Abstract:
This study explores the intricate relationship between higher education and economic
growth in Ethiopia over the period 1974-2022, utilizing secondary data from various
sources such as the World Bank, UNCTAD, The National Bank of Ethiopia (NBE), and
Federal Reserve Economic Data (FRED). The dependent variable, real GDP, is examined
about independent variables including government expenditure on higher education,
student enrollments, stock of human capital, and research and development contributions.
The analysis employs the Augmented Dickey-Fuller (ADF) test to assess unit roots in the
time series data, indicating stationarity. The study further conducts a Durbin-Watson test
and an Autoregressive Distributed Lag (ARDL) model to examine the long-term
relationship between the variables. The results reveal a significant impact of higher
education expansion on economic growth in Ethiopia, with government expenditure on
higher education playing a crucial role. However, the study also highlights a disparity in
the contribution of research and development to economic growth, deviating from
expectations based on endogenous growth models. Recommendations include the need for
continued expansion of higher education institutions, an emphasis on quality assurance,
and strategic initiatives to align higher education with national development goals.
