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Determinants of human capital development in Ethiopia: impact on education policy

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Document pages: 10 pages

Abstract: The role of human capital development in the era of globalization, knowledge economy and technological development can not be underestimated. This mainly depends on the creativity and adaptability of human capital (HC) in bringing multidimensional change and development to individuals, organizations and the whole country. However, compared with the world standard, the HC situation in sub Saharan Africa, especially Ethiopia, is still the lowest. On this premise, this study aims to use autoregressive logarithm of distribution (ARDL) model to analyze the Macroeconomic Determinants of HC development in Ethiopia. This study considered the time series data from 1981 to 2018. The empirical results show that per capita GDP, openness and education policy variables were found to have a positive and significant effect on human capital development in the short and long run. On the contrary, inflation has a negative effect on human capital development only in the short run. On the other hand, no evidence was found on whether the government’s expenditure and capital-labor ratio have significant effects on human capital development. Therefore, the Ethiopian government is strongly advised to investigate its educational investment strategies in such a way that it can promote the development of HC.

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