Africa has made large strides in raising literacy and school enrolments and improving health.
However, in the case of both education and health these gains are lower than those in other developing countries. The percentage of the population over 15 which had completed primary school in 1990 was 25 per cent in Africa as compared with 32 per cent in South Asia. At the secondary level the gap is larger with only 4 per cent of the population over 15 having completed secondary school. The comparable figure for South Asia is 10 per cent, for East Asia it is 50 per cent. Life expectancy on the continent is now 8 years below that in South Asia. Within the overall average for Africa there is great diversity. The health and education of people in some African countries is far lower than would be expected from their income. The nature and extent of this diversity is examined.
Human capital is only one factor in accounting for differences in growth rates across countries.
While low starting levels of human capital may have hindered Africa’s economic growth, its poor performance cannot be attributed to a lack of subsequent investment in human capital. A more important proximate cause is the low level of investment in physical capital. Low rates of investment in physical capital have implications for the rates of return on human capital, particularly education. The conventional wisdom that the rates of return to education are very high is shown not to have held in the context of many African labour markets in the 1980s and 1990s. If human and physical capital are complements then the policy problem is enabling them both to grow rapidly. Returns to human capital investment depend on the success of policies in promoting the growth of physical capital. There is evidence from micro studies that the income returns to education reflect the effects of education in raising productivity.
These effects have been observed for both industry and agriculture. For industry it is the secondary level which is important while for agriculture it is primary education. Less research has been done on the productivity effects of health and nutrition in Africa. The limited evidence is consistent with conclusions from other developing countries that these effects may be substantial. The role of human capital in Africa’s economic development is complex. Inadequate investment in education and health are clearly not the only cause of Africa’s economic difficulties. However, the poor health and education of Africa’s workers is one factor explaining her low income. Government investment in the social sectors is likely to be economically productive and indeed is likely to bring more direct benefits to the people than many other forms of government expenditure.
Government investment in both education and health may be particularly important as there are indirect benefits of such investments which individuals may not allow for in their investment decisions.
Social rates of return may substantially exceed private rates.
Child illness and malnutrition inhibit attendance and performance in school. There are long term effects of educating one generation on the welfare of their future children. Africa’s earlier investments in schooling mean that many more African parents are educated. This is lowering child mortality, reducing the number of births and helping to maintain school enrolments despite falling incomes. The long-term intergenerational effects of health and education are an important reason for promoting social sector investments despite tight current fiscal constraints. To this should be added the irreversible effects of failing to make such investments. Once a generation of children are exposed to life without adequate health care, nutrition or schooling, there is little that can be done during their adulthood to reverse the damage. Perhaps the main conclusion of this paper is paradoxical. Despite the many and complex interlinkages between human capital and economic development, the policy debate might benefit from a greater delinking of the two. The optimists are wrong to believe that investing in human capital will be sufficient for growth. The pessimists are equally wrong to argue that investments in health and education must wait for growth.
Human Capital and Economic Development Simon Appleton and Francis Teal
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African Development Bank
(Visit African's Website)
The African Development Bank is the
premier financial development institution
of Africa, dedicated to combating poverty
and improving the lives of people of the
continent and engaged in the task of
mobilizing resources towards the economic
and social progress of its Regional Member
Countries.The Bank’s s mission is to
promote economic and social development
through loans, equity investments, and
technical assistance.
The ADB is a multilateral development bank
whose shareholders include 53 African
countries and 24 non-African countries
from the Americas, Asia, and Europe. It
was established in 1964, with its
headquarters in Abidjan, Côte d’Ivoire,
and officially began operations in 1967.
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