The human capital-economic growth nexus in SSA countries: What can strengthen the relationship?

Karambakuwa, Tapuwa and Ncwadi, Ronney and Phiri, Andrew (2019): The human capital-economic growth nexus in SSA countries: What can strengthen the relationship?

Abstract

The World Bank has recently placed increasing emphasis on the role of human capital development in facilitating economic development in the Sub-Saharan African (SSA) region. Our study examines the impact of human capital on economic growth for a selected sample of 9 SSA countries between 1980 and 2016 using a panel econometric approach. Interestingly enough, our empirical analysis shows an insignificant effect of human capital on economic growth for our selected sample. These findings remain unchanged even after adding interactive terms to human capital which are representative of government spending as well as foreign direct investment. Nevertheless, we establish a positive and significant effect of the interactive term between urbanization and human capital on economic growth, a result which emphasizes the importance of developing urbanized, ‘smart’, technologically-driven cities within the SSA region as a platform towards strengthening the impact of human capital- economic growth relationship.

• Item Type: MPRA Paper
• Language: English
• Keywords: Human capital, economic growth; Sub-Saharan Africa (SSA) countries; foreign direct investment (FDI); Government spending; Urbanization
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C13 - Estimation: General; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C23 - Panel Data Models ; Spatio-temporal Models; C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C51 - Model Construction and Estimation; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J24 - Human Capital ; Skills ; Occupational Choice ; Labor Productivity; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence

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