Do human capital development and globalization matter for productivity growth? New Evidence from Africa

Abstract

African countries have demonstrated the weakest economic performance relative to other regions of the world as a result of underutilized capital structure despite being more integrated into the world economy since early 1990, thus, this study explores the linkages among globalization, human capital development, and productivity growth in Africa from 1990 to 2019. We employ Dumitrescu–Hurlin non-causality test, Cross-sectionally Augmented Autoregressive Distributed Lag (CS-ARDL), and Dynamic Panel Threshold model to find a bidirectional causality between human capital development and productivity growth. The result of CS-ARDL shows that globalization has a significant positive effect on productivity growth in the long run, while human capital has insignificant positive effects on productivity growth in both the short and long run. Also, we find that the threshold of human capital is 45.07%, and at any level beneath this threshold value, human capital and globalization impede productivity growth in Africa. The study concludes that the relationship between globalization, human capital development, and productivity growth is nonlinear and conditional on a certain level of human capital before the full benefit of globalization can be reaped in terms of productivity growth in Africa. Therefore, we recommend that the interdisciplinary policymakers should promote human capital development policies that conform to the rising population growth in Africa and take serious caution while making policies regarding globalization.