Human Capital-Economic Growth Nexus: A Causality Analysis for Pakistan

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