ISSN 1712-8056[Print]

Canadian Social Science ISSN 1923-6697[Online]

Vol. 15, No. 9, 2019, pp. 19-24 www.cscanada.net
DOI:10.3968/11266 www.cscanada.org

Impact of Institutional Quality on Educational Attainment: The Case of Low-

Income SSA Countries

Stephen Akpo Ejuvbekpokpo[a],*; Sallahuddin Hassan[b]

[a]

[b]
Department of Economics, Delta State University, Abraka Nigeria.
School of Economics, Finance and Banking, University Utara,
Key words: Sub Sahara African countries;
Malaysia. Educational attainment; Institutional quality; Rule of law;
*
Corresponding author. Corruption; Panel data; GMM
Received 12 August 2019; accepted 8 September 2019
Ejuvbekpokpo, S. A., & Hassan. S. (2019). Impact of Institutional
Published online 26 September 2019 Quality on Educational Attainment: The Case of Low-Income
Ssa Countries. Canadian Social Science, 15 (9), 19-24. Available
from: http://www.cscanada.net/index.php/css/article/view/11266
Abstract DOI: http://dx.doi.org/10.3968/11266
Education produces many social, political and economic
outcomes including improved cognitive competences,
higher wages, better health and enhanced economic
status. Nations ensure the development of their population INTRODUCTION
by the use of educational intervention. Despite the It is a known fact that the performance of innovation
documented empirical correlations of education attained, and educational attainment has been unequal regarding
there have been scanty researches exploring the impact the productivity of human capital in SSA countries. The
of institutional quality in low-income SSA countries. The sub-Sahara African region has seen a remarkable rise in
problem facing SSA can be ascertained in the area of primary and secondary school enrolment over the past
weak institutions which leads to poor level of educational decade. More children are reaching the last grade of
attainment and low level of life expectancy which have primary school with the aspiration of going onto secondary
become the focus of the development agenda in the education The low proportion indicates that countries
world as a whole and developing countries in general. are facing significant challenges in meeting the demand
The objective of this study is to evaluate the relationship for secondary education. In 2009 according to UNDP
between institutional quality and educational attainment (2014), SSA was up to 21.6 million, or 30% of all lower
in low-income SSA countries from 2005 to 2013. The secondary school-age children who are out of school
research used secondary data sourced from World Bank worldwide. Within the region, 40% of all lower secondary
governance indicators, Transparency International and school-age are girls and 33% of boys were out of school.
Heritage Foundation. The analysis was divided into panel It is important to note that human capital development
data using the fixed effects method (FEM) and generalized implies the acquisition of knowledge and intellectual
method of moments (GMM). Both the panel data analysis stock through the means of education for expansion
and the generalized method of moments of institutional of economic productivity, efficiency, performance and
quality and educational attainment indicated that most of output. The importance of human capital development
the countries investigated exhibits mixed performance cannot be over emphasized in this world of dynamic
in institutional quality. The study recommends policies economic changes, where human factors have been
to reduce corruption in all levels of economic activities. recognized as the most important factors of management.
In addition, rule of law need to be strengthened and the Out of the various factors that contribute to production;
educational sector should be refined to train manpower in physical factor, monetary factor, machines and man, man
all aspect of human activities in the region especially the has been identified as the most important and relevant out
low-income countries in SSA countries. of these factors UNDP (2014)

19 Copyright © Canadian Academy of Oriental and Occidental Culture

Impact of Institutional Quality on Educational Attainment:
The Case of Low-Income Ssa Countries

