The Impact of Human Capital Development on Economic Growth in Ethiopia

Shemsedin Abdu Dawud

doi:doi:10.11648/j.ajtab.20200604.11

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The Impact of Human Capital Development on Economic Growth in Ethiopia

Shemsedin Abdu Dawud

Published in American Journal of Theoretical and Applied Business (Volume 6, Issue 4)

Received: 5 October 2020 Accepted: 22 October 2020 Published: 19 November 2020

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Abstract

The importance of human capital accumulation as an engine of economic growth and development has been widely recognized in theoretical and empirical studies. No country has achieved sustained economic development without substantial investment in human capital. In accordance with this, Ethiopia has made some movements to create skilled and competent citizens through designing different education and health policies and implementing them. This study investigates the impact of human capital on economic growth in Ethiopia over the period 1980-2018. The model was estimated using the Co-integrated VAR approach. The result of this study showed that in the long run both ratios of government expenditure on health and education to GDP, Labor force and policy change dummies have positive impact on Ethiopian economy. In other words, the result reveals that economic performance can be improved significantly when the variables increase. However, Gross primary school enrollment shows a negative relationship with economic growth during the study period. The estimated short-run model revealed that gross primary school enrollment is the main contributor to real GDP. But, unlike its long run significant impact, Ratio of government expenditure on education has no significant short run impact on the economy. In addition, ratios of government expenditure on health and labor force have negative significant impact on the economy.

Published in	American Journal of Theoretical and Applied Business (Volume 6, Issue 4)
DOI	10.11648/j.ajtab.20200604.11
Page(s)	47-51
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2020. Published by Science Publishing Group

Keywords

Human Capital, Economic Growth, Health, Education, Gross Primary School Enrolment, Labor Force, Vector Error Correction Model

References

[1]	Tewodros, G. (2015), “The determinants of Economic Growth in Ethiopia: A Time series analysis”, unpublished Master Thesis, Addis Ababa University, Addis Ababa, Ethiopia.
[2]	Folloni, G. and Vittadini, G. (2010). Human capital Measurement: A Survey, Journal of Economic Surveys, 24 (2), 248-279.
[3]	Gyimah-Brempong, K. and M. Wilson (2005). Human Capital and Economic Growth. Is Africa Different? Journal of African Development, 7 (1): 73-109.
[4]	Kidanemariam, G. (2013), “The Impact of Human Capital Development on Economic Growth In Ethiopia: Evidence from ARDL Approach to Co-Integration”, A Peer-Reviewed Indexed International Journal of Humanities & Social Science, II (IV), April-2014.
[5]	MoE. (2008). National Report of the Federal Democratic Republic of Ethiopia: Development of Education and Inclusive Education. Ministry of Education, Addis Ababa, Ethiopia.
[6]	Woubet, K. (2006). Human Capital and Economic Growth in Ethiopia, unpublished Master Thesis, Addis Ababa University, Addis Ababa, Ethiopia.
[7]	MoH. (2010). Health Sector Development Programme IV: Final draft. Ministry of Education, Addis Ababa, Ethiopia.
[8]	HSDP, (2010), “Health Sector Development Program”, Addis Ababa, Ethiopia.
[9]	World Bank, (2019), “World Bank, World Bank Data base”, last updated: 23 March, 2019, Washington DC.
[10]	Mankiw, G., Romer, D. and N. Weil (1992). A Contribution to the Empirics of Economic Growth. Quarterly Journal of Economics, 107 (2): 407-437.
[11]	Banerjee, A., Dolado, J., Galbraith, J., and D. Hendry (2003). Co-integration, Error Correction, And the Econometric Analysis of Non-stationary Data: Advanced Text in Econometrics New York: Oxford university press.
[12]	Engle, F. and Granger, J. (1987). Co-Integration and Error correction: Representation, Estimation and Testing, Journals of Econometrica, 55 (2): 251-276.
[13]	Johansen, S. (1995). Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models. Econometrica, 59, 1551-1580.
[14]	Harris, R. (1999). Using Co-integration Analysis in Econometric Modeling. London, Prentice hall.
[15]	Chandran G.; Ramesh R. and Sajid R. (2010), “Economic growth and Government spending in Malaysia; a re-examination of wagner and Keynesian Views”, springer seines and Business media Vol. 44 pp. 203-219.

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Shemsedin Abdu Dawud. (2020). The Impact of Human Capital Development on Economic Growth in Ethiopia. American Journal of Theoretical and Applied Business, 6(4), 47-51. https://doi.org/10.11648/j.ajtab.20200604.11

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Shemsedin Abdu Dawud. The Impact of Human Capital Development on Economic Growth in Ethiopia. Am. J. Theor. Appl. Bus. 2020, 6(4), 47-51. doi: 10.11648/j.ajtab.20200604.11

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Shemsedin Abdu Dawud. The Impact of Human Capital Development on Economic Growth in Ethiopia. Am J Theor Appl Bus. 2020;6(4):47-51. doi: 10.11648/j.ajtab.20200604.11

