HUMAN CAPITAL AND INCLUSIVE GROWTH IN THE SELECTED DEVELOPING COUNTRIES
Keywords:
Human Capital, Panel Data, Employment, Income Inequality, Inclusive GrowthAbstract
This study examines the effects of human capital development on inclusive growth (IG) of developing countries. A surge in human capital (HC) rises the efficiency of workers that have spillover impacts on economic growth over the period 2000-2014. These effects trickle down to the lower segment of the population through job creation that lifts poor people out of poverty. This study uses panel data of 19 developing countries to explore the impacts of human capital on dynamic indicators of IG such as economic growth, employment, income disparity and poverty using the generalized method of moment (GMM) to tackle the problems of serial correlation, endogeneity and excluded variables bias. The outcomes of this study reveal that human capital has increasing effects on economic growth and employment while decreasing effects are observed for income inequality and poverty. Therefore, there is a need to enhance human capital development in developing countries to achieve the target of inclusive growth.References
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ADB. (2010). Measuring and monitoring inclusive growth: Multiple definitions, open questions and some constructive proposals. A. D. B. working paper series, No. 12.
ADB. (2009). Inclusive growth and inclusive development: A review and synthesis of Asian development bank literature. Asian Development Bank, Paper No. 8.
ADB. (2007). Inclusive growth towards prosperous Asia: Policy implications. E. R. D. working paper series 97.
Adedeji, O. S., Du, H., & Afari, M. O. (2013). Inclusive growth: An application of the social opportunity function to selected African countries. IMF working paper No., 139.
ADB. (2013). Determining correlates of poverty for inclusive growth in Africa. African Development Bank, Working paper series No.181.
Afzal, M., Farooq, M. S., Ahmed, H. K., Begum, I., & Qudus, M. A. (2010). Relationship between school education and economic growth in Pakistan: ARDL bound testing approach to cointegration. Pakistan Economic Social Review, 48(1), 39-60.
Afzal, M., Malik, M. E., Begum, I., Sarwar, K., & Fatima, H. (2012). Relationship among education, poverty and economic growth in Pakistan: An econometric analysis. Journal of Elementary Education, 22(1): 23-45.
Akmal, M. S., Ahmed, Q. M., Ahmed, M. S., & Butt, M. S. (2007). An empirical investigation of the relationship between trade liberalization and poverty reduction: A case for Pakistan. Lahore Journal of Economics, 12(1), 99-118.
Akram, M., & Khan, M. (2008). The long term impact of health on economic growth in Pakistan. Pakistan Development Review. 47(4), 487-500.
Alexander, K. (2015). Inclusive growth: Topic guide. GSDRC, University of Birmingham, UK.
Ali, I., & Zhuang, J. (2007). Inclusive growth towards prosperous Asia: Policy implications. E. R. D. working paper series, No. 97.
Ali, S., Chaudry, I. S., & Farooq, F. (2012). Human capital and economic growth in Pakistan. Pakistan Journal of Social Science, 32(1), 45-66.
Allahdadi, F., & Aref, A. (2011). Human resource development and poverty alleviation in Iran. Life science Journal, 8(3), 63-66.
Amjad, R. (2005). Skills and competitiveness: Can Pakistan break out the low-level skills trap. Pakistan Development Review, 44(4), 387-409.
Anand, R., Mishra, S., & Peiris, S. J. (2013). Inclusive growth, measurements and determinants. I. M. F. working paper, 135.
Anand, R., Tulin, V., & Kumar, N. (2014). Defining and explaining inclusive growth and poverty reduction. I. M. F. working paper. 63.
Anyanwu, J. C. (2013). Determining correlates of poverty for inclusive growth in Africa. ADB. Working paper series, No. 181.
Aoun, A. (2004). Poverty alleviation in the developing countries: The leading issues. European Journal of Business Innovation and Resource, 4(2), 18-23.
Arrow, K. J. (I962). ‘Economic welfare and the allocation of resources for invention,’ in (R. R. Nelson, ed.) The Rate and Direction of Inventive Activity. Princeton: Princeton University Press
Ashton, D. N., & Sung, J. (2005). Supporting workplace learning for high performance working. Res. Rep., I. L. O., Geneva.
