Human Capital: Driving Force of Economic Growth in Selected Emergine Economies
DOI:
https://doi.org/10.18034/gdeb.v1i1.200Keywords:
BRIC countries, Economic growth, Human capital, poverty alleviation, educational attainmentAbstract
Human capital is the stock of competencies, knowledge and personality attributes deem vital to produce economic value. It is the attributes gained by a worker through education, training and experience. According to modern growth theory, the accumulation of human capital is an important contributor to economic growth. Numerous cross-country studies extensively explore whether educational attainment can contribute significantly to the production of overall output in an economy. The objective of this paper is to investigate the role of human capital in the fast economic growth of BRIC countries like Brazil, Russia, India and China during 2000-2011 and to assess sustainability of growth in future. The study is descriptive in nature because it mostly involves the description of the situation of human capital in the BRIC countries and measuring change in the selected important variables that is human capital and policy initiative and its effects on the BRIC economies. As the change in the selected variables is clearly visible there is no need to use regression analysis technique. The author has applied statistical techniques such as trend analysis, content analysis and ratio analysis to measure change in the selected variables wherever it is necessary. The findings of the study are interesting and divergent because the human capital development has played a vital role in the fast economic growth of China, India and Brazil while Russia, which was endowed with human capital right from the beginning, could not materialize the potential of human capital during its transition period from planned economy to market economy since 1990s, which is very much surprising. This appears the policy failure to capitalize the valuable human capital to accelerate economic growth. It has resulted in the scaling down of Russia to middle income economy. In contrast, India, China and Brazil have been fully utilizing their human capital potential by following human developing policies and this factor not only has triggered their economic growth but also alleviated poverty in there.
GEL Classification Code: F43; J24
Metrics
Downloads
References
Abed, George T., and Sanjeev Gupta, eds., (2002), "Governance, Corruption, and Economic Performance" (Washington: International Monetary Fund).
Adams, Richard, (2003), “Economic Growth, Inequality and Poverty: Findings from a New Data Set,” World Bank Policy Research Working Paper No. 2922 (Washington:World Bank). DOI: https://doi.org/10.1596/1813-9450-2972
Agion,P. and Hawitt,P. (1992) "A Model of Growth through Creative Destruction". Econometrica. 60 (2): 323-351 DOI: https://doi.org/10.2307/2951599
Arjona, Roman, Maxime Ladaique, and Mark Pearson, (2001), “Growth, Inequality and Social Protection,” OECD Labor Market and Social Policy Occasional Paper No. 51 (Paris: OECD).
Anand, Sudhir, and Martin Ravallion, (1993), “Human Development in Poor Countries: On the Role of Private Incomes and Public Services,” Journal of Economic Perspectives,Vol. 7 (Winter), pp. 133–50. DOI: https://doi.org/10.1257/jep.7.1.133
Baldacci, Emanuele, Maria Teresa Guin-Sui, and Luiz de Mello, (2003), “More on the Effectiveness of Public Spending on Health Care and Education: A Covariance Structure Model,” Journal of International Development, Vol. 15, pp. 709–25. DOI: https://doi.org/10.1002/jid.1025
Baldacci, Emanuele, Arye L. Hillman, and Naoko C. Kojo, (2004), “Growth, Governance, and Fiscal Policy Transmission Channels in Low-Income Countries,” European Journal of Political Economy, Vol. 20, No. 3, pp. 517–49. Also reprinted in Sanjeev Gupta, DOI: https://doi.org/10.1016/j.ejpoleco.2003.12.002
Barro, Robert J., (1996a), “Determinants of Economic Growth: A Cross-Country Empirical Study,” NBER Working Paper No. 5968 (Cambridge, Massachusetts: National Bureau of Economic Research). DOI: https://doi.org/10.3386/w5698
Jong-Wha Lee, (2010), “International Data on Educational Attainment: Updates and Implications,” Center for International Development Working Paper No. 42 (Cambridge, Massachusetts: Harvard University).
Barro, Robert, and Xavier Sala-i-Martin, (1995), “Economic Growth” (McGraw-Hill).
Bassanini, Andrea, and Stefano Scarpetta, (2001), “Does Human Capital Matter for Growth in OECD Countries? Evidence from Pooled Mean-Group Estimates,” OECD Economics Department Working Paper No. 282 (Paris: OECD). DOI: https://doi.org/10.2139/ssrn.265364
Benhabib, Jess, and Mark Spiegel, (1994), “The Role of Human Capital in Economic Development: Evidence from Aggregate Cross-Country Data,” Journal of Monetary Economics, Vol. 34, pp. 143–73.
