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Finance, Human Capital and Economic Development: A Multi-Dimensional Analysis and Long-Run Impacts

Author

Listed:
  • Canh Phuc Nguyen
  • Christophe Schinckus
  • Felicia H.L. Chong
  • Binh Quang Nguyen
  • Duyen Thuy Le Tran

    (University of Economics Ho Chi Minh City)

Abstract

Applying panel fully modified OLS for a global sample of 88 economies over two decades, this study investigates how the growth affects financial development and human capital accumulation in the long-run. The human capital accumulation has a significant positive impact on the output in our full sample and the LMEs, while it appears to have a significant negative impact for the HIEs. The financial development is found to have a significant positive impact. This article investigates the long term effects of FD and human capital on economic development. Our empirical results highlight the positive impacts of financial development (in general) on economic development. Generally speaking, human capital seems to have a long-run positive influence - the results from dynamic fixed effects autoregressive distributed lag (DFE ARDL) show that the positive impact of human capital is consistent in the long-run, but not really statistically significant in the short run. Financial markets mostly have short-run positive impact and financial institutions have a long-run positive impact on the GDP. Finally, the association between the financial development and human capital in the LMEs shows a significant positive impact for all indicators. These results imply a stronger impacts of the FD in case of the LMEs (or lower level of human capital).

Suggested Citation

  • Canh Phuc Nguyen & Christophe Schinckus & Felicia H.L. Chong & Binh Quang Nguyen & Duyen Thuy Le Tran, 2023. "Finance, Human Capital and Economic Development: A Multi-Dimensional Analysis and Long-Run Impacts," Review of Development Finance Journal, Chartered Institute of Development Finance, vol. 13(1), pages 65-91.
    • Handle: RePEc:afj:journ3:v:13:y:2023:i:1:p:65-91
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    File URL: https://journals.co.za/doi/abs/10.10520/ejc-rdfin_v13_n1_a5
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    More about this item

    Keywords

    Financial development; human capital; GDP; GDP per capita; long-run;
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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