A comparative analysis of the spillover effects from human capital skill and infrastructural development on industrial sector growth across sub-regional economies in sub-Saharan Africa

Abstract

Despite the sub-Saharan African (SSA) region’s vast size in terms of human capital and physical capital resources, the industrial output growth in SSA still needs to catch up to the other regions. This is because of low productive skills and the dilapidated spread of infrastructural technology (tech), which have constrained rapid industrial growth. On this premise, the study fills gaps in the literature via trend analysis, sub-sample analysis, Fixed Effect Least Square Dummy Variable (Fixed-LSDV) and disaggregated system-GMM techniques to ascertain the spillover effects of human capital skill and infrastructure development on industrial sector growth across the SSA sub-regional blocs. Findings disclosed that SADC and ECCAS have better spillover effects on industrial growth than EAC and ECOWAS. Notably, ECOWAS, having the highest labor force among the economic blocs, was found to have performed most poorly. Equally, a comparative analysis via FE-LSDV technique, as suggested by the Hausman test, was adopted to examine sub-regional spillover effects across SSA. The LSDV outcomes from the combined model were compared with the LSDV outcomes from specific model to systematically reveal spillover effects from human capital skill and infrastructure on industrial output growth. The overall results showed significant diverse effects from human capital skill and infrastructural-technology development on industrial sector growth across the sub-regional groups in SSA. Consequently, the study suggests that countries at the sub-regional level should draft more policy support to prioritize factor input based on their specific spillover effect to reduce real cost and money cost of production for rapid industrial growth.

Keywords

• Human capital
• skill
• infrastructure
• technology
• industrial growth
• J24