# The Africa-Dummy: Gone with the Millennium?

## TL;DR

This paper introduces a fixed effects regression method to accurately estimate the Africa-Dummy, revealing its decline over time and different returns to growth factors in Sub-Saharan Africa compared to other regions.

## Contribution

It presents a novel fixed effects estimator for the Africa-Dummy that accounts for standard errors and correlations, and analyzes its temporal evolution and regional differences.

## Key findings

- The Africa-Dummy's effect has significantly decreased over time.
- Returns to growth factors differ for Sub-Saharan Africa.
- The Nickel bias is negligibly small.

## Abstract

A fixed effects regression estimator is introduced that can directly identify and estimate the Africa-Dummy in one regression step so that its correct standard errors as well as correlations to other coefficients can easily be estimated. We can estimate the Nickel bias and found it to be negligibly tiny. Semiparametric extensions check whether the Africa-Dummy is simply a result of misspecification of the functional form. In particular, we show that the returns to growth factors are different for Sub-Saharan African countries compared to the rest of the world. For example, returns to population growth are positive and beta-convergence is faster. When extending the model to identify the development of the Africa-Dummy over time we see that it has been changing dramatically over time and that the punishment for Sub-Saharan African countries has been decreasing incrementally to reach insignificance around the turn of the millennium.