Human Capital the Key to Economic Growth: Some New Evidence from Selected Developing Countries

Abstract

Purpose: The first generation of endogenous growth models express human capital is the key driver force of long run economic growth. However, the received empirical literature on the role of human capital in the long run economic growth is still inconclusive.  Keeping in view the inconclusiveness of empirical literature, in this study we try to investigate the role of human capital in terms of different indicators of health and education in the long run economic growth. Design/Methodology/Approach: The empirical estimations have been carried out though Pooled OLS using data set of 43 developing countries spanning from 1990 to 2018. Findings: The results of the study indicate that all education indicators signify its role in long run economic growth. Moreover, the other proxies of human capital education and health expenditures enter the model with positively and negatively respectively. However, health expenditure indicates significant effect on economic growth once it becomes conditional to education expenditure (the interactive term of education and health expenditures). Implications/Originality/Value: Findings of the study call for the attraction of public policy makers to rotate more resources to the accumulation of human capital in order to keep sustainable long run economic growth.