The Impact of Higher Education on Economic growth in Ethiopia

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.