We address the question whether sub-Saharan African countries have lower average growth rates in real GDP per capita than countries in Asia, Latin and Middle America and the Middle East. In contrast to previous studies, countries are no a priori assigned to clusters based on geographical location. Instead, we propose a latent-class panel time series model, which allows a data-based classification of countries into clusters such that within a cluster countries have the same average growth rate. Our empirical results suggest that three clusters are sufficient to describe the different growth paths. Twenty-six African countries belong to the low growth cluster, but 8 African countries show growth rates comparable with many countries in Asia, Latin and Middle America and the Middle East.

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Keywords Economic growth, Latent class models, Panel time series
JEL Time-Series Models; Dynamic Quantile Regressions (jel C32), Models with Panel Data (jel C33), Economic Growth and Aggregate Productivity (jel O4), Comparative Studies of Countries (jel O57)
Persistent URL dx.doi.org/10.1016/j.jdeveco.2004.05.001, hdl.handle.net/1765/11142
Journal Journal of Development Economics
Paap, R, Franses, Ph.H.B.F, & van Dijk, D.J.C. (2005). Does Africa grow slower than Asia, Latin America and the Middle East? Evidence from a new data-based classification method. Journal of Development Economics, 77(2), 553–570. doi:10.1016/j.jdeveco.2004.05.001