The categorization of countries into developed and there is a positive relationship between democracy and
developing nations is based on the human development education. The statistical correlations between education
rates of the people of the nations. Nations tries all they and democracy are positive and significant, and the OLS
have at their disposal to develop their population by the regression line also affirms this means that there is a
use of education intervention to ensure development. mutual relationship between democracy and education
Even organizations in adjustment to changes in the taking place in the sub-region (SADC). Note as far as the
business environment have to pay better attention research work is concerned, democracy is interchanged
on the development of their employees to be able to with quality institutions.
cope economically with the challenges of the business The literature on the consequences of democracy to
environment. education has attracted attention of different scholars
However the drives for a high level of educational in recent time. Bloom,Canniny and Chan (2005) used a
attainment boils down to the issue of strengthening sample with 62 countries covering the period 1975-1993
of institutional quality prevalence in the countries of and they reported that increases in democracy taking
investigation. Hodgson (2006) defines institutions as place in upcoming democracies have attracted increase in
durable systems established and embedded with social secondary school enrolment. On the other hand, Mulligan,
rules that structures social interactions. This definition Gil and Sala-i-Martin (2004) do not find evidence that
encompasses both formal and informal institutions in democracy affects education spending in their sample of
broad sense. In line with this definition, Fapounda (2012) 142 countries between 1960-1990.
opined that institutions are formal and informal rules Also, Brown and Hunter (2004) use a panel of 17
that are essential for economic performance outcome, countries between 1980 and 1997 to report that democracy
which varies from one country to another depending has had a positive effect on pre-primary and primary
on the institutional setting. In another scenario, Ekpo education spending in Latin American. More specifically
(2013) maintained that effective institutions provide for to SSA, Satasavage (2005) uses a sample of 44 countries
predictable and stable patterns of interaction in all spheres of African democracies between 1980 and 1996 to report
of life. Institutions are regarded as long lasting entities that that those recent democracies increased spending on
its speed of change may not be immediate rather, it takes primary education, and Harding and Satasavage (2013)
time to adjust. This is more peculiar with the informal suggest that school attendance is higher in democracies
institutions which rely on natural law. Nevertheless, than in non-democracies and that the abolition of school
formal and informal institutions form the basic structure fees in democratic states plays an important role in
of a given society but do not dictate the social, economic enhancing attendance.
and political relations and interactions of those affected by Researchers have long debated the relative importance
them (Leftwich & Sen, 2011). of education and institutions. Wietzke (2015) carried
out a research on long-term consequences of colonial
institutions and human capital investments: sub-national
1 . L I T E R AT U R E R E V I E W O N evidence from Madagascar. This study from Madagascar
INSTITUTIONAL QUALITY AND represents one of the few systematic attempts to
disentangle the separate economic effects of historical
EDUCATIONAL ATTAINMENT school investments and colonial institutions within a
In the educational attainment concept which is also called comparable national context (Acemoglu, Gallego, &
knowledge development dimension, is classified into four Robinson, 2014). Regions which received stronger
indicators. These indicators provide both the quantity property rights and legal institutions in the colonial period
and quality aspects of knowledge and/or human capital tend to record much better economic outcomes over time
accumulation. The indicators are the following: adult than areas with comparable geographic and historical
literacy rate, primary school enrolment rate, secondary characteristics (Wietzke, 2015).
school enrolment rate and total number of years in schools Furthermore, Neugarten (2015) investigates the role of
(Barro & Lee, 2013). The idea here is to capture not only educational attainment on state failure throughout Africa
total literacy conditions, but also to see their components. since 1950, the beginning of the independence era. The
Beltencourt (2013) carried out an investigation to study uses 31 countries ranging from the northernmost
access the role of democracy in determining education tip of Africa to the southernmost. Although educational
in Southern African Development Community (SADC). attainment is not directly an institution, a country’s
The period of the investigation was from 1980-2009 and academic achievement is most likely highly correlated
the data was got from the 15 countries that make up the with how well the educational sector functions In
SADC. The basic investigation was to ascertain whether addition, this result is consistent with earlier findings by
democracy play any role in enhancing education in the Green and Moser (2013), who find positive associations
region. The method used was panel time-series analysis between local property rights and manufacturing activities
(T= 30 and N=15). The descriptive of the data suggest that in Madagascar.

Copyright © Canadian Academy of Oriental and Occidental Culture 20

 Stephen Akpo Ejuvbekpokpo; Sallahuddin Hassan (2019).
Canadian Social Science, 15 (9), 19-24

