Understanding the Effects of Human Capital on Economic Growth in Developing Countries, does Institutional Environment Matters? Evidence From Sub-Saharan African Countries

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Résumé

This paper analyzes the interactions between human capital, institutional capital and growth in developing countries. For this purpose, a structural model with simultaneous equations and a conditional model are estimated using the double least squares and triple least squares methods on data from WGI & WDI, FERDI & CERDI and HAI over a long period. The results indicate that the return to education in developing countries negatively affects economic growth as much as the institutional capital positively affects it. However, the institutional environment is crucial to fostering human capital accumulation and increasing its returns to meet the growth challenge. In turn, economic growth is important to ensure a quality institutional environment and human capital development. The results suggest that countries should work towards an institutional environment that would ensure high returns to human capital and promote its accumulation.

Mots-clés

Economic growth, Human capital, Institutional capital, Simultaneous equation models, Double least squares (2 sls), Triple least squares (3 sls).