, which is consistent with the gradual, path-dependent nature of institutional change. A Hausman test (χ² = 8.43, p = 0.208) confirms the PMG over the unrestricted Mean Group estimator. Cross-sectional dependence, assessed via the Pesaran (2004) CD test, is addressed through Driscoll-Kraay corrections. The findings provide robust empirical support for the proposition that institutional quality is not merely ancillary to SDG progress but constitutive of it. Policy implications point to the primacy of state capacity building, anti-corruption reform, and regulatory institution development as long-run prerequisites for accelerating sustainable development in the sub-region.