Abstract
Previous research has explored various channels in the aid-growth relationship such as the real exchange rate, changes in manufacturing output, institutional capacity, and governance. This paper puts forward a new mechanism: human capital accumulation. International organizations financially support and/or directly collaborate with educational institutions to establish courses. The development sector, borne out of aid, demands skilled workers. The workforce in turn develops human capital to meet this demand. There is a consequent change in the skills composition in the host country, and thus the types of skills available to employers in the labor market. This may have implications for long-run growth. These mechanisms are explored through mixed-methods analysis of human capital accumulation at the tertiary level in Sierra Leone, a small low-income, aid-dependent country. The data show that post-war interventions have given rise to courses that develop skills that are demanded by local and international non-governmental organizations, but not the formal private sector. This shift toward development-type qualifications has led to excess supply of these graduates, alongside a shortage of graduates with training in science, technology, engineering, and mathematics. The latter are highly demanded by the private sector.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Change history
07 January 2021
The articles was revised due to an added data at the beginning of the last paragraph in section 6.1.
Notes
See the AVU website for more details: https://avu.org/avuweb/en/
The survey sought to explore occupational choice of graduates about to enter the labor market. 392 students were selected (out of final year cohort of 1000) using stratified random sampling. Harris (2019) describes the survey and results.
See chapter 4 of Gibbs (2007) for a discussion on thematic analysis and grounded theory.
Interview 22 (September 22, 2017); Interview 41 (November 21, 2017)
See online appendix for data extracts from interviews and focus group discussions.
Participant 21, Focus Group 5 (October 21, 2017)
Interview 31 (October 2, 2017); Interview 34 (October 5, 2017)
Interview 20 (September 20, 2017); Interview 28 (September 29, 2017); Interview 40 (October 13, 2017); Interview 42 (November 23, 2017)
Interview 22 (September 22, 2017); Interview 41 (November 21, 2017)
Anecdotal evidence suggests that most enumeration work is funded by development partners, even if conducted by the public or private sector.
Interview 41 (November 21, 2017)
Interview 20 (September 20, 2017); Interview 28 (September 29, 2017); Interview 31 (October 2, 2017); Interview 34 (October 5, 2017) Interview 40 (October 13, 2017); Interview 42 (November 23, 2017)
Participant 6, Group 2 (October 10, 2017); Participant 26, Group 6 (October 12, 2017); Participant 41, Group 9 (November 28, 2017)
Interview 34, (October 5, 2017)
Other factors cited include import liberalization policies which resulted in lower demand for some locally produced goods, macroeconomic uncertainties from government policies, and high electricity costs.
Examples of these modules include (Omeje 2015, 43): “The Sociology of Peace & Conflict in International Relations,” “The African Practices and Mechanisms of Conflict Management,” “Methods of Conflict Analysis,” “Peace and Security Issues in Africa,” “Leadership and the Culture of Peace,” “Conflict Prevention, Peacekeeping, and Peace Consolidation,” “Humanitarian Interventions and Conflicts in Africa,” and “Conflict Resolution and Development: Applied Skills.”
Interview 22 (September 22, 2017); Interview 41 (November 21, 2017)
Interview 22 (September 22, 2017); Interview 41 (November 21, 2017)
There are likely other factors that reinforce the upward trend in NGO courses after the initial development intervention. It was reported that some NGO courses (such as Sociology) have lower entry requirements, and that Arts/Social Science degrees are cheaper to run relative to STEM courses which require laboratory equipment. That said, there is still spare capacity for some STEM courses (Interview 41, November 21, 2017). Thus it is possible that if some NGO courses had not been introduced through development cooperation, some students studying NGO degrees may have taken a vocational path or re-done subjects to be accepted to more economically valuable STEM degrees that are below capacity.
Interview 15 (September 13, 2017); Interview 16 (September 13, 2017); Interview 22 (September 22, 2017); Interview 23 (September 22, 2017); Interview 25 (September 26, 2017); Interview 26 (September 26, 2017); Interview 31 (October 2, 2017)
Appendix Table 5 provides the raw data.
