Human capital, innovation, and inclusive growth in sub-Saharan African Region

Abstract The impact of human capital on inclusive growth manifests in several forms. An improvement in human capital can directly influence inclusive growth and indirectly through innovation. Also, human capital serves as a key driver of innovation and knowledge diffusion hence, enhancing labour capacity will facilitate new ideas and technological adoption. Evidence on this relationship are scanty, hence, this study explores the relationship between human capital, innovation, and inclusive growth in sub-Saharan Africa. The fixed-effects model was deployed to examine this relationship in 17 sub-Saharan African countries between 1998 and 2014. The results from the scatterplot suggest that human capital and innovation measures positively correlate with inclusive growth. More so, our empirical results show that different measures of human capital propel inclusive growth as the quality measures (total factor productivity and index of human capital) have significant impact. On innovation measures, the results reveal that investment and ICT positively influence inclusive growth, however, their magnitudes remain inconsequential. Regarding the interaction terms, the results indicate that the indirect impact of human capital through innovation was largely negative. Hence, this study reveals that the level of human capital is not large enough to promote innovative activities and technological advancement in the region.