1

Title: Education, Health and Economic Growth in African Countries

Authors: Jude Eggoh, Hilaire Houeninvo and Gilles-Armand Sossou

Publisher: Journal of Economic Development, Volume 40, Number 1, March 2015

Reviewer: Chari Boru Beriso

Address: - E-Mail:charisaboru2018@gmail.com

-Org E.mail chari.boru@bhu.edu.et

1
 Introduction

The article, “Education, Health and Economic Growth in African Countries”, by Eggoh,
Houeninvo and Sossou seek to address the link between human capital (determined by
education and health) and economic growth for a large sample of 49 African countries over
the period from 1996 to 2010. Beginning from an introduction part, the authors tried to
incorporate purposes and related literatures on the subject clearly.

The authors’ objectives were to find the impact of public expenditures on education and
health on economic growth.

Methodological issue

The authors of this article applied two types of estimators.

i. The OLS estimator for cross-sectional analysis is used in order to assess the LR
relationship and
ii. The GMM used on panel data for SR dynamics.

The authors have investigated the effect of growth on both major components of human
capital, i.e., education and health for the African countries. Using traditional cross section and
dynamic panel techniques, they found that public expenditures on education and health have a
negative impact on economic growth, while human capital stock indicators have a slight
positive outcome. Additionally, their empirical findings revealed that education and health
spending are simultaneously used. Putting side by side to earlier studies (Gyimah-Bempong
and Wilson, 2004; Colantonio et al., 2010), authors’ empirical investigation differs in the
following ways:

 1st in contrast to other studies that focus only on education, the authors use both
education and health indicators to assess the impact of human capital on growth. For
each human capital component, they use both stock and investment indicators.
 2nd unlike Gyimah-Bempong and Wilson (2004) who judge against growth effects of
health in African nations to those in OECD countries, their study focuses on a large
-2-
 sample of African countries and compares the education growth effect to the health
growth effect.
 3rd, the authors investigated the nonlinearity connecting human capital investments in
the African countries.
 4th, the authors make use of the Generalized Method of Moment (GMM) in order to
complete a cross section analysis.

Education and health may be inter-related. However, studies that analyze the relationship
between growth and education or health did not consider this connection (Aka and Dumont,
2008). At most, some empirical works compared health and education contributions to
economic growth.

 Knowles and Owen (1995) include life expectancy at birth as proxy of the health
indicator and find that per capita income growth is more robust with a health indicator
than an education variable.
 In the same vein, using panel data analysis for 77 countries, McDonald and Roberts
(2002) confirm the findings of Knowles and Owen (1995).
 However, Webber (2002) reaches a different conclusion by using the enrolment rate
for primary, secondary and tertiary education and suggests that growth oriented
policies should favor investment in education over health.

To summarize the article, empirical studies of growth effect concerning education and health
are entirely mixed and the literature results based not only on proxy variables used for
education and health, but also on the empirical methodology.

 Their findings provides some contradiction against Romer’s (1990) model of

endogenous growth that larger stocks of human capital may enable greater
investment in physical capital, which in turn generates growth.

This Article makes an effort to fill this gap and aims to evaluate the relative impact of
human capital indicators and their relations with growth. Then, public investment in education
and health were jointly raised their efficiency in order to expect positive impact on human
capital on growth in African countries.
-3-
 Conclusions

The authors’ evidence points out that education and health expenditures have a negative
impact on economic growth for a sample of African countries due to their inefficiency,
corruption, bureaucracy and under investment. However, the inefficiency of public spending
is higher in education than health sector and the health indicators contribute more to economic
growth than the education variables.

This result implies that, governments can rise spending in the health sector and improve the
efficiency in the education sector. It is worth noting that this recommendation should not be
interpreted as a reduction of investment toward the education sector.

Undeniably, their findings also suggest that spending on education and health is
interdependent, characterized by nonlinearity and the existence of threshold effects. Thus,
given the complementarities between education and health expenditures, a threshold of health
expenditure is required to expect positive effects of education spending and vice versa.

The authors’ insights of policy implication were taken into account in the public expenditures
allocation in order to expect beneficial effects of human capital on growth in African
countries. The authors used references that was recent to the time they conduct and relevant to
the subject under study. In addition to that they also fully acknowledge the work of previous
authors accordingly.

Therefore, the reviewer gives a thorough summary of the available theoretical and empirical
research on the topic and could be used as a valuable source for future empirical work: cross-
country or national studies which will focus on measuring the roles of human capital in the
economic growth, by using both quantitative as well as qualitative determinants of human
capital.

-4-
 Personal Critical Comments

Literature used by authors is subject to many methodological and conceptual weaknesses,

such as the inadequacy of empirical human capital proxies and reverse causality. Therefore:

 Their conclusions were considered preliminary and fragile.

 The cross-country studies may fail to capture important country specific
characteristics that may be crucial to their economic development.
 According to both empirical and theoretically, the inter-linkages among the human
capital accumulation and growth of economy is not clear. There is still a need to explore
the relationship between them to get better and efficient results that would be helpful for
policy makers in developed and developing nations.

To end with, I would enormously like to hearten the authors to add in some of these ideas in
making better this article or may be in extending the research as the topic chosen is not only
attention-grabbing but tremendously vital for African countries.

-5-
 REFERENCES

Arora, S. (2001). “Health, Human Productivity, and Long-Term Economic Growth,” The
Journal of Economic History, 61(3), 699-749.

Barro, R.J. (1991), “Economic Growth in a Cross Section of Countries,” Quarterly Journal
of Economics, 106(2), 407-443. (1996), Health and Economic Growth, Mimeo.

Becker, G. S. (1975). Human capital: A theoretical and empirical analysis, with special
reference to education. NBER.

Goode, R. B. (1959). Adding to the stock of physical and human capital. The American
Economic Review, 49(2), 147-155.

Gyimah-Brempong, K., and M. Wilson (2004), “Health and Economic Growth in Sub-
Saharan African and OECD Countries,” Quarterly Review of Economics and Finance,
44, 296-320.

Hanushek, E.A., and D.D. Kimko (2000), “Schooling, Labor-Force Quality and the Growth
of Nations,” American Economic Review, 90(5), 1184-1208.

Kumar, C.S. (2006), “Human Capital and Growth Empirics,” The Journal of Developing
Areas, 40(1), 153-179.

Mayer, D. (2001), “The Long-Term Impact of Health on Economic Growth in Latin

America,” World Development, 29(6), 1025-1033.

Pritchett, L. (1996), “Where Has all the Education Gone?” Policy Research Working Paper,
581, World Bank, Washington.

-6-