Aoyagi, C., & Ganelli, G. (2015). Asia’s quest for inclusive growth revisited. IMF working paper. 42.
Balakrishnan, R., Steinberg, C., & Syed, M. (2013). The elusive quest for IG: Growth, poverty and inequality in Asia. I. M. F. working paper series, No. 152.
Baldecci, E., Clements, B., Gupta, S., & Cui, Q. (2008). Social spending, human capital and growth in developing countries. Journal of World Development, 36(8), 1317-1341.
Barro, R. J., & X. Sala-i-Martin. (2003). Economic growth, 2nd Edition, MIT press. Cambridge, MA.
Barro, R. J. (1991). Economic growth in a cross-section of countries. Quarterly Journal of Economics. 106(2), 403-443.
Bashier, A. A., & Wahban, A. N. (2013). The determinants of employment in Jordan: A time series analysis. International Revenue Management and Business Resource, 2(4), 927-936.
Becker, G. S. (1995). Human capital and poverty alleviation, H. R. O. working paper, No. 52.
Bils, M., & Klenow, J. P. (2000). Does schooling cause growth? American Economic Review, 90(5), 1160-1183.
Bloom, D. E., Canning, D., & Sevilla, J. (2004). The effect of health on economic growth: A production function approach. World Development, 32(1), 1-13.
Bordo, M., & Meissner, C. (2012). Does inequality leads to a financial crisis? Journal of International Money and Finance, 31(8), 2147-2161.
Bosworth, B., & Collins, S. M. (2003). Accounting for growth: Comparing China and India. Journal of Economic Perspective, 22(1), 45-66. CAFOD. (2014). What is Inclusive Growth? CAFOD discussion paper.
Ekanem, E. E., & Emanghe, E. E. (2014). Reducing unemployment incidence for economic security in Nigeria: The interplay of entrepreneurship education and urgent social intervention. British Journal of Marketing Studies, 2(3), 14-25.
Elena, I., & Sushana, L. (2010). IG analytics: Framework and application. Working paper No., 4851.
Fernandez, E., & Mauro, P. (2000). The role of human capital in economic growth: The case of Spain. IMF working paper, WP/00/08.
Fosu, A. K. (2010). Growth, inequality, and poverty reduction in developing countries: Recent global evidence. CSAE working paper, WPS/2011-07
Haan, A. D. (2013). Inclusive growth: More than safety nets. SIG working paper, 1: 1-16.
Hanushek, E. A. (2013). Economic growth in developing countries: The role of human capital. Economic and Education Review, 37, 204-12.
Hur, S. (2014). Govt. spending and inclusive growth in developing Asia. ADB working paper series 415: 4-39.
ILO. (2011). Macroeconomic stability, inclusive growth and employment. UN system task team on the post 2015. UN development agenda.
IMF. (2013). Jobs and growth: Analytical and operational consideration for the fund. Policy Paper.
IMF. (2014). Defining and explaining inclusive growth and poverty reduction. Working paper series, No. 63.
Imran, M., Bano,S., Azeem, M., Mehmood, Y ., & Ali, A. (2012). Relationship between human capital and economic growth: Use of co-integration approach. Journal of Agriculture and Social Science, 8(4), 135-138.
Janjua, P. Z., & Kamal, U. A. (2011). The role of education and income in poverty alleviation: A cross-country analysis. Lahore Journal of Economics, 16, 143-172.
Kapsos, S. (2005). The employment intensity of growth: Trends and macroeconomic determinants. ILO employment strategy paper .143-201.
Khan, M. A., (2001). Poverty reduction and human development: Issues and strategy. Lahore Journal of Economics, 6(2), 1-31.
Klasen, S. (2010). Measuring and monitoring inclusive growth: Multiple definitions, open questions and some constructive proposals. ADB working paper, 12.
Lee, I. H., Syed, M., & Wang, X., (2013). Two sides of the same coin? Rebalancing and inclusive growth in China. IMF working paper, WP/15/68.
Matilda, D. (2013). Does economic growth reduce poverty? (unpublished) M. Phil thesis, EPDIC, Soderton Univ. Sweden: 1-30.
Nelson, R., & Phelps, E. (1966). Investment in humans, technological diffusion and economic growth. American Economic Review, 56, 69-75.
