Productivity Effects of Human Capital among the East African Countries: Evidence from Health And Higher Education

The East African Community (EAC) summit outlines the broad strategic development objectives for the member countries to be pursued in 2021. The objectives include, among other aspirations, improved industrial productivity among members. Given the role of human capital in productivity, this inclusive productivity cannot be achieved if: (i) the productivity of member countries does not co-move together in the long run; (ii) countries have accumulated differing human capital over time; (iii) intra-migration is not adequately productive; and (iv) an environment where unskilled youth with an increasing degree of unemployment exists. As a result, this article investigated the impact of health and higher education, as a proxy for human capital, on productivity among selected EACs with data from 1980-2015. The study conducted cointegrated tests and adopted the panel autoregressive distributive lag (P-ARDL) as the estimating technique. The findings indicated a strong long-run relationship among all the variables under investigation. The result highlighted that countries had developed different quantities of human capital, and as a result, the productivity of their human capital is limited and constrained in promoting notable inclusive growth that can benefit from intra-migration. To enhance the productivity effect of human capital, policymakers in East Africa should aim to balance the growth of human capital across regions.