The impact of human capital on economic growth in ethiopia. As such, it can be positioned within the broader, and recently resurgent, literature that calls for a better understanding of human capital in order to identify its e. The interest over the past few decades on relationship between human capital development and economic growth has attracted great attention in both theory and applied research. In contemporary economics literatures human capital accumulation is considered as one of the major determinants of economic growth.
Pdf the impact of human capital on economic growth in. The impact of human capital development on economic growth. As a result, the main objective of the study is to analyze the impact of human capital development on economic growth in ethiopia over the period 197475201011. Sankay, ismail and shaari 2010 investigated the impact of human capital development on economic growth in nigeria during the period 1970 to 2008. Labor studies individuals differ in both inherited and acquired abilities, but only the latter differ among countries and time periods. Among the most valuable features of smes is their flexibility, decisionmaking accessibility, implementation, innovation and high adaptability to the market environment. Our study examines the impact of human capital on economic growth for a. The first source of economic growth, human capital, can be measured in terms of education level and health. The study aimed at decomposing the relationship between human capital using health index and education index as a proxy and economic growth using time series data from 1971 2011 in ethiopia using modern econometrics technique. Human capital and economic growth in ethiopia publish your. How ever, macro economic instability and poor infrastructure have negative impact on fdi of ethiopia. Effects of urbanization on economic growth and human capital formation in africa article pdf available september 2014 with 1,073 reads how we measure reads. Request pdf the impact of human capital development on economic growth in ethiopia.
Human capital and economic growth in ethiopia ethiopian. Productive capacity and economic growth in ethiopia the united. The impact of taxation is integrated into growth models by its impact on the individual growth variables, which are capital accumulation and investment, human. Sacerdoti, brunschwig, and tang 1998, in a study carried out in western africa, investigated the effects of human capital on economic growth and. The output shows that export orientation, growth rate of real growth domestic product and trade liberalization have positive impact on fdi flow of ethiopia. Human capital and economic growth in ethiopia a time series analysis mulugeta tefera thesis m. The role of human capital resources in east african economies. Introduction 1 foreign direct investment in ethiopia according to the foreign agricultural investment report 2011 ethiopia is among the fastest growing non oil dependent countries in africa.
University of groningen understanding the effects of human. United nations development assistance framework for ethiopia. Human capital development is at the heart of the banks inclusive growth agenda. However, the effect of this interaction term is positive, suggesting that african countries that have high fertility rates and rapid urban population growth rates tend to experience higher per capita gdp growth. Studies of economic growth in ssa countries often focus on technological change and human capital, where education accounts for human capital. Pdf effects of urbanization on economic growth and human. Levine and renelt 1992 have argued that investment in capital goods is the most robust and vital determinant of economic growth. Harbison 1971 stated that the wealth of a nation is critically determined by its level of human capital. Even so, a flexible specification can be important for the economic implications of the results obtained from the estimates. The study also questions the impacts of the economic policy directions and associated institutional settings, which could have been perverting the. The impact of human capital development on economic growth in ethiopia. The index measures the amount of human capital that a child born today can expect to attain by age 18, given the risks of poor health and poor. This study investigates the impact of human capital on economic growth in. I am pleased to present the 2014 national human development report, which has been written on the theme of accelerating inclusive growth for sustainable human development in ethiopia.
By human capital we mean the knowledge and skills people possess that enable them to create value in the global economic system. Determinants of economic growth panel data approach. Jan 29, 2015 the aim of this paper is to evaluate the impact of individual types of taxes on the economic growth by utilizing regression analysis on the oecd countries for the period of 20002011. More specifically, each of the various components of human development is likely to have a distinct impact on economic growth. Fdi, inflation rate, trade openness, human capital 1. Thus, since, the research works showing the effect of human capital on economic growth of ethiopia using educational and health investment, to the best knowledge of the researcher, does not exist so far, the aim of this thesis is to analyze the effect of human capital, in the form of government educational and health expenditure, on the economic growth of ethiopia in both long run and short run. Investing in human capital as a key factor for the. Thus, the aim of this paper is to analyse the impact of human capital on economic growth in ethiopia using time series. The result has been low growth of incomes and low returns to the educational investment. Human capital and economic growth in ethiopia grin.
