Dynamics of human capital investment and productivity growth in sub-Sahara Africa: An empirical assessment.

摘要

Rising poverty levels in Africa are impeding the continent's participation as a viable global trade and investment partner. To explain this trend, especially in Sub-Saharan Africa (SSA) where poverty is acute, researchers and other policy makers have focused on inadequate foreign direct investment, perverse macroeconomic policies, corruption, political instability and adverse terms of trade as the root cause of development challenges facing the region. However, it is true that a dearth of human capacities and widening socio-economic inequalities over the years have hampered sustainable growth in the region.; Broadly, the education level of a country's population is one of the elements that can be expected to explain its ability to absorb information and new technology. Various studies have shown that the relevance of human capital investment to the process of economic development arises from its potential impact on macroeconomic productivity and long-term income distribution. Covering the period 1970--2000, this study seeks to reconcile Pritchett (2001) micro-macro paradox observation that; despite the apparent high returns to years of schooling in SSA (13.4%) compared with OECD countries (6.8%), growth rates in SSA are still dismal. In addition to Pritchett's (2001) arguments, this study posits that absence of externalities associated with human capital investment and a widening education gender gap in SSA contributes to its relatively low level of economic growth performance. Further, lack of free and compulsory primary (universal) education system in SSA creates dynamic inefficiency in these economies.; In the empirical section, controlling for fixed effects as well as endogeneity, this study utilizes the GMM estimation technique in a panel data analysis to obtain unbiased and consistent estimates. The hypothesis here is that an increase in human capital investment, through education, not only alleviates poverty and reduces inequalities but also brings about positive long-term growth in the economy. In addition, and consistent with convergence theories in growth models, we test whether an increase in education attainment corresponds to growth in per worker productivity and also if convergence in per worker productivity levels among SSA countries correspond to their convergence in schooling levels during the period under study (1970--2000). Finally, policy recommendations, conclusions and suggestions for further research are offered, given findings from the study.