THE IMPACT OF HUMAN CAPITAL ON ECONOMIC GROWTH IN SUDAN. 1970-2005

Abstract

This study deals with the impact of human capital on economic growth in Sudan. It is scientifically crucial to thoroughly identify the human capital as average years of schooling of population aged 15 years and above .This study handles the concepts of human capital, its measurements, the theoretical and empirical literature of human capital and economic growth on the local (Sudan) and international levels. The importance of the study was to shed light on human capital and its effect on economic growth in Sudan, in addition , there are few studies in the field of the study in Sudan, and so it might be an addition to the Sudanese library. This study examines the effect of human capital on the economic growth in Sudan, by considering the reverse impact or causation of the economic growth on human capital accumulation. So to analyze this simultaneity between Human Capital and Economic Growth, the simultaneous equations were used. A Three-Stage Least Square technique was applied on the model by using data for the period 1970-2005. By the estimation of the model that describes the behavior of the economy, the study obtained the parameters which characterize the process of human capital accumulation. The study found that, the human capital has a positive effect on economic growth while the retirement effect has a negative effect. On the other hand , the study found that, the economic growth has a positive and significant effect on human capital in Sudan on the data sample VI ac k e r- s o ft w a .c re k e r- s o ft w a ac tr bu PD PD re H F-XC A N GE H F-XC A N GE tr which was used . So there is a reverse impact or causation between human capital and economic growth. The most important recommendations for this study are that efforts should be geared towards improving the quality of education to enhance the skills of the labor force through the training which will increase productivity that will help increase the per capita GDP which in turn have a favorable impact on human capital accumulation which will help greatly in maintaining good economic performance. VII