Okun, A. M. (1962). Potential GNP: Its measurement and significance American Statistical Association, Proceedings of the Business and Economics Statistics Section, 98-104.
Osmani, S. R. (2008). The demands for inclusive growth: Lesson from South Asia. Pakistan Development Review, Part 1, 47(4), 381-402.
Ramos, R., R. Ranieri, R., & Lammons, J. (2013). Mapping inclusive growth. Working Papers 105, International Policy Centre for Inclusive Growth.
Rauniyar, G. and Kanbur, R. (2009). Inclusive growth and inclusive development: A review and synthesis of Asian Development Bank literature. Asian Development Bank, 8, 1-15.
Riddell, W. C., & Song, X. (2011). The impact of education on employment and re-employment success: Evidence from U.S labor market. IZA discussion paper No. 5572.
Romer, P. M. (1986). Increasing returns and long-run growth. Journal of Political Economy, 94, 1002-1037.
Romer, P. M. (1990). Are non-convexities important for understanding growth? American Economic Review, 80, 97-103.
Romer, P. M. (1990). Endogenous technological change. Journal of Political Economy, Part 2, 98(5), 71-101.
Samans, R., Blanke, J., Corrign, G., & Drzenick, M. (2015). Benchmarking inclusive and development. World economic forum. Discussion paper, 1: 1-36.
Santos, E. M., (2009). Human capital and the quality of education in a poverty trap model. OPHI working paper, No. 30.
Solow, R. M. (1957). Technological change and the aggregate production function. The Review of Economics and Statistics, 39(3), 312-320.
Tanaka, S., Spohr, C., & Amico, S. D. (2015). Human capital development, employment and labor markets. A. D. B. working paper series 469.
Tilak, J. B. G. (2007). Inclusive growth and education: On the approach to the eleventh year plan. Journal of Political Economy, 42(38), 3872-3877.
The World Bank (WB). (2009). Inclusive growth analytics: Framework and application. WB working paper series, 4851.
WB. (2007). World Bank indicators. Online available: http://ddp-ext. World Bank. Org/ext/DDPQQ.
Wambugu. A. (2011). The effects of educational attainment on employment outcomes in Kenya. International Journal of Education Administration and Policy Studies, 3(7): 94-102.
Wilson, R. A., & Briscoe, G. (2004). The impact of human capital on economic growth: A review. Cedefop reference series, 54.
Winters, J. V. (2012). Human capital externalities and employment: Differences across metropolitan area of US. IZA Discussion Paper, No. 6869.
Winters, P., & Chiodi, V. (2008). Human capital investment and long-term poverty reduction in rural Mexico. PSE working paper, No. 51.
ADB. (2010). Measuring and monitoring inclusive growth: Multiple definitions, open questions and some constructive proposals. A. D. B. working paper series, No. 12.
ADB. (2009). Inclusive growth and inclusive development: A review and synthesis of Asian development bank literature. Asian Development Bank, Paper No. 8.
ADB. (2007). Inclusive growth towards prosperous Asia: Policy implications. E. R. D. working paper series 97.
Adedeji, O. S., Du, H., & Afari, M. O. (2013). Inclusive growth: An application of the social opportunity function to selected African countries. IMF working paper No., 139.
ADB. (2013). Determining correlates of poverty for inclusive growth in Africa. African Development Bank, Working paper series No.181.
Afzal, M., Farooq, M. S., Ahmed, H. K., Begum, I., & Qudus, M. A. (2010). Relationship between school education and economic growth in Pakistan: ARDL bound testing approach to cointegration. Pakistan Economic Social Review, 48(1), 39-60.
Afzal, M., Malik, M. E., Begum, I., Sarwar, K., & Fatima, H. (2012). Relationship among education, poverty and economic growth in Pakistan: An econometric analysis. Journal of Elementary Education, 22(1): 23-45.
Akmal, M. S., Ahmed, Q. M., Ahmed, M. S., & Butt, M. S. (2007). An empirical investigation of the relationship between trade liberalization and poverty reduction: A case for Pakistan. Lahore Journal of Economics, 12(1), 99-118.
Akram, M., & Khan, M. (2008). The long term impact of health on economic growth in Pakistan. Pakistan Development Review. 47(4), 487-500.
Alexander, K. (2015). Inclusive growth: Topic guide. GSDRC, University of Birmingham, UK.
