current account balance are positive and significant in regression [2] of Table 1, therefore, both fiscal and external savings play a role in limiting the adverse impacts of the pandemic on economic growth. Consequently, countries with smaller primary deficits or primary surpluses have space to finance policies that could help avoid deeper declines in economic growth. The same can be said about countries that have accumulated external savings (i.e. current account surpluses). Finally, the estimated coefficients of general government gross debt are negative but insignificant in most cases, and hence a country with larger general government gross debts could still face a significant decrease in economic growth.

The pandemic has adversely affected economic activity in all regions. Although economic growth declined significantly in Sub-Saharan Africa, this decline is smaller than the developing country average after controlling for an array of growth drivers (see Tables 1 to 3). Consequently, we test whether the different drivers of growth have a different impact in Sub-Saharan Africa vis-à-vis other developing countries in Table 3. We include interaction terms between the Sub-Saharan Africa dummy and selected explanatory variables —including, trade openness (level and composition by partner and product), gross capital inflows (level and composition by type of inflow), government response indicators, and health and human capital indicators. For most of the drivers, we are unable to find a significant coefficient for the interaction with SSA. Therefore, the average impact on growth for developing countries is similar to that for SSA countries. The only exception is gross capital inflows (as percentage of GDP), with a positive and significant interaction coefficient. This finding supports that the financing flow channel may be weaker in Sub-Saharan Africa when compared with other developing areas.

# **5.3 Instrumental Variables Estimation**

We conduct an in IV regression analysis to overcome endogeneity caused from a simple linear regression. The results from the 2020 human capital index (HCI) are positive and significant (i.e. 20.61 points in [2] in Table 4). Consequently, countries with higher levels of human capital (i.e. improved higher education and better health outcomes) have a higher rate of economic growth. Global health security shows a positive and insignificant coefficient, therefore, global health security matters on economic growth. The coefficient estimates of government response of both containment and health measures as well as stringency measures are robustly negative and significant. Therefore, governments measures of stringency and containment may not be providing efficient support or adequately targeting the lives and livelihoods that they want to protect. Ineffective pandemic policies can exacerbate the economy decline.

The results from IV estimations support the findings from the least squares regressions: they confirm the existence of a negative relationship between trade exposure and growth. The deleterious effects of trade exposure can be partly due to vulnerabilities to commodity price volatility. The results from trade openness and export to advanced countries are mostly negative and significant. Natural resource exports and gross capital inflows are negative and statistically not significant. The plunge in global trade as a result of the pandemic has affected more countries participating in global value chains compared with those that resort to intra-regional trade.

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