Education is not only a way to better income and or by other local processes of endogenous human capital
employment opportunities for all or a source of economic accumulation, like domestic migration or learning-related
growth for the nation. But it also plays a pivotal role spillovers (Glaeser & Gottlieb, 2009; Lucas, 1988; Romer,
in improving other social indicators. It leads to better 1990). However, the issue of state failure and instability
life expectancy and health care, smaller family norms, is one of great concern for the west and the inhabitants of
greater community and political participation. It also leads fragile states throughout Africa.
to reduction of inequality, poverty elevation and good
governance. It is a pre-condition to establish democracy in Model specification and method of Analysis
a country (Carlos, 2016) To estimate our model consistently and efficiently, this
This case has been made forcefully by former colonies study used both static and dynamic panel data analysis.
that were chosen for European settlement; they do For static panel, random and fixed effects are used to
better today due to the higher quality of the institutions assess the behavior of the variables. In addition, dynamic
they received in the colonial era. While the authors panel data of generalized method of moments (GMM)
acknowledge that better institutions tend to be associated is also applied to test the robustness of the model. For
with higher rates of investment in human capital, they dynamic panel data models (Arellano and Bover, 1995)
interpret this as a result of institutional development encompasses regression equation in both differences
(Acemoglu & Robinson, 2012). and levels, each one with its specific set of instrumental
Also studies in this area rely on sub-national data variables. The use of instrumental variables is required to
and do not typically account for possible interactions handle two issues. First, we can resolve the problem of
between institutions and human capital within localities. simultaneity and reverse causation that is due to the likely
For example an article by Gennaioli, La Porta, Lopez-de- endogeneity of the regressors used in this type of equation
Silanes, and Shleifer (2013), who document that economic and to reduce the estimation bias because of the under
effects of local human capital outweigh those of local reporting of institutional qualities incapability within
institutions in a large sample of developing and developed the SSA countries. Nevertheless, the researcher used the
regions, only uses contemporaneous data to buttress this GMM estimator developed by Anderson and Hsiao (1981),
stance. This was also corroborated by Acemoglu and Griliches and Hausman (1986), Hsiao (2003) Blundell
Dell (2010). As a consequence, the authors cannot fully and Bond (1988) for dynamic models of panel data. The
account for the possibility that local skill and education model is formally stated in conjunction with the objective
levels are influenced by the quality of local institutions, of the research as shown in Equation (1) this is consistent
with Arellano, 2003 and Poveda,
EDU it = β 2t + δ 1 EDU it −1 + δ 2 RLI it + δ 3 C
I it + δ4B
Q it + δ 5 PRI it + δ 6 H
E + δ 7 SE
+ δ 8G
E it + δ 9 INFRit + ε it
201.2)
(1)

where,
EDU = Educational attainment (school enrolment)
PRI = property right (percentage)
RLI = rule of law (percentage)
CI = corruption index (percentage)
BQ = bureaucratic quality (percentage)
GE = government expenditure (percentage of GDP)
SE = School expenditure (proxied by total % of GDP )
INFR = infrastructural facilities (percentage)

2. RESULTS AND DISCUSSION

From the Hausman test result, Education’s χ2 value is 0.047 shows negative coefficient. In other words, one percent
hence Fixed Effect Model (FEM) estimator is applicable increase in rule of law index implementation in the region
instead of Random Effect Model (REM). This follows the on average leads to 0.04 percent decrease on educational
discussion below. The results of estimation are shown attainment of the people in the area of this study. This is
in Table 1 The table shows that all the variables’ has not in agreement with human development theory and this
negative coefficient such as RLI, CI, BQI, SE, LAB and finding lays credence to previous studies such as Osman,
INFR except the coefficient of PRI which has a positive Alexiou and Tsaliki (2012) and Cross and Donelson
sign. Also, RLI, CI and PRI are statistically significant (2010). In their submission that rule of law serve as an
at the conventional level of significance. The rule of engine room that promotes peace and security and safety
law index is statistically significant at five percent but net for educational attainment.

21 Copyright © Canadian Academy of Oriental and Occidental Culture

Impact of Institutional Quality on Educational Attainment:
The Case of Low-Income Ssa Countries

Corruption index is also statistically significant at Table 1-b

five percent but with negative coefficient. This implies GMM Results on Institutional Quality and Educational
Attainment in Low-Income
that one percent increase on the control of corruption on
Standard
average leads to 0.05 percent decrease on educational Variable Coefficient
Error
z-value Prob>| z |
attainment. This result also contravenes the human Constant 17.522 3.567 4.91 0.000*
development theory. Ideally, control of corruption in
RLI 1.016 2.371 0.43 0.668
the society leads to increase on educational attainment
CI -2.192 0.761 2.88 0.004*
because funds that were supposed to be stolen is made
available for judicious use for the people’s education as BQI 0.012 0.071 0.18 0.860
asserted by Barro and Lee (2013); Beltencourt (2013) PRI -0.267 0.067 3.97 0.000*
and Wietzke (2015). SE 0.264 0.044 6.03 0.000*
Nonetheless, BQI is statistically insignificant with LAB -0.138 0.015 9.47 0.000*
a negative coefficient. While, property rights index
INFR 0.963 0.336 2.86 0.004*
is statistically significant at five percent level of
significance with positive coefficient. In other words, Diagnostic Statistics:
a one percent increases on effective implementation of
property right in the region on average leads to 0.13
Wald χ 29 = 12526.560

