The Role of Human Capital Resource in the East African Economic Growth

Please cite the paper as:
Worku R. Urgaia, (2016), The Role of Human Capital Resource in the East African Economic Growth, World Economics Association (WEA) Conferences, No. 1 2016, Capital Accumulation, Production and Employment:, 15th May to 15th July 2016


This study presents the role of Human Capital Resource in Economic Growth using dynamic panel Transmission Mechanism Channels in Vector Error Correction model and Time Scale Decomposition of the Wavelet analyses. The empirical results indicate the estimated Human Capital Resource has long-run effects on Gross National Income per- capita for a panel of ten East African countries for the period 1980 to 2014. The Short-term Transmission Mechanism Channels using the Wald test indicates that there is significantly important contribution of growth in Human Capital Resource to the development of Physical Capital Stock through Gross National Income per capita. The estimated growth in Gross National Income per capita has also a positive role towards the accumulation of Physical Capital Stock via Human Capital Resource. The Granger Causality test Wavelet Analyses of country by country for a heterogeneous panel data clearly show that the estimated growth of Human Capital Resource is a cause for change in the Gross National Income per capita growth in the short-run, medium and long-run.

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4 comment

  • Maria Alejandra Madi says:

    Interesting paper on the role of human capital in the current African scenario.

    As you said: “East Africa has the lowest level of human capital development, nevertheless a rapid
    growth in the expansion of education”.

    I would like you to discuss he following questions
    1) Which public policies have been addressed in order to enhance human capital development?.
    2) Which are the main youth employment challenges in the context of the digital economy?


    • Worku, R. Urgaia says:

      Dear Professor Maria,
      Many thanks indeed for your comments/ questions. In these regard, the following are responds to your questions.
      1) Physical policy been addressed for enhancing human capital development in East African region.
      2) Specifically, the young women have faced employment challenges.

      Kind regards,


      • mariaalejandramadi says:

        Many thanks. Could you expand your ideas about the employment chalenges that women are facing in your country? This is a very important issue to be addressed in the policy agenda of underdeveloped countries. However, labor theories and labor policies do not ussually include a gender approach to labor chalenges.

        Regarding your answer, could you also explain what is physical policy?


        • Worku R. Urgaia says:

          Dear Professor Maria,

          Thank you very much once again for your questions.First, I would like to expand the issue of employment chalenges that women are currently facing. In stead of going to school, they are being forced to marry before fully matured due to financial constraints and traditional cultures that curb their opportunities to education. Second, off course, labor theories and policies do not ussually include a gender approach to labor chalenges. In my view, physical policy is an important element in which addressing the develpment of human capital in East African region.Physical policy is all about the effective system of taxation on the issues of sources of revenue generation for the governments and other resource mobilization.However,in the region, this policy wouldn’t be sound in narrowing the gap between the societies in terms of income and wealth inequalities.

          Kind regards,