Fighting Corruption in Developing Countries to Meet the Challenge of Human Capital Development: Evidence from Sub-Saharan African Countries

Abstract

This paper provides both theoretical and empirical evidence on the need to consider institutions in human capital development in Sub-Saharan African (SSA) countries. In a model of human capital accumulation with public expenditure where we include a corruption parameter, it is found that when a bureaucrat or any other agent takes away part of the amount allocated to education or health, he reduces the quantity and quality of public services. Moreover, an estimation with the generalized moment method in system on panel data of 35 countries covering the period 1996–2018, the results show on the one hand that corruption manages to reduce the output of education and the average duration of studies and life expectancy of citizens through its negative effect on public spending in the education and health sector. On the other hand, corruption has a direct and negative impact on the performance of education. Indeed, it creates a lack of motivation in learning and in plans to pursue higher education because the return is very low, as is access to health and education services. In addition, corruption also distorts the allocation of public expenditure in favor of military, transport, mining, energy, and fuel expenditure as opposed to health and education expenditure. The effectiveness of governments in combating corruption is fundamental to human capital accumulation in Sub-Saharan African countries.