Does higher education matter in African economic growth? Evidence from a PVAR approach

ABSTRACT

This study investigates the impact of higher education on economic growth and is based on a sample of 18 African economies over the time period 1980–2015. The research makes use of a Panel Vector Autoregression (PVAR) framework to account for potential dynamic and endogenous relationship in modelling of the tertiary education–growth nexus. The findings show that higher education significantly increases the economic growth of the sample of African countries understudy with a lagged time. The economic effect of higher education is observed to be relatively smaller as those reported for the case of developed countries and also in comparison with primary and secondary education. Interestingly, this research also confirms the presence of a reverse causation as the economy’s income is also a determinant of tertiary education, although with a lagged time. Domestic and foreign direct investment, education attainment as well as openness level are also observed to be other determinants of tertiary education enrolment. Finally, there is evidence that tertiary education encourages private and foreign direct investment thus indirectly affecting growth rates.

KEYWORDS:

• Higher education
• Africa
• economic growth

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 Castells (1994) also discussed the fact that higher education is linked to the generation of positive change in attitudes which is crucial element for socialisation and for the positive transformation of societies.

2 We used the fixed group effect model/cross-sectional fixed effects.

3 See Arellano and Bover (1995), Holtz-Eakin, Newey, and Rosen (1988) and Love and Zicchino (2006)

4 UNCTAD (1994) reported that multinationals also depend high quality labour and they are often provide financial support, advices and inputs through advisory board memberships, curriculum design and review panels, academic councils and senates of Universities.