Human capital investment, productivity and economic growth in selected Sub Saharan African countries

Mutambirwa, Edward https://orcid.org/0000-0002-9010-1950

Title: Human capital investment, productivity and economic growth in selected Sub Saharan African countries
Creator: Mutambirwa, Edward https://orcid.org/0000-0002-9010-1950
Subject: Human capital -- Africa, Sub-Saharan
Subject: Economic development -- Africa, Sub-Saharan
Subject: Capital investments -- Africa, Sub-Saharan
Date: 2023-11
Type: Doctoral theses
Type: text
Identifier: http://hdl.handle.net/10353/28639
Identifier: vital:74481
Description: Many Sub-Saharan African (SSA) countries experience low economic growth rate levels which is worrisome given the demographic window of opportunities in the region. The governments of SSA countries have been putting emphasis on increasing investments in human capital development as it is vital in unlocking potential economic growth through enhancing regional productivity. With this in mind, this study examined the effect of human capital investment on economic growth through productivity in 12 selected SSA countries during the period 2000 to 2017. The selection of these countries and the study period were based on the data availability as well as differences in income growth. The sample represents all the countries in the income growth groups which are low income, lower middle income and upper middle income. In order to examine the overall effect of human capital investment on economic growth the study utilizes two models which are: 1. Human capital investment and productivity in selected SSA countries. 2. Human capital investment and economic growth in selected SSA countries. Model 1 objective of the study was to investigate the effect of human capital investment on productivity in the selected SSA countries. Productivity proxied by labour productivity measured by real output per person employed was the dependent regressed against a host of independent variables which includes human capital investment, foreign direct investment (FDI), total factor productivity (TFP) and labour quantity growth (LQ).The human capital investment components used in the model included: fiscal expenditure on primary education (PEI), secondary education(SEI), tertiary education (TEI) all as a percentage of government expenditure on education; public health(PHI) as a percentage of GDP and domestic private health (DPHI) as a percentage of current health expenditure. Several estimation techniques which include the Pooled Mean Group (PMG), Panel Fully Modified Ordinary Least Square (PFMOLS) and Panel Dynamic Ordinary Least Square (PDOLS) were employed to analyse the relationship between the variables of interest. The empirical findings indicated that all human capital investment components contribute positively to labour productivity except tertiary education investment which had a negative effect. Moreover, the empirical findings also revealed that foreign direct investment and total factor productivity had positive effects on labour productivity while labour quantity growth had a negative effect. Model 2 objective examined the effect of productivity enhanced human capital on economic growth in the sample of countries. It also incorporated the direct channel of the effect of human capital on economic growth in the stated countries. Economic growth (EG) proxied by real GDP growth as the dependent variable and, on the other hand, explanatory variables being productivity enhanced human capital investment (PEHC), human capital (HC), gross fixed capital formation (GFCF), population growth (POP), institutional quality proxied by government effectiveness (GE) and political stability (PS). The same estimation techniques were also employed so as to obtain robust results. The empirical findings revealed that both productivity enhanced human capital investment and human capital contributes positively to economic growth in the selected SSA countries. In addition, the empirical results also proved that gross fixed capital formation, government effectiveness and political stability have positive effects on economic growth whilst population growth has a negative effect. Overall, the results of the study evidenced the existence of a transfer mechanism from human capital investment to economic growth through productivity in the selected SSA countries. The empirical results imply that increasing investment on human capital is of importance in trying to enhance productivity and through this economic growth in the SSA region. The study concludes that there is a potential on enhancing economic growth in the long run in the SSA region if countries invest more on human capital. Therefore, the study recommends that SSA countries must devote more budget to human capital so that free basic education can be offered in both primary and secondary as well as free health care services. With this, the objectives of quality education and health, sustainable and inclusive growth targets of the African Union (AU) Agenda 2063 as well as United Nations (UN) Sustainable Development Goals (SDGs) can be achieved.
Description: Thesis (PhD) -- Faculty of Management and Commerce, 2023
Format: computer
Format: online resource
Format: application/pdf
Format: 1 online resource (xix, 201 pages)
Format: pdf
Publisher: University of Fort Hare
Publisher: Faculty of Management and Commerce
Language: English
Rights: rights holder
Rights: All Rights Reserved
Rights: Open Access

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