The relationship between human capital and economic growth in Sub Saharan Africa

Abstract

Studies on economic growth assert that human capital is one of the key drivers of economic growth but these studies do not inevitably conclude about the gender composition of human capital. This study, therefore examined the relationship between gender inequality in human capital and economic growth in Sub-Saharan Africa using data from Barro and Lee dataset 2013 and the World Bank, World Development Indicators (WDI) for 27 sub Saharan African countries for the period 1990 to 2015. To account for the convergence tendency, Gross National Income (GNI) per capita for 1990 was used as a variable for initial conditions. In the study, gender inequality in human capital was measured using a female-male ratio of the mean years of schooling. The results were estimated using Pooled Ordinary Least Square (OLS), Fixed Effect, and Random Effect estimators. This study also addressed endogeneity problems by using an instrumental variable for Random Effect (IV-RE) with lagged values of mean years of schooling as the instruments. The results indicate that gender inequality against females and males is associated with lower economic growth outcomes and that improvement in the quality of education for both males and females is associated with an increase in Gross Domestic Product (GDP) growth rate. The findings of the study, therefore, imply that policy measures implemented to promote human capital accumulation should not only focus on the level but also take into account the distribution and composition of human capital, striking a balance between male and female. Keyword: Economic Growth, Human Capital, Gender Inequality