Human Capital, Finance and Economic Development in Sub-Saharan Africa
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Date
2023-06-06
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A.A.U
Abstract
Several researches has investigated separately the impact of human capital and financial sector
development economic growth in sub Saharan African countries. Therefore, it is important to investigate
their interactive effect in the Sub Saharan African countries using recent panel data set. This research
examines the impact of human capital and financial development on economic growth in a cross-country
analysis. The empirical research used a dynamic panel data model to analyze annual data of 26 countries
from several Sub-Saharan African countries between the period 2010 - 2020. The result show that GDP
per capita growth rate is positively correlated with gross fixed capital formation, total trade, and labor
force, pupil to teacher ration primary and pupil to teacher ratio secondary. On the other hand, GDP per
capita growth rate is negatively correlated with domestic credit to private sector, domestic credit to
private sector by bank, general government final consumption expenditure, inflation, and secondary
school enrollment. Regarding the interaction effect of Human capital and financial development, the
interaction effect has significant and positive effect on GDP per capita growth. The researcher concluded
that skilled human power with the support of finance will boost productivity and this resulted in
increasing the level of economic growth. Human capital with the support of financial development in the
form of domestic credit to private sector enhanced economic development. Finally, the government should
facilitate credit for education to improve the GDP per capita growth in each country. If there is available
credit to schools, students and private sectors, there will be advanced education with full equipment and
human resource, and this in return generate skilled work force. Generally, the government should
develop a strategy that interlinks educational and financial institutions.