Berry, C.R., and Glaeser, E.L., (2005) "The Divergence of Human Capital Level across Cities." Working paper: Chicago, IL: University of Chicago. DOI: https://doi.org/10.3386/w11617
Bidani, Benu, and Ravallion, Martin, (1997), “Decomposing Social Indicators Using Distributional Data,” Journal of Econometrics, 77, No. 1, pp. 125–39. DOI: https://doi.org/10.1016/S0304-4076(95)01809-3
Bils, Mark, and Peter J. Klenow, 2000, “Does Schooling Cause Growth?” American Economic Review, Vol. 90, No. 5, pp. 1160–83.
Bleaney, Michael F., (1996), “Macroeconomic Stability, Investment and Growth in Developing Countries,” Journal of Development Economics, Vol. 48, No. 2, pp. 461–77. DOI: https://doi.org/10.1016/0304-3878(95)00049-6
Bloom, David, and David Canning, 2003, “The Health and Poverty of Nations: From Theory to Practice,” Journal of Human Development, Vol. 4, No. 1, pp. 47–71. DOI: https://doi.org/10.1080/1464988032000051487
Jaypee Sevilla, 2004, “The Effect of Health on Economic Growth: A Production Function Approach,” World Development, Vol. 32, No. 1, pp.1–13. DOI: https://doi.org/10.1016/j.worlddev.2003.07.002
Blundell, R., and Stephen Bond, 1998, “Initial Conditions and Moment Restrictions in Dynamic Panel Data Models,” Journal of Econometrics, Vol. 87, No. 1, pp. 115–43. DOI: https://doi.org/10.1016/S0304-4076(98)00009-8
Benhabib, J. and M. Spiegel (1994). "The Role of Human Capital in Economic Development: Evidence from Aggregate Cross-Country Data." Journal of Monetary Economics 34, pp. 143-73. DOI: https://doi.org/10.1016/0304-3932(94)90047-7
Berman, E., J. Bound and S. Machin (1998). "Implications of Skill-Biased Technological Change: International Evidence." Quarterly Journal of Economics, November, pp. 1245-1280. DOI: https://doi.org/10.1162/003355398555892
Bils, M. and P. Klenow (2000). "Does schooling cause growth?" American Economic Review 90(5), pp. 1160-83. DOI: https://doi.org/10.1257/aer.90.5.1160
Bond, Stephen, Anke Hoeffler, and Jonathan Temple, 2001, GMM Estimation of Empirical Growth Models, Nuffield College Economics Paper No. 2001-W21 (Oxford: Oxford University).
Bruno, Michael, Martin Ravallion, and Lyn Squire, 1998, “Equity and Growth in Developing Countries: Old and New Perspectives on the Policy Issues,” in Vito Tanzi and Ke-young Chu, eds., Income Distribution and High Growth (Cambridge, Massachusetts: MIT Press).
Burdekin, Richard C.K., Arthur T. Denzau, and Manfred W. Keil, 2000, “When Does Inflation Hurt Economic Growth? Different Nonlinearities for Different Economies,” Working Paper in Economics No. 22 (Claremont, California: Claremont McKenna College).
Carrin, Guy, and Claudio Politi, 1996, “Exploring the Health Impact of Economic Growth, Poverty Reduction and Public Health Expenditure,” Macroeconomics, Health, and Development Series, No. 18 (Geneva: World Health Organization).
Castro, Claudio de Moura, and Philip Musgrove, 2001, “Why Education and Health Are More Different than Alike,” Economics of Education Series (Washington: World Bank).
Coulombe, Serge, Jean-François Tremblay, and Sylvie Marchand, 2004, “Literacy Scores, Human Capital and Growth Across Fourteen OECD Countries,” International Adult Literacy Survey Monograph Series (Ottawa: Statistics Canada).
Deaton, Angus, 2004, “Health in an Age of Globalization,” paper prepared for the Brookings Trade Forum (Washington: Brookings Institution). DOI: https://doi.org/10.1353/btf.2005.0004
Deuska, V., Jeong,B.,Keijak,M. and Vinogradov.V (2002) "Assessing the Problem of Human Capital Mismatch in Transitional Economies", William Davidson Institute Working Paper #467 University of Michigan. DOI: https://doi.org/10.2139/ssrn.282993
Filmer, Deon, and Lant Pritchett, 1997, “Child Mortality and Public Spending on Health: How Much Does Money Matter?” World Bank Policy Research Working Paper No.1864 (Washington: World Bank).
