EDUCATION, HEALTH AND ECONOMIC GROWTH NEXUS: NEW EVIDENCE FROM SIERRA LEONE
Abstract
This study investigates the impact of health and education spending on economic growth in Sierra Leone. The study utilizes the autoregressive distributed lag estimation technique with quarterly time series data spanning from 2000Q1 to 2022Q4. The unit root test result confirms a mixture of I(0) and I(1) variables, while the bound test establishes cointegration. The long-run findings suggest that education spending has a significant negative impact on economic growth, while health expenditure is growth-enhancing. Also, the result indicates that foreign direct investment inflows boost growth, but inflation impedes growth in the long run. The short-run dynamics show that lagged economic growth has a positive impact on the current growth rate. Furthermore, the findings confirm a positive relationship between health spending and economic growth, while the lagged value of health spending and the current level of education expenditure stifle growth. The short-run findings for both FDI and inflation corroborate with the long-run results. The result of the error correction term (ECT) indicates that any disequilibrium to the model is corrected at an adjustment speed of 11.8% towards long run equilibrium. The findings of this study emphasize the need for more government spending to strengthen the health sector and also ensure accountability and transparency in the disbursement and utilization of funds for the education sector.
JEL: C22, H51, H52, O55
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DOI: http://dx.doi.org/10.46827/ejefr.v9i1.1965
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