Ali, I., & Zhuang, J. (2007). Inclusive growth towards prosperous Asia: Policy implications. E. R. D. working paper series, No. 97.
Ali, S., Chaudry, I. S., & Farooq, F. (2012). Human capital and economic growth in Pakistan. Pakistan Journal of Social Science, 32(1), 45-66.
Allahdadi, F., & Aref, A. (2011). Human resource development and poverty alleviation in Iran. Life science Journal, 8(3), 63-66.
Amjad, R. (2005). Skills and competitiveness: Can Pakistan break out the low-level skills trap. Pakistan Development Review, 44(4), 387-409.
Anand, R., Mishra, S., & Peiris, S. J. (2013). Inclusive growth, measurements and determinants. I. M. F. working paper, 135.
Anand, R., Tulin, V., & Kumar, N. (2014). Defining and explaining inclusive growth and poverty reduction. I. M. F. working paper. 63.
Anyanwu, J. C. (2013). Determining correlates of poverty for inclusive growth in Africa. ADB. Working paper series, No. 181.
Aoun, A. (2004). Poverty alleviation in the developing countries: The leading issues. European Journal of Business Innovation and Resource, 4(2), 18-23.
Arrow, K. J. (I962). ‘Economic welfare and the allocation of resources for invention,’ in (R. R. Nelson, ed.) The Rate and Direction of Inventive Activity. Princeton: Princeton University Press
Ashton, D. N., & Sung, J. (2005). Supporting workplace learning for high performance working. Res. Rep., I. L. O., Geneva.
Aoyagi, C., & Ganelli, G. (2015). Asia’s quest for inclusive growth revisited. IMF working paper. 42.
Balakrishnan, R., Steinberg, C., & Syed, M. (2013). The elusive quest for IG: Growth, poverty and inequality in Asia. I. M. F. working paper series, No. 152.
Baldecci, E., Clements, B., Gupta, S., & Cui, Q. (2008). Social spending, human capital and growth in developing countries. Journal of World Development, 36(8), 1317-1341.
Barro, R. J., & X. Sala-i-Martin. (2003). Economic growth, 2nd Edition, MIT press. Cambridge, MA.
Barro, R. J. (1991). Economic growth in a cross-section of countries. Quarterly Journal of Economics. 106(2), 403-443.
Bashier, A. A., & Wahban, A. N. (2013). The determinants of employment in Jordan: A time series analysis. International Revenue Management and Business Resource, 2(4), 927-936.
Becker, G. S. (1995). Human capital and poverty alleviation, H. R. O. working paper, No. 52.
Bils, M., & Klenow, J. P. (2000). Does schooling cause growth? American Economic Review, 90(5), 1160-1183.
Bloom, D. E., Canning, D., & Sevilla, J. (2004). The effect of health on economic growth: A production function approach. World Development, 32(1), 1-13.
Bordo, M., & Meissner, C. (2012). Does inequality leads to a financial crisis? Journal of International Money and Finance, 31(8), 2147-2161.
Bosworth, B., & Collins, S. M. (2003). Accounting for growth: Comparing China and India. Journal of Economic Perspective, 22(1), 45-66. CAFOD. (2014). What is Inclusive Growth? CAFOD discussion paper.
Ekanem, E. E., & Emanghe, E. E. (2014). Reducing unemployment incidence for economic security in Nigeria: The interplay of entrepreneurship education and urgent social intervention. British Journal of Marketing Studies, 2(3), 14-25.
Elena, I., & Sushana, L. (2010). IG analytics: Framework and application. Working paper No., 4851.
Fernandez, E., & Mauro, P. (2000). The role of human capital in economic growth: The case of Spain. IMF working paper, WP/00/08.
Fosu, A. K. (2010). Growth, inequality, and poverty reduction in developing countries: Recent global evidence. CSAE working paper, WPS/2011-07
Haan, A. D. (2013). Inclusive growth: More than safety nets. SIG working paper, 1: 1-16.
Hanushek, E. A. (2013). Economic growth in developing countries: The role of human capital. Economic and Education Review, 37, 204-12.
Hur, S. (2014). Govt. spending and inclusive growth in developing Asia. ADB working paper series 415: 4-39.