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@article{10.11648/j.ajtab.20200604.11,
  author = {Shemsedin Abdu Dawud},
  title = {The Impact of Human Capital Development on Economic Growth in Ethiopia},
  journal = {American Journal of Theoretical and Applied Business},
  volume = {6},
  number = {4},
  pages = {47-51},
  doi = {10.11648/j.ajtab.20200604.11},
  url = {https://doi.org/10.11648/j.ajtab.20200604.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ajtab.20200604.11},
  abstract = {The importance of human capital accumulation as an engine of economic growth and development has been widely recognized in theoretical and empirical studies. No country has achieved sustained economic development without substantial investment in human capital. In accordance with this, Ethiopia has made some movements to create skilled and competent citizens through designing different education and health policies and implementing them. This study investigates the impact of human capital on economic growth in Ethiopia over the period 1980-2018. The model was estimated using the Co-integrated VAR approach. The result of this study showed that in the long run both ratios of government expenditure on health and education to GDP, Labor force and policy change dummies have positive impact on Ethiopian economy. In other words, the result reveals that economic performance can be improved significantly when the variables increase. However, Gross primary school enrollment shows a negative relationship with economic growth during the study period. The estimated short-run model revealed that gross primary school enrollment is the main contributor to real GDP. But, unlike its long run significant impact, Ratio of government expenditure on education has no significant short run impact on the economy. In addition, ratios of government expenditure on health and labor force have negative significant impact on the economy.},
 year = {2020}
}

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TY - JOUR
T1 - The Impact of Human Capital Development on Economic Growth in Ethiopia
AU - Shemsedin Abdu Dawud
Y1 - 2020/11/19
PY - 2020
N1 - https://doi.org/10.11648/j.ajtab.20200604.11
DO - 10.11648/j.ajtab.20200604.11
T2 - American Journal of Theoretical and Applied Business
JF - American Journal of Theoretical and Applied Business
JO - American Journal of Theoretical and Applied Business
SP - 47
EP - 51
PB - Science Publishing Group
SN - 2469-7842
UR - https://doi.org/10.11648/j.ajtab.20200604.11
AB - The importance of human capital accumulation as an engine of economic growth and development has been widely recognized in theoretical and empirical studies. No country has achieved sustained economic development without substantial investment in human capital. In accordance with this, Ethiopia has made some movements to create skilled and competent citizens through designing different education and health policies and implementing them. This study investigates the impact of human capital on economic growth in Ethiopia over the period 1980-2018. The model was estimated using the Co-integrated VAR approach. The result of this study showed that in the long run both ratios of government expenditure on health and education to GDP, Labor force and policy change dummies have positive impact on Ethiopian economy. In other words, the result reveals that economic performance can be improved significantly when the variables increase. However, Gross primary school enrollment shows a negative relationship with economic growth during the study period. The estimated short-run model revealed that gross primary school enrollment is the main contributor to real GDP. But, unlike its long run significant impact, Ratio of government expenditure on education has no significant short run impact on the economy. In addition, ratios of government expenditure on health and labor force have negative significant impact on the economy.
VL - 6
IS - 4
ER -

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Shemsedin Abdu Dawud

Department of Economics, Mekdela Amba University, Mekane Selam, Ethiopia

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APA Style

Shemsedin Abdu Dawud. (2020). The Impact of Human Capital Development on Economic Growth in Ethiopia. American Journal of Theoretical and Applied Business, 6(4), 47-51. https://doi.org/10.11648/j.ajtab.20200604.11

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ACS Style

Shemsedin Abdu Dawud. The Impact of Human Capital Development on Economic Growth in Ethiopia. Am. J. Theor. Appl. Bus. 2020, 6(4), 47-51. doi: 10.11648/j.ajtab.20200604.11

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AMA Style

Shemsedin Abdu Dawud. The Impact of Human Capital Development on Economic Growth in Ethiopia. Am J Theor Appl Bus. 2020;6(4):47-51. doi: 10.11648/j.ajtab.20200604.11

Copy | Download

@article{10.11648/j.ajtab.20200604.11,
  author = {Shemsedin Abdu Dawud},
  title = {The Impact of Human Capital Development on Economic Growth in Ethiopia},
  journal = {American Journal of Theoretical and Applied Business},
  volume = {6},
  number = {4},
  pages = {47-51},
  doi = {10.11648/j.ajtab.20200604.11},
  url = {https://doi.org/10.11648/j.ajtab.20200604.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ajtab.20200604.11},
  abstract = {The importance of human capital accumulation as an engine of economic growth and development has been widely recognized in theoretical and empirical studies. No country has achieved sustained economic development without substantial investment in human capital. In accordance with this, Ethiopia has made some movements to create skilled and competent citizens through designing different education and health policies and implementing them. This study investigates the impact of human capital on economic growth in Ethiopia over the period 1980-2018. The model was estimated using the Co-integrated VAR approach. The result of this study showed that in the long run both ratios of government expenditure on health and education to GDP, Labor force and policy change dummies have positive impact on Ethiopian economy. In other words, the result reveals that economic performance can be improved significantly when the variables increase. However, Gross primary school enrollment shows a negative relationship with economic growth during the study period. The estimated short-run model revealed that gross primary school enrollment is the main contributor to real GDP. But, unlike its long run significant impact, Ratio of government expenditure on education has no significant short run impact on the economy. In addition, ratios of government expenditure on health and labor force have negative significant impact on the economy.},
 year = {2020}
}

Copy | Download