The Impact of Investment in Human Capital on Economic Growth in Algeria over the Period 2000–2022

Abstract

This paper investigates the impact of investment in human capital on economic growth in Algeria over the period 2000–2022. The Autoregressive Distributed Lag (ARDL) bounds-testing approach is used to capture the short-run and long-run dynamic relationship between the share of government expenditure allocated to higher education and scientific research, the share of government expenditure allocated to basic education, and the growth rate of Gross Domestic Product (GDP). The empirical results reveal a statistically significant negative long-run relationship between government spending on higher education and scientific research and GDP growth, while no statistically significant long-run relationship is found between spending on basic education and GDP growth. The error-correction term is negative and highly significant, confirming that short-run deviations are corrected rapidly toward long-run equilibrium. The paper concludes that raising the efficiency — not merely the volume — of public education spending, and aligning it more closely with labour-market requirements, is essential for translating human-capital investment into measurable economic growth in Algeria.