Economic Growth and the Quality of Life Nexus in Ethiopia: A Time Series Analysis
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2013-06
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Addis Ababa University
Abstract
To what extent are improvements in quality of life (material living levels, consumption, education/literacy, urban dwelling, political and civil rights, and the like) associated with economic growth? International comparisons of quality of life (QOL) conditions usually point to a strong positive association with real GDP per capita. This study investigates the nexus between economic growth and quality of life using objective indicators (economic, social and political representative variables) in Ethiopia for the period 1981 to 2011. Applying both descriptive and econometric analyses, the study uses the long run and short run estimation approaches for econometrics part. The results from the descriptive analysis confirmed that on average, all the variables in the objective indicators of quality of life have shown a rising trend. Moreover, among these, education enrollment and per capita consumption expenditure have shown strong correlation with economic growth. The empirical results indicated that, the relationship between economic growth and objective indicators of quality of life is significant (at 1 %) with a positive sign in the long run. In the short run, economic growth has significant (at 5%) relationship with per capita consumption expenditure and gross education enrollment ratio and insignificant relationship with political freedom. The study also identified the existence of considerable relationship among the QOL indicators. It suggests adjustments in the short run path of economic growth and urbanization
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Economic Policy Analysis