Participant 26, Group 6 (October 12, 2017)
Participant 6, Group 2 (October 10, 2017)
Participant 41, Group 9 (November 28, 2017)
The Mankiw-Romer-Weil model presented immediately above [Y = KαHβ(AL)1 − α − β] would be an endogenous growth model if α + β = 1 so there was no longer diminishing marginal returns (Mankiw et al. 1992, 421).
Specific to peace related training, employment opportunities significantly reduced as the international peacekeeping mission withdrew from Sierra Leone in 2014.
References
Africa Centre (2004). Developing a Bachelor of Arts Degree Programme on Peace and Conflict Studies at the University of Sierra Leone. University of Sierra Leone, Sierra Leone, 6–7 November 2003. Report on two-day curriculum development workshop. Bradford, University of Bradford Press. AFC Report: No. 3.
Banya, K., & Elu, J. (2001). The World Bank and financing higher education in sub-Saharan Africa. Higher Education, 42, 1–34. https://doi.org/10.1023/A:1017584501585.
Becker, G. S. (1964). Human capital: A theoretical and empirical analysis, with special reference to education. New York: National Bureau of Economic Research.
Bloom, D.E., Canning, D., Chan, K., & Luca, D.L. (2014). Higher education and economic growth in Africa. International Journal of African Higher Education 1. https://doi.org/10.6017/ijahe.v1i1.5643.
Bourguignon, F., & Sundberg, M. (2007). Aid effectiveness: Opening the black box. The American Economic Review 97, 316–321. https://www.jstor.org/stable/30034468
Bräutigam, D. A., & Knack, S. (2004). Foreign aid, institutions, and governance in sub-Saharan Africa. Economic Development and Cultural Change, 52(2), 255–285. https://doi.org/10.1086/380592.
Brock-Utne, B. (2003). Formulating higher education policies in Africa: The pressure from external forces and the neoliberal agenda. Journal of Higher Education in Africa / Revue de l’enseignement supérieur en Afrique, 1, 24–56.
Browne, S. (2006). Aid and influence: Do donors help or hinder? London; Sterling: Routledge.
Buchert, L., & King, K. (Eds.). (1995). Learning from experience: Policy and practice in aid to higher education. The Hague: Centre for the Study of Education in Developing Countries.
Corden, W. M., & Neary, J. P. (1982). Booming sector and De-industrialisation in a small open economy. The Economic Journal, 92(368), 825–848. JSTOR. https://doi.org/10.2307/2232670.
Darwich, M. (2018). Skills needs assessment initiative of the TVET Coalition of Sierra Leone. Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH.
Easterly, W. R. (2002). The elusive quest for growth: Economists’ adventures and misadventures in the tropics: Economists adventures and misadventure in the tropics (New Ed edition. ed.). Cambridge: MIT Press.
Gemmell, N. (1996). Evaluating the impacts of human capital stocks and accumulation on economic growth: Some new evidence. Oxford Bulletin of Economics and Statistics, 58, 9–28. https://doi.org/10.1111/j.1468-0084.1996.mp58001002.x.
Gibbs, G. (2007). Analyzing qualitative data. SAGE Publications, Ltd. https://doi.org/10.4135/9781849208574.
Guest, G., Bunce, A., & Johnson, L. (2006). How many interviews are enough?: An experiment with data saturation and variability. Field Methods, 18(1), 59–82. https://doi.org/10.1177/1525822X05279903.
Harris, J. (2019). Occupational choice of skilled workers in the presence of a large development sector: Evidence from Sierra Leone. WIDER working paper 2019/101. Helsinki: UNU-WIDER. https://doi.org/10.35188/UNU-WIDER/2019/737-8.
Heckelman, J. C., & Knack, S. (2009). Aid, economic freedom, and growth. Contemporary Economic Policy, 27(1), 46–53. https://doi.org/10.1111/j.1465-7287.2008.00123.x.
Hussain, M., Berg, A., & Aiyar, S. (2009). The macroeconomic management of increased aid: Policy lessons from recent experience. Review of Development Economics, 13(3), 491–509. https://doi.org/10.1111/j.1467-9361.2009.00503.x.