Filmer, Deon, Jeffrey Hammer, and Lant Pritchett, 1998, “Health Policy in Poor Countries:Weak Links in the Chain,” World Bank Policy Research Working Paper No. 1874 (Washington: World Bank). DOI: https://doi.org/10.1596/1813-9450-1874
Fischer, Stanley, 1993, “Role of Macroeconomic Factors in Growth,” Journal of Monetary Economics, Vol. 32, pp. 485–512. DOI: https://doi.org/10.1016/0304-3932(93)90027-D
Flug, K., A. Spilimbergo, and E. Wachtenheim, 1998, “Investment in Education: Do Economic Volatility and Credit Constraints Matter?” Journal of Development Economics, Vol. 55, pp. 465-81. DOI: https://doi.org/10.1016/S0304-3878(98)00045-5
Gemmel, N.,(1996), "Evaluating the Impacts of Human Capital Stocks and Accumulation on Economic Growth: Some New Evidence," Oxford Bulletin of Economics and Statistics, Vol. 58, pp. 9–28. DOI: https://doi.org/10.1111/j.1468-0084.1996.mp58001002.x
Gupta, Sanjeev, Hamid Davoodi, and Rosa Alonso-Termé, (2002a), “Does Corruption Affect Income Inequality and Poverty?” Economics of Governance, Spring.
Gupta, Sanjeev, Marijn Verhoeven, and Erwin Tiongson,( 2002b), “The Effectiveness of Government Spending on Education and Health Care in Developing and Transition Economies,” European Journal of Political Economy, Vol. 18, No. 4, pp. 717–37 DOI: https://doi.org/10.1016/S0176-2680(02)00116-7
Gupta, Sanjeev, Marijn Verhoeven, and Erwin Tiongson, ((2003), “Public Spending on Health Care and the Poor,” Health Economics, Vol. 12, pp. 685–96. Also reprinted inSanjeev Gupta, Benedict Clements, and Gabriela Inchauste, eds., Helping Countries Develop: The Role of Fiscal Policy (Washington: International Monetary Fund,2004).
Gupta, Sanjeev, Benedict Clements, Emanuele Baldacci, and Carlos Mulas-Granados, 2004, “Fiscal Policy, Expenditure Composition, and Growth,” Journal of International Money and Finance, forthcoming. Also reprinted in Sanjeev Gupta, Benedict Clements, and Gabriela Inchauste, eds., Helping Countries Develop: The Role of Fiscal Policy (Washington: International Monetary Fund, 2004).
Gyimah-Brempong, Kwabena, and Mark Wilson,( 2004), “Health Human Capital and Economic Growth in Sub-Saharan African and OECD Countries,” The Quarterly Review of Economics and Finance, Vol. 44, No. 2, pp. 296–320. DOI: https://doi.org/10.1016/j.qref.2003.07.002
Hamilton, Lawrence C.(199)1, “How Robust is Robust Regression?” Stata Technical Bulletin, Vol. 2 (July), pp. 21–26.
Hojman, David E.,( 1996), “Economic and other Determinants of Infant and Child Mortality in Small Developing Countries: The Case of Central America and the Caribbean,” Applied Economics, Vol. 28, pp. 281–90. DOI: https://doi.org/10.1080/000368496328641
Kim, K., and Moody, P.M., (1992) “More Resources, Better Health? A Cross-National Perspective,” Social Science and Medicine, Vol. 34, pp. 837–42. DOI: https://doi.org/10.1016/0277-9536(92)90253-M
Kaufmann D., A. Kraay, and M. Mastruzzi (2003), “Governance Matters III: Governance Indicators for 1996–2002.” World Bank Policy Research Working Paper 3106 (Washington: World Bank). DOI: https://doi.org/10.1596/1813-9450-3106
Krueger, Alan B., and Mikael Lindahl,( 2001), “Education for Growth: Why and For Whom?” Journal of Economic Literature, Vol. 39, No. 4, pp. 1101–1136. DOI: https://doi.org/10.1257/jel.39.4.1101
Levine, Ross, and David Renelt, (1992), “A Sensitivity Analysis of Cross-Country Growth
Regressions,” American Economic Review, Vol. 82, No. 4, pp. 942–63.
Lucas, Robert E. Jr.,( 1988), “On the Mechanic of Economic Development,” Journal of Monetary Economics, Vol. 22, pp. 3–42. DOI: https://doi.org/10.1016/0304-3932(88)90168-7
Li, Tairan and Richard Florida (2006), "Talent, Technological innovation and Economic Growth in China".
