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Education and economic growth in Cape and Natal colonies: learning from history

Biyase, Mduduzi (2018): Education and economic growth in Cape and Natal colonies: learning from history.

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Abstract

This paper uses archival data from colonial South Africa over the 1859–1910 period to investigate the impact of education on economic growth. The analysis applies fixed effect to account for unobserved colony-level heterogeneity and minimise the omitted variable bias. It also employs fixed effects two-stage least squares (FE-2SLS) estimator to account for a possible endogeneity bias due to reverse causation between economic growth and education or other forms of endogeneity problem. The results suggest that levels of education (proxied by spending on education) have a robust positive impact on economic growth. Results are robust to addressing the potential reverse causality of education influencing economic growth and using alternative measures of education (proxied by enrolment rate).

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