Investments in human capital represent an increasingly important approach and set of instruments for the banks fight against poverty and social exclusion in africa. Empirical analysis of human capital development and economic growth in european regions. We characterize the nature of persistence and dynamic complementarities between two components of human capital. Third report on vocational training research in europe. Human capital, economic growth and welfare are closely.
Insight report the global human capital report 2017. Productive capacity and economic growth in ethiopia 1 introduction ethiopia is one of the largest least developed countries ldcs in subsaharan africa, with a popula. The topic of the research is human capital and economic growth of ethiopia. By investigating the relationship between productivity and human capital, the result of this paper will have policy implications for human capital investments in the country. Human capital and economic growth in ethiopia a time series analysis mulugeta tefera magisterarbeit bwl unternehmensforschung, operations research publizieren sie ihre abschlussarbeit. As such, barro 1991, for 98 countries in the period 19601985, concludes that the growth rate of real per capita gdp is positively related to initial human capital proxied by 1960 schoolenrollment rates. Small and mediumsized enterprises smes are considered to be a driving force of the economy in the world.
The main objective of the study was to investigate the long run and short run impact of human capital on economic growth in ethiopia using real gdp per capita, as a proxy for economic growth over the period 19752011. To provide an educational system that helps to develop positive attitude towards manual. It also underscores how the slow pace of structural transformation could be accelerated by investing in industrial growth and highlights critical policy choices that must be made to achieve sustainable human development. It also attempts empirical analysis to find the determining factors of fdi in ethiopia. Economic growth, health, education, time series model, human capital. This paper provides an overview of africas achievements in the formation of human capital, and its impact on economic growth and welfare. In this paper we use high quality data from two developing countries, ethiopia and peru, to estimate the production functions of human capital from age 1 to age 15. This study employs the ordinary least square regression analysis to examine the impact of human capital development on economic growth of nigeria. The human capitaleconomic growth nexus in ssa countries. To this effect, this study used empirical econometric model to analyse the impact of education and health human capital on economic growth from 198020 in ethiopia. Bundell and others 1999 analyzing the impact of human capital on economic growth believe that the growth rate of output depends on the rate of accumulation of human capital and innovation, whose source is the stock of human capital, education level influence labor productivity. To examine the effect of human capital on economic growth accurately country specific study is worthwhile. The structure of the labor market, that is critical for the quantity and quality of human capital that is generated and for the uses to which it is put, is poorly understood and overlooked. Human capital and economic growth in ethiopia publish.
The purpose of this study is to investigate the impact of human capital formation on economic growth of bangladesh. He revealed that gender inequality in education and employment can reduce economic growth, and. The impact of human capital on economic growth sciencedirect. This study employs the ordinary least square regression analysis to examine the impact of human capital development on economic growth of nigeria, using annual time series date from 1981 to 2015. A thesis submitted to the department of development economics, institute of public management and development studies ipmds, school of graduate studies, ethiopian civil service university. In particular, estimates of the productivity of parental investment and its persistence or fadeout can be substantially affected by the functional. It is over 15 years since the last national human development report for ethiopia was published and much has changed in the intervening period. Benhabib and spiegel 1994 investigated the role of human capital in economic growth and reported the positive impacts of physical and human capital on economic growth. A thesis submitted to the school of graduate studies of addis ababa. Business economics operations research publish your bachelors or masters thesis, dissertation, term paper or essay.
The study uses the current expenditure on health and public expense on education to measure the human capital formation and growth of gross domestic product as an economic growth proxy. Ethiopia the human capital index hci database provides data at the country level for each of the components of the human capital index as well as for the overall index, disaggregated by gender. Does human capital create economic growth in sub saharan africa. Thus far, the process underlying human capital development and economic growth is inadequately and poorly understood. The impact of human capital development on economic growth in. Recent literature has contrasted human development, described as the ultimate goal of the development process, with economic growth, described as an imperfect proxy for more general welfare, or as a means toward enhanced human development. Ethiopia has experienced rapid economic growth since 2005, with gross domestic product gdp growing at an average rate of 10. Klasen and lamanna 2008 also investigated the impact of gender inequality in education and employment on economic growth in developing countries through a 41year period 1960 2000. In other words the total output of an economy is the function of its resource endowments labor, physical capital and human capital and the productivity with which these endowments are deployed to produce a flow of goods and services. Human capital and economic growth in ethiopia mulugeta tefera on. Smes provide for acceleration and economic growth of the country and its regions.
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