The Role of Human Capital Resources in East African Economies

This study deals with the role of human capital resources in economic growth. In economic growth, human capital is an important stock component that can affect the gross national income GNI more than gross domestic product GDP since GNI comprises the GDP itself and other income resources obtained from abroad. The empirical results of transmission mechanism channels in vector autoregressive model indicate that the observed human capital has long-run effects on the national income in a panel of nine East African countries from the year 1980 to 2015.The short-term transmission mechanism channels show that there is an important contribution of human capital resources HCR to the development of physical capital stock through GNI. The GNI has also a positive impact on the accumulation of physical capital stock via HCR. In addition, we also apply the time scaling decomposition of a panel wavelet analysis in Granger causality tests. The tests show that HCR and the GNI have a bi-directional causal relationship in the short-run, medium-and long-run. The recent trend shows that East Africa has the lowest level of human capital development which raises the issues of employment challenges faced by women more than men although it has achieved a rapid growth in expanding education. We, therefore, suggest that more due attention should be given to human capital resources than any other in attempt to achieve sustainable development in the process of successful economic progress.