The Role of Health Capital Stock to Economic Growth In Sub-Saharan Africa: A Dynamic Panel Data Approach

No Thumbnail Available



Journal Title

Journal ISSN

Volume Title


Addis Ababa University


There are considerable differences in income per capita and output per worker across countries of the world. The original Neo- classical growth model was not able to explain such income differences. Most of the works aimed at augmenting this model by including human capital focus on education only. Little has been done in modeling stock of health capital as a determinant of economic growth and so far empirical evidences of this area are not able to come up with conclusive results regarding the health-wealth nexus. Some evidences support the view that ‘health is wealth’ while others contradict this and argue in support of the negative relationship; and we see some countries with better growth/development but with unfavorable health indicators and vice versa that makes the relationship less clear and calls for further research. Methodological shortcomings are mostly viewed as an important reason for inconsistent and inconclusive results in addressing the problem. Solving the endogeneity of health is the notable problem in this respect. In this study, therefore, we tried to explicitly model the role of health human capital in economic growth of sub-Saharan African countries in which we included both health and education variables to augment the Neo-classical growth model. We used two data sources, the World Development Indicators 2008-09(WDI) and the Penn World Table (PWT) Version 6.3, to construct alternative panel datasets. Our dynamic panel data model was estimated by using the System and Difference Generalized Methods of Momentum (system GMM and difference GMM) that account the endogeneity of health and other regressors. The result reveals that health human capital (proxied by life expectancy at birth and infant mortality rate) positively and significantly affects economic growth of sub-Saharan Africa while the effect of education was found to be positive but insignificant. This finding has a policy implication that investing in health and improving health conditions helps countries accelerate their economic growth and reduce the existing poverty.



Economic Policy Analysis