Abstract
Human centric policies play important role in materializing the dream of sustainable economic development. In this regard investigation of human capital formation (HCF) and its
transmission mechanism to sustainable economic growth cannot be overlooked. This study aims
to estimate and analyze the long run and short run dynamics between economic growth and
HCF by employing ARDL technique of Pesaran et al. (2001) in case of Pakistan. The study
uses time series data from 1972 to 2014 regarding the selected variables of HCF proxied by
growth of secondary school enrollments (GEDU) and life expectancy at birth (LHLTH) along
with other determinants of economic growth. Such variables include growth of fixed capital
formation (GFCF), employed labor force (LELF), openness of the economy (LOPEN) and
regime changes (REG. Variance Decomposition (VDCs) is estimated for further inferences.
The estimated ARDL model indicates a stable long run relationship between economic growth
and the components of HCF. The findings of the study are in conformity with the Mankiw–
Romer–Weil (1992) model; however, the extent of influence of health indicator is much stronger
than that of education indicator. After ‘pre and post’ time series diagnostic and reliability tests,
the study reveals that HCF cannot be ignored while achieving sustainable economic growth and
hence sustainable economic development. The study further indicates that though HCF is essential however; the importance of its different components is asymmetric. Based on the findings of
the study, heavily weighted HCF components if targeted on priority bases will help accelerating
economic growth in Pakistan, as investment in education alone will not be suffice unless the health
sector is equally targeted
Ibrar Hussain, Zahoor Khan, Muhammad Rafiq, Arshad Ali, Umar Hayat. (2016) A Dynamic Analysis of the Nexus of Human Capital Formation and Economic Growth: A Case of Pakistanr, Journal of Rural Development & Administration, Volume 47, Issue 1.
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