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The Impact of Human Capital Development on Economic Growth in Ethiopia
American Journal of Theoretical and Applied Business
Volume 6, Issue 4, December 2020, Pages: 47-51
Received: Oct. 5, 2020; Accepted: Oct. 22, 2020; Published: Nov. 19, 2020
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Author
Shemsedin Abdu Dawud, Department of Economics, Mekdela Amba University, Mekane Selam, Ethiopia
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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.
Keywords
Human Capital, Economic Growth, Health, Education, Gross Primary School Enrolment, Labor Force, Vector Error Correction Model
To cite this article
Shemsedin Abdu Dawud, The Impact of Human Capital Development on Economic Growth in Ethiopia, American Journal of Theoretical and Applied Business. Vol. 6, No. 4, 2020, pp. 47-51. doi: 10.11648/j.ajtab.20200604.11
Copyright
Copyright © 2020 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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