Institutional Governance, Education and Growth

Theoretical Economics Letters, 2016(6), pp. 131-137.

16 Pages Posted: 5 Mar 2016 Last revised: 2 Apr 2016

See all articles by Mohamed Jellal

Mohamed Jellal

Al Makrizi Institute of Economy

Bouzahzah Mohamed

Mohammed V University – Agdal, FSJES de Rabat

Simplice Asongu

African Governance and Development Institute

Date Written: December 2, 2015

Abstract

This study articulates the interaction between institutional governance, education and economic growth. Given the current pursuit of education policy reforms and knowledge economy around the world, it is of policy relevance to theoretically analyze the main mechanisms by which the macroeconomic impact of education on growth (and economic development) occurs. Our theoretical model demonstrates how incentives offered by the government affect human capital accumulation which ultimately engenders positive economic development externalities. We articulate two main channels through which education affects economic growth. The first channel highlights direct positive effect of educational quality on the incentive to accumulate human capital by individuals, which makes them more productive. The second channel appears in the explicit function of the economic growth rate. As a policy implication, we have shown that the growth rate depends on the rate of return on human capital or that this rate of return itself depends on the quality of governance, which further increases growth. As a result, institutional quality has a double dividend, which suggests considerable benefits to educational reforms.

Keywords: Institutions, Human capital, Education, Growth

JEL Classification: H11, O15, O43

Suggested Citation

Jellal, Mohamed and Mohamed, Bouzahzah and Asongu, Simplice, Institutional Governance, Education and Growth (December 2, 2015). Theoretical Economics Letters, 2016(6), pp. 131-137. . Available at SSRN: https://ssrn.com/abstract=2741346 or http://dx.doi.org/10.2139/ssrn.2741346

Mohamed Jellal

Al Makrizi Institute of Economy ( email )

Rabat
Morocco

Bouzahzah Mohamed

Mohammed V University – Agdal, FSJES de Rabat ( email )

Angle avenue Allal El Fassi
Mfadel Cherkaoui, Al Irfane
Salé, RABAT 10000
Morocco
+212 5 37 83 35 75 (Phone)
+212 5 37 83 06 01 (Fax)

HOME PAGE: http://fsjes-sale.um5s.ac.ma

Simplice Asongu (Contact Author)

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

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