HUMAN CAPITAL-ECONOMIC GROWTH NEXUS: A CAUSALITY ANALYSIS FOR PAKISTAN

Abstract

This paper concentrates on the role of human capital in economic growth of Pakistan
during the period 1971-2012.Granger Causality test has been used as analytical
technique for this purpose. The study used research and development (R&D), education
and health as proxies for human capital. The results confirm the role of human capital in
the economic growth of the study area. The results show that human capital in form of
research and development (R&D) Granger caused economic growth during the study
period. Moreover, unidirectional causal relationships exist among different levels of
education, physical capital, R&D and economic growth. Realizing the significance of
human capital for sustained economic growth of the country, it is suggested to increase
investment in R&D, health and education sector of Pakistan.