HUMAN CAPITAL DEVELOPMENT AND ECONOMIC GROWTH IN WEST AFRICAN MONETARY ZONE (WAMZ) COUNTRIES

ABSTRACT

This study examined the effect of human capital development on economic growth in the context of West Africa Monetary Zone (WAMZ) countries for the period 2001 – 2015. The data for the study were sourced from World Development Indicators of the World Bank for the six (6) ECOWAS countries. The modified Solow’s human capital growth model was utilized as the theoretical framework of the study, while the panel least squares (random effects and fixed effects modeling) were embraced as the estimation techniques. The empirical result of the study reveals a positive coefficient and statistically significant at 1% significance level in the fixed – effects model of the following macro economic variables government expenditure on education, Labourforce and Population growth rate suggesting that they significantly stimulate economic growth in WAMZ countries. On the other hand government expenditure on health and investment income ratio had negative co-efficient with only investment income ratio statistically significant at 1% significance level. This indicates that urgent government action is required to reverse these negative trends in order to encourage health and investment contribution to economic growths in WAMZ countries.The study therefore recommended that government should encourage savings in order to boost investment in micro, small and medium industries as well as prescribe and ensure efficient implementation of relevant policies. This will help create employment, improve the low output and boost economic growth. Government of WAMZ countries should also increase budget allocation to the health sector for infrastructure and personnel development to foster a healthy work force that will promote economic growth. Education sector should be properly funded to enable more people to be educated and contribute to economic growth.