The Spatial Spillover Effect of Institutional Quality on the Path to Sustainable Socioeconomic Development in Africa

ABSTRACT Africa's sustainable socioeconomic development is increasingly challenged by institutional disparities, where weak governance undermines progress in human capital indicators such as life expectancy and educational attainment. Despite recognition of institutional quality's role in fostering transparency, accountability, and stability, existing research often overlooks its spatial spillover effects across interconnected African nations. This study aims to examine the direct and spillover impacts of institutional quality proxied by transparency (corruption perception), rule of law, and political stability on life expectancy and mean years of schooling in 42 African countries over the period 2012–2022. Employing spatial panel econometric models, including the Spatial Durbin Model (SDM), Spatial Autoregressive Model (SAR), and Spatial Error Model (SEM), the analysis controls for GDP per capita and population growth. The results reveal significant positive spatial autocorrelation in both outcomes (Moran's I: 0.536 for life expectancy; 0.469 for schooling). For life expectancy, institutional quality (particularly the rule of law) exhibits strong positive direct and spillover effects, amplified by regional GDP and population dynamics, indicating that governance improvements in one country enhance health outcomes in neighbors through policy diffusion and cross‐border cooperation. In contrast, educational attainment shows no significant spillovers, driven primarily by domestic GDP, population, and rule of law, highlighting fragmented regional education systems. These findings underscore institutional quality as a regional public good, offering nuanced insights for harnessing spatial interdependence in Africa's development agenda.