Causal relationship between Education and Economic Growth in Sierra Leone

This paper was spurred out of the need to explore the causal relationship between economic growth, government expenditure on education and tertiary education in Sierra Leone during 2000 to 2014. In other words, the study aims to explore the value addition that expenditure on education is making to growth in the Sierra Leone economy.The study commences with initial diagnostics of the basic unit root test, which revealed the presence of I(1) and I(2) for the three variables, which is sufficient for the unrestrictedVectorAutoregression (VAR) model to be utilised as the main estimation technique. Other relevant post-diagnostic test outcomes like Heteroskedasticity, Serial LM Correlation and Normality were also carried out, which indicates the model's robustness. A 10-period innovation impulse response shock shows a rapid response of immediate reaction to the variables themselves.There is even a more revealing response to the shock to government investment and RGDP, which confirms that growth in tertiary education is highly hinged on the need to boost investment in the education sector.This is highly needed to catalyze a sustained level of growth in the Sierra Leone economy.Variance Decomposition shock also manifests a similar pattern, with the resulting outcome revealing economic growth (RDGP) as a major catalyst to boost human resource capacity.The conclusion finally proffers policy action in support of the establishment of Public-Private Partnership (PPP) as a way of facilitating meaningful economic growth and competitiveness in the country’s education sector , particularly at the tertiary level.