Ankara Long-Run Growth Effect of the Physical Capital-Human Capital Complementarity: An Approach by Time Series Techniques

This paper aims to explore physical capital (K) and human capital (H) complementarity impact on long-run economic growth. It is hypothesized that in times of frequent innovations factor complementarity plays a more significant role in explaining GDP growth than factor substitutability adopted among neoclassical and endogenous growth models. VAR results confirm that physical capital and human capital accord showing complementarity is a good proxy in explaining GDP growth for selected developed countries. The estimates yield results showing very short term and stabilizing impacts on innovation for all tested countries