Human Capital and Economic Growth: The Quest for the Most Relevant Level of Education in Pakistan

Sultan, Faisal and Tehseen, Syed and Arif, Imtiaz (2009): Human Capital and Economic Growth: The Quest for the Most Relevant Level of Education in Pakistan. Published in: NICE Research Journal, , Vol. 1, No. 1 (2009): pp. 1-11.

Abstract

The study examines the role of human capital in the economic growth of Pakistan by using primary, secondary and higher education enrolments as proxies for human capital in three different specifications. The idea behind these models is to find out the most relevant level of education in terms of its contribution in economic growth. The order of integration of the variables is checked through Augmented Dickey Fuller and Phillips Perron test. In order to find out the evidences of the long run relationship, Engle-Granger two step procedure is used. The findings are re-examined through Johansen and Juselius method. The study found that human capital is positively related with the long run economic growth with primary education as the most relevant level of education. It is therefore recommended that special attention should be given to the primary level of education.

• Item Type: MPRA Paper
• Language: English
• Keywords: Human Capital, Economic Growth, Education
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O15 - Human Resources ; Human Development ; Income Distribution ; Migration; O - Economic Development, Innovation, Technological Change, and Growth > O2 - Development Planning and Policy > O20 - General

References

Abbas, Q. (2000), The Role of Human capital in Economic Growth: A Comparative Study of Pakistan and India, Pakistan Development Review 39(4): 2, 45 1-473

Abbas, Q. (2001), Endogenous Growth and Human Capital. A Comparative Study of Pakistan and Srilanka, The Pakistan Development Review, 40(4): 2, 987-1007

Abbas, Q., and Foreman-Peek, J. (2007), Human Capital and Economic Growth in Pakistan 1960-2003, Cardif Economics Working papers, E2007/22

Barro, R. (1991), Economic Growth in a Cross Section of Countries, Quarterly Journal of Economics, 106(2): 407-433. NICE Research Journal, Volume No. 1, December 2009 11

Engle, R. F. \& Granger, C. W. F. (1987), Cointegration and Error Correction: Representation, Estimation and Testing, Econometrica, 51:251-76

Government of Pakistan (2009), Economic Survey. Finance Division, Economic Advisors Wing, Islamabad, Pakistan

Johansen, S. (1988), Statistical Analysis of Cointegration Vectors, Journal of economic dynamics and control, 12:23 1-54

Johansen, S. (1991), Estimation and Hypothesis testing of Cointegration vectors in Gaussian Vector Autoregressive Models, Econometrica, 59:1551-1580

Johansen, S. (1992), Determination of Cointegration Rank in the Presence of a Linear Trend, Oxford Bulletin of Economics and Statistics, 54:383-397

Johansen, S. and Juselius, K. (1990), Maximum Likelihood Estimation and Inference on Cointegration with applications to the Demand for Money, Oxford Bulletin of Economics and Statistics, 52(2): 169-210

Mankiw, N. Gregory; David Romer, \& David N. Well (1992), A Contribution to the Empirics of Economic Growth, Quarterly Journal of Economics, 107: 407-437

Philips, P. C. B \& Perron, P. (1988), Testing for a Unit Root in Time Series Regression, Bio-Metrika, 75:335-346

Pitchett, L. (1996), Where has all education gone? World Bank Economic Review, 15(3):367-391

State Bank of Pakistan (2005), Handbook of Statistics on Pakistan Economy, State Bank of Pakista