Mankiw, Gregory N., David Romer, and David N. Weil, (1992), “A Contribution to the Empirics of Economic Growth,” Quarterly Journal of Economics, Vol. 107, pp. 407–37. DOI: https://doi.org/10.2307/2118477
Mauro, Paolo,(1998), “Corruption and the Composition of Government Expenditure,” Journal of Public Economics, Vol. 69, No. 2, pp. 263–79. DOI: https://doi.org/10.1016/S0047-2727(98)00025-5
Mauro, Paolo, (1996), “The Effects of Corruption on Growth, Investment, and Government Expenditure “, IMF Working Paper No. 96/98 (Washington: International Monetary Fund). DOI: https://doi.org/10.5089/9781451852097.001
McGuire, A., D. Parkin, D. Hughes, and K. Gerard, (1993), “ Econometric Analyses of National Health Expenditures: Can Positive Economics Help Answer Normative Questions?” Health Economics, Vol. 2, pp. 113–26. DOI: https://doi.org/10.1002/hec.4730020205
Mingat, Alain, and Jee-Peng Tan,(1992), Education in Asia: A Comparative Study of Cost and Financing (Washington: World Bank).
Musgrove, P., (1996), “Public and Private Roles in Health: Theory and Financing Patterns,” World Bank Discussion Paper No. 339 (Washington: World Bank).
Noss, Andrew, (1991), “Education and Adjustment: A Review of the Literature,” PREM Working Paper WPS 701 (Washington: World Bank).
Pritchett, Lant, (1996), “Where Has All the Education Gone?” World Bank Policy Research Working Paper No. 1581 (Washington: World Bank).
Pritchett, Lant, and Lawrence H. Summers, 1996, “Wealthier is Healthier,” Journal of Human Resources, Vol. 31 (Fall), pp. 841–68. DOI: https://doi.org/10.2307/146149
Psacharopoulos, George, (1994), “Returns to Investment in Education: A Global Update,” World Development, Vol. 22, No. 9 (September), pp. 1325–43. DOI: https://doi.org/10.1016/0305-750X(94)90007-8
Psacharopoulos, George, and Harry Anthony Patrinos, (2002), “Returns to Investment in Education: A Further Update,” World Bank Policy Research Paper No. 2881 (Washington: World Bank).
Rajkumar, Andrew Sunil, and Vinaya Swaroop,(2002), “Public Spending and Outcomes:Does Governance Matter?” World Bank Working Papers No. 2840 (Washington:World Bank).
Romer, Paul,(1986), “Increasing Returns and Long-Run Growth,” Journal of Political Economy, Vol. 94, No. 5, pp. 1002–37.- 39 - DOI: https://doi.org/10.1086/261420
Sachs, Jeffrey, and members of the Commission on Macroeconomics and Health,( 2003), Macroeconomics and Health: Investing in Health for Economic Development (Geneva: World Health Organization).
Sen, Amartya , (1999), Development as Freedom (Alfred A. Knopf Inc.: New York).
Schramm,Noemi (2011) “Population-Control policies and their implications for Economic Growth in China”, Unpublished Bachelor’s Thesis, Department of Economics, University of Zurich,Swizerland.
Schultz, T. Paul, (1993), “Mortality Decline in the Low-Income World: Causes and Consequences,” Economic Growth Center Discussion Paper No. 681 (New Haven: Yale University).
Sianesi, Barbara, and John Michael Van Reenen, (2003), “The Returns to Education: Macroeconomics,” Journal of Economic Surveys, Vol. 17, pp. 157–200. DOI: https://doi.org/10.1111/1467-6419.00192
Soboleva.Irina (2011) "Pattern of Human Capital Development in Russia: Meeting the Challenge of Market Reforms and Globalization", Institute of Economy Russuan Academy of Science.
Strauss, John, and Duncan Thomas, (1998), “Health, Nutrition, and Economic Development,” Journal of Economic Literature, Vol. 36, No. 2. pp. 766–817.
Summers, Lawrence H., (1992), “Investing in All the People: Educating Women in Developing Countries,” EDI Seminar Paper No. 45 (Washington: World Bank).Temple, Jonathan R.W., 1999, “The New Growth Evidence,” Journal of Economic Literature, Vol. 37, No. 1, pp. 112–56.
Unger.Jens.M, Andreas Rauch, Michael Fres,Nina Rosenbusch (2009), "Human Capital and Entrepreneurial Success:A Meta-analytical review" . Journal of Business Venturing 26 (2011) 341-358. DOI: https://doi.org/10.1016/j.jbusvent.2009.09.004
World Bank, 1993), World Development Report 1993: Investing in Health (New York:
Oxford University Press for the World Bank).
Woszmann, Ludger,( 2003), “Specifying Human Capital,” Journal of Economic Surveys, Vol. 17, No. 3, pp. 239–70. DOI: https://doi.org/10.1111/1467-6419.00195
--0--
