Methodology Empirical model

The questions this chapter seeks to answer are: whether colonial origin really matters for post-independence economic growth in SSA, and if yes, what are its channels of transmission?

To answer these questions, I specify the regression model as follows:

Where:

  • - GROWit is the per capita GDP growth of country i in year t.
  • - p, y, n, and 5 are vectors of coefficients, while ^ is a vector of individual country effects reflecting unobservable country heterogeneity and eit is the remainder (non-systematic) disturbance term.
  • - COLOi is a matrix of colonial origin dummies comprising BCORG (which takes the value 1 for British colonial origin and zero otherwise), FCORG (which takes the value 1 for French colonial origin and zero otherwise) and PCORG (which takes the value 1 for Portuguese former colonies and zero otherwise) and BECORG (which takes the value 1 for Belgian former colonies and zero otherwise).15
  • - TRANSMit is a matrix of variables that serve as probable transmission channels between colonial origin and growth.
  • - INTERACTit is a matrix of interaction terms linking colonial origin dummies (COLOi) with the transmission mechanisms (TRANSMit). A model with interaction terms can be presented in a simplified form as:

where X1 and X2 represent the matrix of transmission channels and the vector of colonial origin dummies respectively. Thus,

tells us whether the Impact of a specific transmission channel Is significantly different across colonial origins.

- CONTROLSit is a matrix of control variables that are standard in the growth

literature, in addition to controls for the duration of colonization.

 
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