Convergence and divergence of adjusted net national income per capita and GDP per capita in Sub-Saharan Africa

This paper uses a novel approach that combines a non-conventional indicator of income inequality (the "Adjusted Net National Income per capita" – ANNIPC) together with the traditional indicator (the "GDP per capita" – GDPPC) to test for income convergence and divergence. In addition, the paper evaluates the effects of inflation, gross fixed capital formation, unemployment, labour force, and institutional factors on ANNIPC and GDPPC using the spatial lag and OLS regression models. The results of income convergence and divergence tests for both ANNIPC and GDPPC reveal comparable patterns, with a diverging trend being apparent in the initial period (1971–1994) succeeded by a converging trend in the subsequent years (i.e., 1995 to the early 2020s). The results of the spatial regression indicated that overall, the models were statistically significant due to the inclusion of spatial components. However, the individual predictors did not significantly explain the variability in ANNIPC and GDPPC. On the other hand, the Ordinary Least Squares (OLS) results revealed that GDPPC was significantly influenced by gross capital formation, unemployment, and the total labour force. We underscore the need for policymakers and stakeholders aiming to enhance the economic prospects of Sub-Saharan Africa (SSA) to consider the complex relationships between inflation, gross capital formation, and labour dynamics. Strategies should not only address immediate economic concerns but also focus on promoting sustainable and inclusive growth for the future.