Effect of Government Human Capital Investment on Economic Growth in Sub-Saharan Africa: Evidence from Nigeria, South Africa and Ghana (1980-2013)

Abstract

This study examines the effect of government human capital investment on the economic growth of three Sub-Sahara African (SSA) countries of Nigeria, South Africa and Ghana from 1980 to 2013. The objective is to analyze the growth effect of three government human capital investment variables of health, education and literacy rate on the economies of these countries; Secondary data are sourced from World Development Indicators (WDI) online Database and analyzed using Co-integration techniques and Vector Error Correction mechanism (ECM) at 1% and 5% significance levels. The results indicate that two out of the three human capital proxy variables; Health,(GIH), and Education (GIE), show significant positive effect on growth only in Nigeria, while literacy ratio (LR)is insignificantly positive in all countries. This study concludes that in spite of the above result, the SSA countries’ economies still exhibit the potentials for enhanced economic growth in the long run judging from the VECM test results. The study therefore, recommends for SSA countries to prioritize skill development, increase budgetary allocations, as well as promote policies that enhance school enrolment in secondary schools in the sub-region.