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

Sunday Anderu Keji, Gbenga Wilfred Akinola and Josue Mbonigaba

Cogent Economics & Finance, 2024, vol. 12, issue 1, 2402178

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.In recent times, individual sub-regions across the globe have strived to promote industrial output growth through varied means of productive inputs. For example, South Asia changed industrial production fortunes through massive infrastructural investment (Du, Zhang and Han, 2022). While, North America sub-region promoted industrial output growth through massive advancement in human capital skills and infrastructure (World Bank Development Index, 2023). However, the fortunes of advancing industrial output growth have remained mirage in sub-Saharan Africa (SSA) due to poor human capital skills and low infrastructure development (Akinlo, 2020; Keji, 2021; Amoah and Jehu-Appiah, 2022; World Bank Development Index, 2023). Consequently, findings from this study would provide the needed means to improve human capital and infrastructure spillover effects towards advancing industrial output growth in EAC ECCAS ECOWAS and SADC sub-regional blocs in SSA.

Date: 2024
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DOI: 10.1080/23322039.2024.2402178

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