The Relationship Between Human Capital and the Economic Growth in Sudan

Abstract

The study aims to test the relationship between investment in human capital and economic growth in Sudan. It assumed that the growth in both of enrolled in different levels of education and government expenditure on education will lead to increase the economic growth in Sudan. The variables were subjected to several econometrics tests, such as Augmented Dickey–Fuller test (ADF), Autoregressive Distributed- lagged Model (ARDL) and the Error Correction Model (ECM) to test the short- and long- term relationship between study variables.

The results of long- run parameters of the (ARDL) model showed a positive correlation between real Gross Domestic Product (GDP) growth rate and the percentage of enrollment in universities from the total population. Also it showed a positive correlation between real GDP growth and education expenditure as a percentage of Gross National Income (GNI). While the estimated results of the bounds test for co- integration within the (ARDL) methodology results provided evidence of a long- run equilibrium relationship between the real GDP growth and the enrollment ratios of primary, secondary and university levels to the total population. Also provided evidence for a long- run equilibrium relationship between real GDP growth and the education expenditure as a share of GNI. Export of goods and services as a percentage of GDP and inflation rate. While the results of the estimated error correction model (ECM) confirmed that the real GDP growth is adjusted to its equilibrium value in each time period by 93% and 88%- for the two models respectively- of the remaining balance of the period with onetime lag.

The study recommended the expansion of university education to raise the rate of economic growth through the development of policies to encourage investment in it, raise the quality of university education and improve the outputs quality, enhance the curricula to keep pace with the modern technology progress, linking education outputs with the needs of the labor market requirements and raising the percentage of education expenditure from GDP, as well as to encourage the governmental educational institutions to develop and diversify their self- financing resources.