Jones, B. F. (2014). The human capital stock: A generalized approach. American Economic Review, 104(11), 3752–3777. https://doi.org/10.1257/aer.104.11.3752.
Kanyako, V. (2016). Donor policies in post-war Sierra Leone. Journal of Peacebuilding & Development, 11(1), 26–39. https://doi.org/10.1080/15423166.2016.1146035.
Kargbo, P. M., & Sen, K. (2014). Aid categories that Foster pro-poor growth: The case of Sierra Leone. African Development Review, 26(2), 416–429. https://doi.org/10.1111/1467-8268.12101.
Khan, M. S., & Reinhart, C. M. (1990). Private investment and economic growth in developing countries. World Development, 18, 19–27. https://doi.org/10.1016/0305-750X(90)90100-C.
Knack, S. (1999). Aid dependence and the quality of governance: A cross-country empirical analysis. The World Bank. https://doi.org/10.1596/1813-9450-2396.
La Porta, R., & Shleifer, A. (2014). Informality and development. Journal of Economic Perspectives, 28, 109–126. https://doi.org/10.1257/jep.28.3.109.
Lin, T. C. (2004). The role of higher education in economic development: An empirical study of Taiwan case. Journal of Asian Economics, 15, 355–371. https://doi.org/10.1016/j.asieco.2004.02.006.
Liu, G., & Fraumeni, B. M. (2020). A brief introduction to human capital measures. Discussion paper 13494. IZA Discussion Paper Series. http://ftp.iza.org/dp13494.pdf
Mankiw, N. G., Romer, D., & Weil, D. N. (1992). A contribution to the empirics of economic growth. The Quarterly Journal of Economics, 107(2), 407–437. https://doi.org/10.2307/2118477.
Mannah, E., & Gibril, Y.N. (2012). A skills gap analysis for private sector development in Sierra Leone 2012. Economic and Sector Work, African Development Bank. Available at: https://nctva.org/wp-content/uploads/2018/09/Skills_Gap_Analysis_2012_AfDB.pdf
Matsumoto, M. (2018). Technical and vocational education and training and marginalised youths in post-conflict Sierra Leone: Trainees’ experiences and capacity to aspire. Research in Comparative and International Education, 13(4), 534–550. https://doi.org/10.1177/1745499918807024.
McGrath, S. (2002). Skills for development: A new approach to international cooperation in skills development? Journal of Vocational Education & Training, 54(3), 413–430. https://doi.org/10.1080/13636820200200207.
Mekasha, T. J., & Tarp, F. (2019). A meta-analysis of aid effectiveness: Revisiting the evidence. Politics and Governance, 7, 5–28. https://doi.org/10.17645/pag.v7i2.1771.
OECD (2020). Education-related aid data at a glance. Available at: https://www.oecd.org/dac/financing-sustainable-development/development-finance-data/education-related-aid-data.htm. Accessed 24 Feb 2020.
Omeje, K. (2015). Promoting peace and conflict-sensitive higher education in sub-Saharan Africa. African Conflict and Peacebuilding Review, 5(2), 33–56. https://doi.org/10.2979/africonfpeacrevi.5.2.33.
Palmer, R. (2009). Skills development, employment and sustained growth in Ghana: Sustainability challenges. International Journal of Educational Development, 29(2), 133–139. https://doi.org/10.1016/j.ijedudev.2008.09.007.
Radelet, S. (2006). A primer on foreign aid, SSRN scholarly paper no. Id 983122, Social Science Research Network, Rochester, NY.
Rajan, R., & Subramanian, A. (2007). Does aid affect governance? The American Economic Review 97, 322–327. https://www.jstor.org/stable/30034469
Rajan, R., & Subramanian, A. (2011). Aid, Dutch disease, and manufacturing growth. Journal of Development Economics, 94(1), 106–118. https://doi.org/10.1016/j.jdeveco.2009.12.004.
Romer, P. M. (1990). Human capital and growth: Theory and evidence. Carnegie-Rochester Conference Series on Public Policy, 32, 251–286. https://doi.org/10.1016/0167-2231(90)90028-J.
