Efficiency of Public Human Capital Spending in Africa

What is it about?

The study examined the efficiency of public spending on health and education in Africa from 2006 to 2017 using DEA. The results showed that public spending on health was more efficient than spending on education. Factors such as institutional quality, economic growth, government expenditure, foreign direct investment, and trade openness influenced the efficiency of public spending on human capital. The study recommends measures to stimulate trade, ensure institutional quality, and sustain economic growth to improve efficiency in public spending.

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Why is it important?

The importance of this study lies in its examination of the efficiency of public spending on human capital, specifically health and education, in Africa. By analyzing data from 2006 to 2017 and using DEA models, the study provides valuable insights into how resources are allocated and utilized in these sectors. Understanding the efficiency of public spending is crucial for governments to make informed decisions and ensure that funding is directed towards areas that have the greatest impact on citizens' well-being and development. Key Takeaways: 1. Public spending on health and education in Africa was found to be inefficient. 2. Efficiency was higher in health spending compared to educational spending. 3. Factors such as institutional quality, economic growth, government expenditure, foreign direct investment, and trade openness influence the efficiency of public spending on human capital. 4. Urbanization positively impacts the efficiency of public spending on health, while economic growth has a negative relationship with public spending efficiency on health but a positive relationship with the squared term of economic growth. 5. The study recommends strengthening institutions, sustaining economic growth, and promoting urbanization to improve efficiency in public spending on human capital. 6. The research highlights the need for African governments to allocate resources more effectively and efficiently in order to achieve better outcomes in health and education. By understanding the correlates of efficiency in public spending, policymakers can implement targeted policies and interventions to address the challenges faced in these sectors.