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Human Capital and Economic Growth: Pakistan, 1960-2003

  • Qaisar Abbas

    ()

    (Comsats Institute of Information Technology, Islamabad, Pakistan & Cardiff Business School, Cardiff University, UK.)

  • James Foreman-Peck

    ()

    (Cardiff Business School, Cardiff University.)

This paper investigates the relationship between human capital and economic growth in Pakistan with aggregate time series data. Estimated with the Johansen (1991) approach, the fitted model indicates a critical role for human capital in boosting the economy’s capacity to absorb world technical progress. Much higher returns, including spillovers, to secondary schooling in Pakistan than in OECD economies is consistent with very substantial education under-investment in Pakistan. Similarly, extremely large returns to health spending compare very favorably with industrial investment. Human capital is estimated to have accounted for just under one-fifth of the increase in Pakistan’s GDP per head. Since the 1990s, the impact of deficient human capital policies is shown by the negative contribution to economic growth.

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File URL: http://121.52.153.179/JOURNAL/Vol13-No1/01%20Human%20K%20&%20Econ%20Growth%2016th%20june.pdf
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Article provided by Department of Economics, The Lahore School of Economics in its journal Lahore Journal of Economics.

Volume (Year): 13 (2008)
Issue (Month): 1 (Jan-Jun)
Pages: 1-27

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Handle: RePEc:lje:journl:v:13:y:2008:i:1:p:1-27
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  1. Dilip Dutta & Nasiruddin Ahmed, 2001. "Trade Liberalisation and Industrial Growth in Pakistan: A Cointegration Analysis," ASARC Working Papers 2001-01, The Australian National University, Australia South Asia Research Centre.
  2. Barbara Sianesi & John Van Reenen, 2003. "The Returns to Education: Macroeconomics," Journal of Economic Surveys, Wiley Blackwell, vol. 17(2), pages 157-200, 04.
  3. Talat Anwar, 2004. "Recent Macroeconomic Developments and Implications for Poverty and Employment in Pakistan: The Cost of Foreign Exchange Reserve Holdings in South Asia," ASARC Working Papers 2004-14, The Australian National University, Australia South Asia Research Centre.
  4. Fazal Husain & Muhammad Ali Qasim & Khalid Hameed Sheikh, 2003. "An Analysis of Public Expenditure on Education in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 42(4), pages 771-780.
  5. Stephen L. Parente & Edward C. Prescott, 1997. "Monopoly rights: a barrier to riches," Staff Report 236, Federal Reserve Bank of Minneapolis.
  6. Behrman, Jere R. & Ross, David & Sabot, Richard, 2008. "Improving quality versus increasing the quantity of schooling: Estimates of rates of return from rural Pakistan," Journal of Development Economics, Elsevier, vol. 85(1-2), pages 94-104, February.
  7. World Bank, 2002. "Pakistan Development Policy Review : A New Dawn?," World Bank Other Operational Studies 15425, The World Bank.
  8. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-80, November.
  9. Sergio Rebelo, 1999. "Long Run Policy Analysis and Long Run Growth," Levine's Working Paper Archive 2114, David K. Levine.
  10. Charles I. Jones, 1995. "Time Series Tests of Endogenous Growth Models," The Quarterly Journal of Economics, Oxford University Press, vol. 110(2), pages 495-525.
  11. Peter J. Klenow & Mark Bils, 2000. "Does Schooling Cause Growth?," American Economic Review, American Economic Association, vol. 90(5), pages 1160-1183, December.
  12. Das, Jishnu & Pandey, Priyanka & Zajonc, Tristan, 2006. "Learning levels and gaps in Pakistan," Policy Research Working Paper Series 4067, The World Bank.
  13. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501.
  14. David Bloom & David Canning, 2003. "The Health and Poverty of Nations: From theory to practice," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 4(1), pages 47-71.
  15. Blankenau, William F. & Simpson, Nicole B., 2004. "Public education expenditures and growth," Journal of Development Economics, Elsevier, vol. 73(2), pages 583-605, April.
  16. Andrea Bassanini & Stefano Scarpetta, 2001. "Does Human Capital Matter for Growth in OECD Countries?: Evidence from Pooled Mean-Group Estimates," OECD Economics Department Working Papers 282, OECD Publishing.
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