Saint, W.S. (1992). Universities in Africa: Strategies for stabilization and revitalization. World Bank technical paper no. 194, Africa technical department series. The World Bank.
Samoff, J., & Carrol, B. (2004). The promise of partnership and continuities of dependence: External support to higher education in Africa. African Studies Review, 47, 67–199. https://doi.org/10.1017/S0002020600027001.
Solow, R. M. (1956). A contribution to the theory of economic growth. The Quarterly Journal of Economics, 70(1), 65–94. https://doi.org/10.2307/1884513.
Statistics Sierra Leone (SSL) (2014). 2013 Non-Governmental Organizations (NGOs) Survey For National Accounts Compilation. Available at: https://www.statistics.sl/images/StatisticsSL/Documents/Publications/2013/2013_ngo_survey_for_national_accounts_compilation.pdf. Accessed 24 Oct 2020.
Statistics Sierra Leone (SSL) (2015). Sierra Leone 2014 Labor Force Survey Report. Available at: https://www.statistics.sl/images/StatisticsSL/Documents/sierra_leone_labour_force_survey_report_2014.pdf. Accessed 24 Oct 2020.
Szirmai, A., & Verspagen, B. (2015). Manufacturing and economic growth in developing countries, 1950–2005. Structural Change and Economic Dynamics, 34, 46–59. https://doi.org/10.1016/j.strueco.2015.06.002.
United Nations Conference on Trade and Development (UNCTAD) (2019). The least developed countries report 2019: The present and future of development finance – Old dependence, new challenges. United Nations. New York and Geneva. https://unctad.org/en/PublicationsLibrary/ldcr2019_en.pdf
United Nations Development Programme (UNDP) (2019). Sierra Leone human development indicators. Human development reports. Available from: http://hdr.undp.org/en/countries/profiles/SLE
United Nations Educational Cultural and Scientific Organization (UNESCO) (2020). Education: Distribution of tertiary graduates by field of study. Available at: http://data.uis.unesco.org/index.aspx?queryid=163
Van Wijnbergen, S. (1986). Aid, export promotion and the real exchange rate: an African dilemma (English). Development research department discussion paper; no. DRD 199 Washington, D.C.: World Bank Group. http://documents.worldbank.org/curated/en/592431468202450155/Aid-export-promotion-and-the-real-exchange-rate-an-African-dilemma
World Bank (2013). Republic of Sierra Leone higher and tertiary education sector policy note. Report ACS4393. Washington, DC: The World Bank. Available at: http://documents.worldbank.org/curated/en/857591468302730070/Sierra-Leone-Higherand-tertiary-education-sector-policy-note
World Bank (2020). World Development Indicators Online database. https://data.worldbank.org/data-catalog/world-development-indicators. Accessed 24 Feb 2020.
Yanguas, P. (2017). The role and responsibility of foreign aid in recipient political settlements. Journal of International Development, 29(2), 211–228. https://doi.org/10.1002/jid.3269.
Yanguas, P., & Bukenya, B. (2016). ‘New’ approaches confront ‘old’ challenges in African public sector reform. Third World Quarterly, 37(1), 136–152. https://doi.org/10.1080/01436597.2015.1086635.
Acknowledgements
This work would not have been possible without financial support from the International Growth centre (IGC) – project number 39408; my Sierra Leone team Abass Kargbo, Mousa Sesay, Sidi Saccoh, Umaro Tarawalie and Alpha Jalloh; and my research participants who gave of their time. I am also grateful for comments and feedback from Christopher Adam, Andy McKay, Martin Williams, Vincenzo Bove and Alex Jones. And to the taxpayers of Trinidad and Tobago, who funded my doctoral studies.
Funding
This study was funded by the International Growth centre (grant number 39408).
Author information
Authors and Affiliations
Corresponding author
Ethics declarations
Conflict of interest
The author declares that they have no conflict of interest.
Additional information
Publisher’s note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Appendix
Appendix
Rights and permissions
About this article
Cite this article
Harris, J. Foreign aid, human capital accumulation and the potential implications for growth. Rev Int Organ 16, 549–579 (2021). https://doi.org/10.1007/s11558-020-09408-8
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11558-020-09408-8