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Human Capital, Social Capabilities and Economic Growth

Author

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  • Muhammad Ali

    (The World Bank, Islamabad, Pakistan)

  • Abiodun Egbetokun

    (Science Policy and Innovation Studies, National Centre for Technology Management, Ile-Ife 220005, Nigeria)

  • Manzoor Hussain Memon

    (Applied Economics Research Center, University of Karachi, Karachi 75270, Pakistan)

Abstract

Theoretically, human capital is conclusively believed to be positively related with economic growth. While empirically, the said relationship does not always hold for several reasons. Thus, the current paper presents new results on a set of conditions under which human capital is robustly and positively associated with economic growth. Using data for 132 countries over 15 years, the empirical results reveal that human capital plays a positive role in per capita GDP growth only in the presence of better economic opportunities and high-quality legal institutions. In fact, economic opportunities reinforce the effect of human capital on growth: the easier it is to do business and trade domestically or internationally, the stronger the effect of human capital on growth. In conclusion, the findings suggest that inconclusive results in previous empirical studies on human capital and growth might be due to omitted variable bias as these studies do not include variables related to social capabilities.

Suggested Citation

  • Muhammad Ali & Abiodun Egbetokun & Manzoor Hussain Memon, 2018. "Human Capital, Social Capabilities and Economic Growth," Economies, MDPI, vol. 6(1), pages 1-18, January.
    • Handle: RePEc:gam:jecomi:v:6:y:2018:i:1:p:2-:d:125115
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    More about this item

    Keywords

    human capital; economic growth; economic opportunities; social capabilities;
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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