The Nexus Between Economic Institutions and Multidimensional Poverty in Sub-Sahara Africa

This paper investigated the impact of ten different components of economic freedom on multidimensional poverty, poverty headcount ratio, intensity of poverty, vulnerability to poverty, severity of poverty, as well as inequality among the poor. Panel data covering 37 countries in Sub-Sahara Africa (SSA) was analysed using Fixed and Random Effects approaches, while the Hausman specification test was helpful in choosing the lead model between Fixed and Random effects models. The findings revealed that institutions that encourage, support, and protect private-sector economic activities such as investment freedom, business freedom, and protection of property rights were most important in reducing poverty. While other indicators of institutions including tax burden, government spending, labour freedom, monetary freedom, and trade freedom do not have a significant influence on poverty. Therefore, policymakers should strengthen the institutions that have a bearing on starting and running a business, contract enforcement, and protection of private property including intellectual property.