Human development equation

The results10 of the two-step Sys-GMM estimates of the HDI equation are presented in Table 4.5. The coefficient estimate of comper is positive and significant, suggesting that all things being equal, an increase in electricity access is positively associated with improvement in human development. This result reconfirms Dinkelman‟s (2011) finding that show how electricity access positively impacted on HDI in South Africa by providing opportunities for self-employment and importantly female self-employment. It is also in line with studies on other developing countries (e.g., Barnes et al., 2010; Klandker et al., 2012; Klandker et al., 2013) that find electricity access enhances human development through increased food intake, improvements in diet, ability to afford education and health through increase in household income and reduction in the number of people in poverty.

Although, Escribano et al. (2008) did not directly assessed the impact of access rates on human development, they find evidence that low electricity access has adversely affected HDI through economic performance in SSA countries. However, the intuition behind their results indicates that lack of access to electricity and unreliability of services have not only constrained the economic performance of SSA countries, but also have adversely affected human development. Thus, consistent with these studies result, the results suggest that electricity access is a key determinant of human development where it has been provided. However, the result differs from those of Madubansi and Shackleton (2007) who reported that after 11-year period of village electrification efforts, fuel wood consumption had not changed in five South African villages. Hiemstra-van der Horst and Hovorka (2008) also find

10 _{This results and other subsequent ones in this chapter suffer from lower levels of observations during} estimation. This is due to the inclusion of the variable pm in the estimations. After excluding the variable from the estimations there were not significant changes in results even though the number of observations increases to over 500 in some cases.

similar results in the case of Botswana.

Table 4. 5:Two-Step GMM Estimates of HDI Equation

Human Development Index (hdi-index) Variable Est. t-stat.

hdi-index(t-1) 0.843*** 22.23 ln comper 0.007*** 3.86 corr 0.004** 1.97 eduexp -0.001 -1.32 healexp 0.001*** 3.79 com-price -0.001*** -3.20 pm -0.001*** -3.16 poprate 0.001 0.72 time 0.002*** 4.87 intercept 0.143*** 4.19 No of obs. 144 No of countries 41 Instruments 30

AR(1) test (p value) -1.47 (0.141)

AR(2) test (p value) -1.00 (0.319)

Hansen test (p value) 17.67 (0.609)

Significance code: *** p<0.01, ** p<0.05, * p<0.1

This shows that if efforts are made to increase electricity access to the 590 million people without basic access (IEA, 2017) in the region, it would not only boost economic performance, but would also enhance human development. For example, expanding electricity to access would help fulfil the ambition of Goal 7 of the SDGs by 2030 of providing universal access to affordable, reliable and modern energy services. In order to achieve sustained level of socio-economic development, Brew-Hammond (2010) noted that SSA countries most effectively mobilisation both domestic and external funding through implementations of innovative policy frameworks that would attract private sector investments.

in government expenditure on and health is associated with an increase in human wellbeing. This result contrasts with Filmer and Pritchett (1997) who find government spending on health did not lead to improvements in health measured as child mortality. However, the result is similar to those obtained by other researchers who find a positive relationship between public spending on health care and human development (e.g., Fan, et al., 2008). The coefficient for eduexp is not significant suggesting that there is no association between government spending on education and human development. This could be explained by low public spending on education by most SSA countries. Public spending on education as share of GDP in most SSA countries is below the 6% threshold recommended by UNESCO (2017). The result is consistent with other studies that find insignificant or a weak link between public spending and educational outcomes (Flug et al., 1998) and differs from Sequiera and Martins (2008). The estimates of both healexp and eduexp suggest government social spending is an important channel through which SSA countries can enhance human development, therefore increasing it would further boost human development.

Regarding the other control variables, the coefficient of corr, is positive and significant suggesting that corruption has adversely affected human wellbeing thus confirming Mauro‟s (1998) finding that show how corruption reduces government expenditure on education and health. The coefficient of com-price is also positive and significant suggesting that increase in cost of living have affected the wellbeing of citizens in SSA countries during the period covered by this study. This result confirms a World Bank (2012) report that shows soaring prices especially of food have held back millions from escaping poverty particularly in Africa and Asia.

The coefficient of pm is negative and significant indicating that exposure to air pollution have adversely affected human wellbeing in SSA countries. This is not surprising as about 80% of the population of SSA use solid fuels in cooking and this has been responsible for more than

50% of all deaths from pneumonia in children under 5 years and chronic lung diseases and cancers in adults over the age of 30 (WHO, 2016). However, the coefficient of poprate is not significant suggesting that population growth has no effect on human development. The coefficient of time is positive and significant signifying that, other things equal, human development has increased over time.