The impact of education on economic growth in South Africa : econometric analysis

Nkohla, Tumi Vuyolwethu (2014-12)

Thesis (MDF)--Stellenbosch University, 2014.


This paper investigates the impact of education on economic growth in South Africa using annual panel data from 1990 to 2011, controlling for regional differences. Education is believed to be an important factor in developing an economy. The theoretical basis of education on economic growth comes from the endogenous growth theory. The endogenous growth theorists believed that investing in education is linked to an increase in efficiency and productivity of labour. It can be argued that by boosting cognitive and other skills, education makes labour more productive and accelerates innovation and technological progress, bringing higher economic growth. The nature of the data allowed for panel estimation techniques to be employed and the fixed effects and random effects models were considered in a Generalised Least Squares estimation framework, with the final estimation model informed objectively by the Hausman test. Education was found to be positively related to GDP, with variations across provinces observed. The results have implications for both policy and further research, which are outlined in the final chapter.

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