Human Capital and Growth: An Examination into Education and the Role of Political Institutions in Fostering Economic Growth

This paper empirically studies the relationship between human capital and economic growth. The role of institutions, advanced as an important determinant of growth, is also examined. Human capital is hypothesized to positively affect growth through the enhancement of worker capabilities. Political institutions are hypothesized to be an important factor in creating and maintaining an environment conducive to growth. Using panel data of East and Southeast Asian countries from 1985 to 2010 an empirical model is constructed to statistically test the effect of primary school enrollment on GDP per capita growth in addition to other important variables. The results indicate that growth is significantly fostered by primary school enrollment, investment, and GDP per capita. No statistically significant evidence of institutional variables, measuring democracy and corruption, being important for growth is found. These findings support the primary hypothesis that the development of human capital is key in stimulating growth