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Does Human Capital Cause Economic Growth? A Case Study of India

Author

Listed:
  • Sushil Kumar Haldar

    (Jadavpur University, Jadavpur, Kolkata-700032, India)

  • Girijasankar Mallik

    (School of Economics and Finance, University of Western Sydney, Locked Bag 1797, Penrith South DC, NSW 1797)

Abstract

This study examines the time series behavior of investment in physical capital, human capital (comprising education and health) and output in a co-integration framework, taking growth of primary gross enrolment rate and a dummy for structural adjustment programme (openness which has been initiated in 1991) as exogenous variables in India from 1960 to 2006. The results suggest that physical capital investment has no long-run nor short-run effect but the human capital investment has significant long-run effect on per capita GNP; the stock of human capital measured by primary gross enrolment rate (lagged by three years) and openness is found to have a significant effect on growth of per capita GNP. The Generalized Impulse Response Function confirms that the innovation in per capita GNP growth can only explain the movements of the growth of per capita GNP (itself) and investment in education human capital positively and significantly only for a short period of time but does not explain the movements of the investment in physical capital and health human capital. Moreover, the innovation in change in education human capital investment significantly and positively explains the movement of the changes in education human capital investment (itself), health human capital investment and growth of GNP per capita; the innovation in health human capital investment significantly explains the changes of education and health human capital investment only. This study may help towards policy modeling of economic growth in India, taking into account the relevance of endogenous growth.

Suggested Citation

  • Sushil Kumar Haldar & Girijasankar Mallik, 2010. "Does Human Capital Cause Economic Growth? A Case Study of India," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Democritus University of Thrace (DUTH), Kavala Campus, Greece, vol. 3(1), pages 7-25, July.
    • Handle: RePEc:tei:journl:v:3:y:2010:i:1:p:7-25
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    References listed on IDEAS

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    Cited by:

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    2. Muhammad Mansha & Xiuyun Yang & Ahmed Raza ul Mustafa & Muhammad Mubashar Nasim, 2022. "Empirical Analytics of SAARC vs ASEAN in Perspective of Economic Growth and Capital Accumulation," iRASD Journal of Economics, International Research Alliance for Sustainable Development (iRASD), vol. 4(2), pages 337-351, June.
    3. Ongo Nkoa B. Emmanuel & Vukenkeng Andrew Wujung & Seppo Martin P. Emmanuel, 2014. "Mechanisms of the Influence of Human Capital on Economic Growth: A Panel Data Analysis of the CEMAC Region," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(5), pages 625-640, May.
    4. Panagiotis PEGKAS & Constantinos TSAMADIAS, 2015. "Does Formal Education At All Levels Cause Economic Growth? Evidence From Greece," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 15, pages 9-32, June.
    5. Ghosh Dastidar, Sayantan & Chatterji, Monojit, 2015. "Public expenditure in different education sectors and economic growth: The Indian experience," MPRA Paper 66903, University Library of Munich, Germany.
    6. Lisbeth F. la Cour & Jennifer Müller, 2014. "Growth and project finance in the least developed countries," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Democritus University of Thrace (DUTH), Kavala Campus, Greece, vol. 7(2), pages 77-103, September.
    7. Lena Malešević-Perović & Vladimir Šimić & Vinko Muštra, 2013. "Investigating the Influence of Economic and Socio-Political Openness on Growth," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Democritus University of Thrace (DUTH), Kavala Campus, Greece, vol. 6(3), pages 35-59, December.
    8. Gargi Bhattacharya & Sushil Kr. Haldar, 2015. "Does demographic dividend yield economic dividend? India, a case study," Economics Bulletin, AccessEcon, vol. 35(2), pages 1274-1291.
    9. Parika, Ayushi & Singh, Bhanu Pratap, 2020. "How Does Human Capital Affect Economic Growth in India? An Empirical Analysis," MPRA Paper 102428, University Library of Munich, Germany.
    10. Zaira ADNAN & Mamta CHOWDHURY & Girijasankar MALLIK, 2019. "Foreign direct investment and total factor productivity in South Asia," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(2(619), S), pages 105-120, Summer.
    11. Ioanna Apostolidou & Achilleas Kontogeorgos & Anastasios Michailidis & Efstratios Loizou, 2014. "The Role of Agriculture in Economic Growth: A Comparison of Mediterranean and Northern Views in Europe," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Democritus University of Thrace (DUTH), Kavala Campus, Greece, vol. 7(3), pages 81-102, December.
    12. Sulekha Hembram & Sushil Kr. Haldar, 2020. "Is India experiencing health convergence? An empirical analysis," Economic Change and Restructuring, Springer, vol. 53(4), pages 591-618, November.
    13. P.K. Mishra (b), S.K. Mishra (b) and M.K. Sarangi (b), 2020. "Social Sector Development and Economic Growth in India, 1990-1991 to 2017-2018," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 45(4), pages 49-68, December.
    14. Bidzha, Mashudu Lucas & Ngepah, Nicholas & Greyling, Talita, 2024. "The impact of antiretroviral treatment on the relationship between HIV/AIDS and economic growth," Economic Analysis and Policy, Elsevier, vol. 81(C), pages 368-387.
    15. Raifu, Sisiaka Akande & Nnadozie, Obianuju Ogochukwu & Opeloyeru, Olaide Sekinat, 2021. "The Mediating Role of Institutional Quality in Human Capital-Economic Growth Nexus in Nigeria: Evidence from Aggregate and Gender Perspective," Journal of Economic Development, The Economic Research Institute, Chung-Ang University, vol. 46(4), pages 157-188, December.

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    More about this item

    Keywords

    Human Capital Investment; Cointegration; Economic Growth;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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