The Effects of Education on Economic Growth in Kenya

Abstract

The key reason for carrying out this research was to offer a response to the fundamental question as to whether education at different levels and economic growth in Kenya have a relationship and if so, how significant the relationship is. Empirical evidence is not conclusive on this question and conflicting findings have been given by various empirical work. The research was motivated by the belief that is so deeply engrained in the Kenyan society that education contributes significantly not only to personal progress but also to national progress. The emphasis is seen in the huge allocations of the national budget to the Ministry of Education. In the 2012/2013 budget, for instance, Ministry of Education got the second largest share of the budget at 21%, after energy, infrastructure and ICT which got 24% , but this was on account of the ongoing projects in the energy and roads sector. This paper uses time series technique to probe the relationship between real GDP growth rate in Kenya on one hand and primary school, secondary school and university enrolment on the other hand. The period of interest is the period 1980 to 2010. The estimated co-coefficients depict the relationship between our variables of interest. The results show that there exists a favorable and significant connection between real GDP growth and the three independent variables namely primary school, secondary school and university enrolments. The co-efficient of regression for primary school, secondary school and university enrolments are 11.851, 1.267, and 1.463 respectively showing that increases in these variables will result into increases in real GDP growth rate. The research therefore recommends that more investment should be put in education and that both the national and county governments should focus on the development of education at all levels.