Effect of Human Capital Development on Economic Growth of Ecowas Member States

Abstract

This study examines the random effect of human capital development on economic growth of ECOWAS member states for the period of thirty seven years from 1980-2016, the measurement of random effect of human capital development on economic growth of ECOWAS member countries encompasses World Development Indicator and human capital index, four human capital variables are used, namely: expenditures on education (EED), expenditures on health (EHE), gross domestic product (GDP) and school enrollment (SCE), these variables were transformed to logarithm of base ten (10) to give more robust estimates,the economic growth was proxied by GDP, which is dependent variable, the empirical evidence is based on the Pedroni residual co-integration approach to test for the long-run relationship among the variables, the findings show that there is positive and significant relationship between GDP and government expenditure on education, expenditure on health and school enrollment in the ECOWAS counties, the study concludes that human capital development has an effect on economic growth in the ECOWAS region,the study is very relevant to the post-2015 Sustainable Development Goals agendas for two fundamental reasons: (a) Exclusive development is a critical policy syndrome in ECOWAS region where human capital development is a key to attain the SDGs extreme poverty target despite enjoying more than two decades of growth resurgence in some member states. (b) Growth in the region can primarily be driven by high human capital with the population of member countries expected to double in about 30 years, high investment on education and health for inclusive development is very welcome. This is essential because studies have shown that the increase in human capital development (resulting from increasing investment in education and health) would be enhances economic growth and development.