Relationship Between Human Capital and Economic Growth: An Application to Developing Countries

Abstract

High and sustainable economic growth, that is an important indicator of life quality, is an essential condition in the realization of economic growth. In this regard, achieving strong economic growth in developing countries which mostly need development today, is one of the most debated topics. For many years, physical capital has been recognized as the most important determinant of economic growth. New approaches to economic growth have been developed since 1980s. In this context, according to endogenous growth theory, it is stated that the most important determinant of economic growth is the human capital stock. Today, while the subject of economic growth is examined, the effect of human capital on economic growth is intensively investigated. In this study, the impact of human capital on economic growth for selected 32 developing countries is investigated by panel data analysis method using data from the period 2000-2014. The focus of the study is also the direction and degree of effect of the increase in the level of education on economic growth. According to empirical analysis results, it is founded that human capital positively affects economic growth. It has also been found that its positive effect on economic growth has reduced while the education level has increased. On the other hand, the results of the analysis indicate that physical capital has a positive impact and that the labor negatively affects economic growth in the studied countries. However, it has been determined that the effect of human capital on economic growth is lower than that of physical capital.

Revisiting the empirical relationship among the main targets of sustainable development: Growth, education, health and carbon emissions

“…Notably, we observe that the role of labour for economic progress varies with the level of income and regions. Previous literature has also confirmed similar findings regarding human capital and economic growth (Abbas & Foreman-peck, 2008;Abimbola & Abdulfatai, 2017;Altiner & Toktas, 2017;Amir, Khan, & Bilal, 2015;Khan, 2018).…”

Human Capital Formation and Economic Growth in Sub-Saharan African Countries: An Empirical Investigation

“…Altiner and Toktas (2017) examined the impact of human capital development on the economic growth of selected 32 developing countries with a panel data analytical method. The study had two issues in focus: examining the direction of causality and the magnitude of the impact of the rise in the educational level on economic growth.…”

“…Findings showed that investments in primary and secondary education explained the variations to the growth of economic activities in East Asia better than the expenditures on tertiary and vocational education in South Asia. Altiner and Toktas (2017) examined the impact of human capital development on the economic growth of selected 32 developing countries with a panel data analytical method. The study had two issues in focus: examining the direction of causality and the magnitude of the impact of the rise in the educational level on economic growth.…”

When Will Human Capital in Indonesia be Equal? A Convergence Analysis

“…The Human Capital Index is defined as a measure that describes the knowledge, information, ideas, and expertise of an individual, all of which can be obtained through formal education. Thus, several previous researchers proxied human capital using school enrollment rates (Altiner & Toktas, 2017;Barro, 2001;Hanushek, 2013;Mankiw et al, 1992;Murthy, 1997). The Human Capital Index in this study was formed using the method developed by the World Economic Forum ( 2017), which the authors further modify as follows.…”