Macroeconomic Determinants of Human Capital Development and Economic Growth in

Abstract

Evidence from recent literature gesticulates that macroeconomic determinants arising from the slow level of human capital development contribute to the sluggish growth of developing nations which in turn truncates the anticipated growth trajectories of African countries (evidence from Sub-Saharan African countries). On this note, this study investigated the impact of macroeconomic determinants of human capital development on economic growth in Sub-Saharan Africa (SSA) countries. The study used annual time series data spanning from 1980 to 2022 and sourced from the regional SSA 2022 edition database out of African countries' economic blocs. Panel Autoregressive Distributed Lag (PARDL) approach and Panel VAR Granger causality model were used as estimation techniques for the study. Results showed that government expenditure on health and education, labour force, as well as school enrolment, exhibits a profound positive influence on the real gross domestic product (RGDP) in the SSA region while the inflation rate was less pronounced statistically. The result of ECM-1 showed that about 86% of the adjustment from short-run to long-run is very high. This implies that disequilibrium errors that occurred in the previous year are corrected in the current year. Results of the VAR Granger causality test showed that RGDP is necessary for enhancing macroeconomic determinants like government expenditure on health and education just as enhanced government expenditure on health and education is needed to sustain growth in the SSA region. While no causal relationship exists between the inflation rate and RGDP and labour force exhibits a unidirectional relationship without feedback. Based on the findings, the study, therefore, recommends improvement in the educational system through increased expenditure, to ensure sustainable healthcare financing that will improve health facilities and reduce the burden of health spending inequality most especially in rural communities as well as the rate of unemployment should be reduced to the barest minimum as against applicants seeking employment all these while. An increased labour force would do more to improve the economic growth of the region. These among other things would lead to the growth sustainability of SSA countries if properly harnessed by the policymakers.