Towards Understanding the Triangular Relationship between Technology Innovation, Human Capital and Economic Growth in South Africa

Technology innovation and human capital are without doubt contributory factors to economic growth. However, not many of such studies have been conducted in Sub-Saharan Africa. This study assessed the triangular association between human capital, technology innovation and economic growth in South Africa over the period 1985-2015. The study used Johansen cointegration analysis and the vector error correction model (VECM) to test the relationships between these variables. Results revealed there is a long-term relationship and bi-directional relationships between them. Moreover, the results of short-term causality revealed two things: a unidirectional causality from economic growth to technology innovation and human capital; and causality from technology innovation to human capital. This implies that a boom in the economy and improvement in technology innovation in the short run would cause long run human capital development and accumulation which afterwards would lead to economic growth in South Africa.