percent increase on educational attainment in low- P r o b 0.000

income SSA countries. This result is consistent with ( χ2)
economic theory and also supported by previous studies
such as German Soto and Flores (2015) and Wietzke Sargan test χ 342 = 19.428
(2015). They assert that security of property rights
has the potential to advance the standard of living and P r o b
0.979
educational attainment. ( χ2)
Table 1
Table 1-a Order Z P>Z
Institutional Quality and Educational Attainment in Arellano- 1. 0.637 0.524
Low-Income Countries: Fixed Effect Bond
2. 0.241 0.810
Standard
Variable Coefficient t-value Prob>| t Note: * and ** indicates significance at 5 and 10 percent level of
Error
significance.
Constant 6.828 0.127 53.56 0.000*
For the instrumental variables apart from INFR
RLI 0.042 0.013 3.32 0.001* which is statistically significant at ten percent but with
CI 0.045 0.017 2.63 negative coefficient, The other variables like SE and
0.009* LAB are insignificant in terms of their relationship with
BQI 0.002 0.022 0.13 0.895 educational attainment in the sub-region. In other words,
PRI 0.128 0.024 5.38 0.000* lack of encouragement from government through effective
SE 0.020 0,014 1.43 0.156
educational policies on education contributed to the
high level of illiteracy in the region. This assertion lends
LAB 0.018 0.017 1.08 0.282 support to the ones reported by previous studies Klomp
INFR 0.009 0.005 1.68 0.095** and Haan (2013), Saulawa (2014) and Acemoglu, Gallego
Diagnostic statistics: and Robinson (2014) opined that there is a huge regional
imbalance within the countries due to poor implementation
R2: Within 0.300
of educational policies in the SSA countries in general and
Between 0.006 the selected low-income countries in particular.
Overall 0.009 Various diagnostic checks were performed and
the results are also shown in Table 1 These include
Wald = 282.320 the results of multicollinearity, heteroskedasticity and
χ 72
autocorrelation. However, the post estimation has shown
Prob ( that the model has no issue of heteroskedasticity and
χ2) 0.000
autocorrelation. The discussion was based to on FEM as it
Multicollinearity 1.320 relates to the model.
Heteroskedasticity 54239.280 In addition, GMM was also computed for this model
and the result is reflected in Table 1 and the interpretation
Serial Correlation 171.012 is done thus. RLI is statistically insignificant, but with
F–statistics F(24, 193) = 913.23 positive coefficient. In this circumstance it means that

Copyright © Canadian Academy of Oriental and Occidental Culture 22

 Stephen Akpo Ejuvbekpokpo; Sallahuddin Hassan (2019).
Canadian Social Science, 15 (9), 19-24

rule of law index does not contribute positively to the CONCLUSION

educational attainment in the region. However this Generally, the paper investigates the impact of
situation is in contrary to human capital development institutional quality and educational attainment in low-
theory. Therefore the implementation of rule of law policy income SSA countries. Both static and dynamic panel
is expected to influence the educational attainment of data analysis was employed. The key findings include
the people positively. Nevertheless, corruption index is institutional qualities such as rule of law and corruptions
statistically significant at five percent level of significance, are major contributing setback on the educational
with negative coefficient. In other words, one percent attainment in the low-income SSA countries. The paper
increase in corruption index (control of corruption) on therefore, recommends improvement in government
average leads to 2.19 percent decrease in educational expenditure on health, education and economic services
attainment in the region. This finding is inconsistent with as components of productive expenditure to boost
the human development theory and supported by previous economic development. Also, institutional activities such
studies such as Barro and Lee (2013), Saulawa (2014) and as rule of law, control of corruption and bureaucratic
Acemoglu, Gallego and Robinson (2014) they opined that quality need to be effectively implemented to bring
there is a huge regional imbalance within the countries about accountability, transparency, justice and fairness.
due to poor provision of infrastructural facilities in the In addition, policy-makers in these countries should
SSA countries as a result of high level of corruption. focus on the capability and capacity of government
In another scenario, bureaucratic quality index is institutions in carrying out comprehensive monitoring,
insignificant but has positive sign. In other words, increase implementation and evaluation of educational policies
in effective bureaucratic qualities index in the society, through increased investment on education.
suppose to increase the level of educational attainment
when all other things are held constant. That is to say,
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Copyright © Canadian Academy of Oriental and Occidental Culture 24