HUMAN CAPITAL AND INCLUSIVE GROWTH IN SUB-SAHARAN AFRICA: A PANEL SYSTEM GMM APPROACH

In the past decades, scholars directed their focus towards unraveling the macroeconomic effects of human capital development and economic growth. Despite human capital development being recognized as a growth stimulant, studies on sub-Saharan Africa’s human capital development and inclusive growth nexus remain scarce and contradictory owing to the inappropriateness of GDP growth as a measure of inclusive growth. This study examines the relationship between human capital input and output factors, and inclusive growth in 32 SSA countries from 1999 to 2021. Employing a panel system generalized method of moments; the analysis yields insights at a significant 5% level of significance. The study found that government health spending adversely impact inclusive growth in SSA. Thus, inadequate public health spending is significantly related with the region’s low output growth, high unemployment rate and rising inequality. The findings further showed that human capital output factors (primary and secondary school enrolment, and infant mortality) have an adverse effect on inclusive growth. Thus, the deficiencies in the region’s human capital development programme receive further empirical validation. The study suggests the need for government to increase investment and improve access to quality education and healthcare to address inequality, and promote growth and employment. Also, it emphasizes the importance of labour market reforms for holistic development in SSA