The Impacts of Economic Growth on Human Development in East Africa: A Comparative Analysis among member Country of EAC and Ethiopia
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Date
2013-06
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Addis Ababa University
Abstract
Economic growth is an important determinant of human development, which can contribute to
the improvement of human development and poverty alleviation in East Africa countries. The
economic growth rate of a country would be meaningful only if it is accompanied by
improvement of human development. This study examines the impact of economic growth in
enhancing the quality of human life in the current member countries of EAC and Ethiopia.
Specifically, it analyzes the effect of the economic growth on human development of these
countries for the period 1990/91 to 2011/12 by collecting quantitative from secondary sources.
Empirical analysis has been performed by using descriptive and econometric technique to
investigate the relationship between economic growth and human development. To achieve the
objectives of the study, an econometric model for each country are estimated by using OLS
method of estimation. So, this paper presents Six models for the sampled country to measure
the impacts of proxies’ measure of economic growth on HDI (proxy measure of human
development).By applying multiple linear regression model,HDI is regressed on
LRGDP,LRGDPpc,RGDPg,AVA,PEE,PEH,Pr and POVL in each country that listed above.
The paper concludes that the trends of the RGDP, RGDPpc and HDI have been fluctuated
overtime. On average, the performance of these variables since 1990s and 2000s has been very
low. This shows that a strong heterogeneity among these countries. This variation reveals that
there is unequal performance of economic growth and human development in the East Africa
countries. Moreover, all of the six countries models that estimated based on OLS i.e.
regression results of each country indicate that LRGDP,LRGDP and RGDPg has a positive
and insignificant impact on HDI. Similarly, the econometric results indicated that AVA,PEE
and PEH have a positive and insignificant relationship with HDI. Although, Pr and POVL
have a negative and insignificant impact on HDI. So, the OLS results showed unexpected
reverse relationship with statistically insignificant effect at 10% and 5% levels of significance
in all sampled East Africa countries except AVA in Uganda. Therefore, the econometric result
is unreliable and invalid for policy formulation, policy analysis and predication purposes.
Hence, member countries of EAC and Ethiopia should create a conducive macroeconomic
environment and policy, and also NGOs and Government of these countries should commit
their resources to invest in the human development sub sectors. But, further indepth research
on this subject by using advanced econometrics methods is required in the future in the
sampled countries under investigation
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Keywords
Economic Growth