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Human capital, financial sector development and inclusive growth in sub-Saharan Africa

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Abstract

This paper examines the role of financial development in the human capital-growth relationship. The core activity of this study involves the use of different measures of human capital (school enrolment and total factor productivity) in the examination of its impact on inclusive growth and interrogating how financial sector serves as catalyst in this process. We explore the system generalized method of moments estimation technique to examine this relationship in 19 sub-Saharan African countries between 1999 and 2014. The findings show indications of largely positive direct impact of both human capital and financial development on inclusive growth. The results also show that financial development promotes the extent to which human capital can facilitate inclusive growth, however the choice of measures of both human capital and financial development are important in examining their complemental influence on inclusive growth. Thus, enhancing the efficiency of the financial sector through reforms would have greater spillover effect on human capital development thereby promoting growth inclusiveness.

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Notes

  1. See, Ali and Son (2007) and Raheem et al. (2016) for details.

  2. See, Esso (2012).

  3. The results somehow, tend to support the narrative that, in addition to many other important factors, the performance and long-term economic growth and welfare of a country are related to its degree of financial development. The higher the degree of financial development, the wider the availability of financial services that allows the diversification of risk. Such diversification, in turn, increases the long-term growth trajectory of a country and ultimately improves the welfare and prosperity of producers and consumers that have access to financial services (See The Financial Development Report, 2012 by World Economic Forum, Switzerland).

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Authors and Affiliations

  1. Department of Economics, University of Ibadan, Ibadan, Nigeria

    Mutiu Abimbola Oyinlola & Abdulfatai Adedeji

Authors
  1. Mutiu Abimbola Oyinlola
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  2. Abdulfatai Adedeji
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Correspondence to Mutiu Abimbola Oyinlola.

Appendices

Appendix 1

See Table 5.

Table 5 Summary of literature on human capital and economic growth
Full size table

Appendix 2

List of countries used in the study: Botswana, Burkina Faso, Burundi, Central African Republic, Congo Dem, Cote d’Ivoire, Kenya, Lesotho, Mauritania, Mauritius, Mozambique, Namibia, Niger, Nigeria, Senegal, Sierra Leone, South Africa, Tanzania, Togo.

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Oyinlola, M.A., Adedeji, A. Human capital, financial sector development and inclusive growth in sub-Saharan Africa. Econ Change Restruct 52, 43–66 (2019). https://doi.org/10.1007/s10644-017-9217-2

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