ILO. (2011). Macroeconomic stability, inclusive growth and employment. UN system task team on the post 2015. UN development agenda.
IMF. (2013). Jobs and growth: Analytical and operational consideration for the fund. Policy Paper.
IMF. (2014). Defining and explaining inclusive growth and poverty reduction. Working paper series, No. 63.
Imran, M., Bano,S., Azeem, M., Mehmood, Y ., & Ali, A. (2012). Relationship between human capital and economic growth: Use of co-integration approach. Journal of Agriculture and Social Science, 8(4), 135-138.
Janjua, P. Z., & Kamal, U. A. (2011). The role of education and income in poverty alleviation: A cross-country analysis. Lahore Journal of Economics, 16, 143-172.
Kapsos, S. (2005). The employment intensity of growth: Trends and macroeconomic determinants. ILO employment strategy paper .143-201.
Khan, M. A., (2001). Poverty reduction and human development: Issues and strategy. Lahore Journal of Economics, 6(2), 1-31.
Klasen, S. (2010). Measuring and monitoring inclusive growth: Multiple definitions, open questions and some constructive proposals. ADB working paper, 12.
Lee, I. H., Syed, M., & Wang, X., (2013). Two sides of the same coin? Rebalancing and inclusive growth in China. IMF working paper, WP/15/68.
Matilda, D. (2013). Does economic growth reduce poverty? (unpublished) M. Phil thesis, EPDIC, Soderton Univ. Sweden: 1-30.
Nelson, R., & Phelps, E. (1966). Investment in humans, technological diffusion and economic growth. American Economic Review, 56, 69-75.
Okun, A. M. (1962). Potential GNP: Its measurement and significance American Statistical Association, Proceedings of the Business and Economics Statistics Section, 98-104.
Osmani, S. R. (2008). The demands for inclusive growth: Lesson from South Asia. Pakistan Development Review, Part 1, 47(4), 381-402.
Ramos, R., R. Ranieri, R., & Lammons, J. (2013). Mapping inclusive growth. Working Papers 105, International Policy Centre for Inclusive Growth.
Rauniyar, G. and Kanbur, R. (2009). Inclusive growth and inclusive development: A review and synthesis of Asian Development Bank literature. Asian Development Bank, 8, 1-15.
Riddell, W. C., & Song, X. (2011). The impact of education on employment and re-employment success: Evidence from U.S labor market. IZA discussion paper No. 5572.
Romer, P. M. (1986). Increasing returns and long-run growth. Journal of Political Economy, 94, 1002-1037.
Romer, P. M. (1990). Are non-convexities important for understanding growth? American Economic Review, 80, 97-103.
Romer, P. M. (1990). Endogenous technological change. Journal of Political Economy, Part 2, 98(5), 71-101.
Samans, R., Blanke, J., Corrign, G., & Drzenick, M. (2015). Benchmarking inclusive and development. World economic forum. Discussion paper, 1: 1-36.
Santos, E. M., (2009). Human capital and the quality of education in a poverty trap model. OPHI working paper, No. 30.
Solow, R. M. (1957). Technological change and the aggregate production function. The Review of Economics and Statistics, 39(3), 312-320.
Tanaka, S., Spohr, C., & Amico, S. D. (2015). Human capital development, employment and labor markets. A. D. B. working paper series 469.
Tilak, J. B. G. (2007). Inclusive growth and education: On the approach to the eleventh year plan. Journal of Political Economy, 42(38), 3872-3877.
The World Bank (WB). (2009). Inclusive growth analytics: Framework and application. WB working paper series, 4851.
WB. (2007). World Bank indicators. Online available: http://ddp-ext. World Bank. Org/ext/DDPQQ.
Wambugu. A. (2011). The effects of educational attainment on employment outcomes in Kenya. International Journal of Education Administration and Policy Studies, 3(7): 94-102.
Wilson, R. A., & Briscoe, G. (2004). The impact of human capital on economic growth: A review. Cedefop reference series, 54.
Winters, J. V. (2012). Human capital externalities and employment: Differences across metropolitan area of US. IZA Discussion Paper, No. 6869.
Winters, P., & Chiodi, V. (2008). Human capital investment and long-term poverty reduction in rural Mexico. PSE working paper, No. 51.
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2020-01-15
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