Human capital, capital goods import and economic growth in West Africa

Figures & data

Table 1. A priori expectations on exogenous variables

Variable	Indicator	Sign	References
Hc	Human capital index per person	positive	Nelson and Phelps (1966)
K^E	capital equipment at current PPPs	positive	Lucas (1988).
M	Import of goods and services as percentage of GDP.	positive	Lagares (2013), Aramowo (2014)
$\left(HcKe\right)$	Product of human capital index and capital stock	positive	Lucas (1988).

Figure 1. Mean of human capital across West African countries.

Figure 2. Mean of human capital by income group.

Figure 3. Average capital stock imported by West African countries.

Figure 4. Effective capital across West African countries.

Table 2. Correlation analysis of variables

	Y	L	M	KE	HC
Y	1
L	0.4	1
	0	—
M	−0.08	−0.31	1
	0.0973	0	—
KE	0.59	0.78	−0.18	1
	0	0	0.0001	—
HC	0.32	0.22	0.27	0.43	1
	0	0	0	0	—–

Probability values in italics

Table 3. Levin, Lin & chu unit root test

Null :	Common unit root process in the group
Variable	Statistic	Prob.**	Integration
D(Y)	−8.6248	0.0000	I(1)
M	−1.3265	0.0923	I(0)
D(KE)	−3.1569	0.0008	I(1)
D(L)	−2.966	0.0015	I(1)
HC	−3.3199	0.0005	I(0)

Table 4. Panel unit root test (individual process)

Null:	Unit root assumes individual unit root process
Variable	Method	Statistic	Prob.**
D(Y)	Im, Pesaran and Shin W-stat	−9.81283	0.0000
	ADF - Fisher Chi-square	167.987	0.0000
	PP - Fisher Chi-square	412.442	0.0000
M	Im, Pesaran and Shin W-stat	−3.04375	0.0012
	ADF - Fisher Chi-square	62.411	0.0010
	PP - Fisher Chi-square	74.3298	0.0000
D(Ke)	ADF - Fisher Chi-square	54.493	0.0079
	PP - Fisher Chi-square	50.0046	0.0223
D(L)	Im, Pesaran and Shin W-stat	−6.72372	0.0000
	ADF - Fisher Chi-square	142.57	0.0000
	PP - Fisher Chi-square	216.501	0.0000
HC	Im, Pesaran and Shin W-stat	1.7	0.9554
	ADF - Fisher Chi-square	23.6267	0.5973
	PP - Fisher Chi-square	7.52166	0.9998

Table 5. Hausman homogeneity test

Correlated Random Effects - Hausman Test
Test Summary	Chi-Sq. Statistic	Chi-Sq. d.f.	Prob.
Cross-section random	9.913159	4	0.0419

Table 6. PMG/ARDL of human capital and the impact of imported capital stock on growth

Dependent Variable: D$\mathrm{\ell }$n (Y)
Selected Model: ARDL(2, 1, 1, 1, 1, 1)
Variable	Coefficient	Std. Error	t-Statistic	Prob.*
Long Run Equation
HC	4.026977	0.553855	7.270812	0.0000
HC*$\mathrm{\ell }$n(KE)	−0.191465	0.05106	−3.74981	0.0002
$\mathrm{\ell }$n(M)	0.271777	0.062651	4.337938	0.0000
$\mathrm{\ell }$n(KE)	0.522037	0.042735	12.21578	0.0000
$\mathrm{\ell }$n(L)	−0.368461	0.067674	−5.44463	0.0000
Short Run Equation
COINTEQ01	−0.154736	0.042686	−3.62498	0.0003
D$\mathrm{\ell }$n(Y(−1))	−0.091922	0.056722	−1.62057	0.1059
D(HC)	13.72636	7.91561	1.734087	0.0837
D(HC*$\mathrm{\ell }$n(KE))	−1.458541	0.803578	−1.81506	0.0703
D$\mathrm{\ell }$n(KO)	0.021384	0.044245	0.483313	0.6291
D$\mathrm{\ell }$n(KE)	1.839443	1.207079	1.52388	0.1283
D$\mathrm{\ell }$n(L)	−0.601691	0.341247	−1.76321	0.0786

Table 7. Human capital and the impact of other investment on growth

	PMG/ARDL		ROBUST OLS
Variable	Coefficient	Prob.*	Coefficient	Prob.*
HC	3.75284	0.0000	3.427087	0.0000
LOG(KE)	0.331895	0.0000	0.382711	0.0000
LOG(M)	1.347523	0.0000	1.424229	0.0000
LOG(L)	-0.522187	0.0000	-0.423712	0.0000
HC*LOG(M)	-0.953443	0.0000	-0.977685	0.0000

Nelson, R. R., & Phelps, E. S. (1966). Investment in humans, technological diffusion, and economic growth. American Economic Review, 56(1/2), 69–75. https://www.rand.org/pubs/papers/P3295.html

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Lagares, O. (2013). Domestic and imported capital, economic growth and relative income differences in Latin America. Working Paper of University of York

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Aramowo, D. F. (2014). Nexus of capital goods import and economic growth: Evidence from panel ARDL model for WAMZ. Journal of International and Global Economic Studies, 7(2), 32–14.

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