Does higher education matter in African economic growth? Evidence from a PVAR approach

Abstract

ABSTRACT This study investigates the impact of higher education on economic growth and is based on a sample of 18 African economies over the time period 1980–2015. The research makes use of a Panel Vector Autoregression (PVAR) framework to account for potential dynamic and endogenous relationship in modelling of the tertiary education–growth nexus. The findings show that higher education significantly increases the economic growth of the sample of African countries understudy with a lagged time. The economic effect of higher education is observed to be relatively smaller as those reported for the case of developed countries and also in comparison with primary and secondary education. Interestingly, this research also confirms the presence of a reverse causation as the economy’s income is also a determinant of tertiary education, although with a lagged time. Domestic and foreign direct investment, education attainment as well as openness level are also observed to be other determinants of tertiary education enrolment. Finally, there is evidence that tertiary education encourages private and foreign direct investment thus indirectly affecting growth rates.