Human capital, foreign direct investment, and economic growth: Evidence from ECOWAS in a decomposed income level panel

Abstract

The study explored the nexus of human capital development, foreign direct investment, and economic growth within the ECOWAS region while controlling carbon emission, urbanization, and renewable energy. To examine the dynamic link between economic growth, human capital, foreign direct investment, CO2 emissions, and urbanization in ECOWAS, the selected countries were clustered into Lower Middle-Income Countries and Low-Income Countries. Drawing on panel data from 1990 to 2017, the study suggests that the rate of human capital, foreign direct investment, CO2 emissions, and urbanization affect economic growth as LMIC and LIC. The effect weight, however, changed per sub-panel this implies that LMICs and LICs should focus on investing in human capital development through education and health to enhance their economic growth. Policies to reduce CO2 emissions by focusing on renewable energy usage. This is fundamental in achieving the United Nations’ sustainable development goal 4 which seeks to safeguard inclusive and equitable quality education and stimulate lifetime learning opportunities (human capital development) and 17 which seeks to reinforce the means of implementation and rejuvenate the global partnership for sustainable development (FDI).

Keywords

• Human Capital
• Foreign Direct Investment
• Economic Growth
• Urbanization
• CO2