Human Capital Accumulation and Economic Growth in South Asia: A Bi-directional Relationship
Author: Nabya Tehreem

The study analyzes the effect of human capital accumulation on GDP per capita and vice versa for the South Asian countries. Bhutan is excluded from the sample of South Asian countries due to lack of human capital accumulation data. Using the log linearization of the Mankiw et al. (1992) human capital augmented model, a simultaneous equation system is obtained where the causality runs from human capital accumulation to GDP per capita and from GDP per capita to human capital accumulation. The estimation of the simultaneous equation system with panel data is done with the help of two stage non-linear least square which controls for the endogeneity. The results of the estimation show that GDP per capita has positive effect on the average years of schooling. Growth rate of human capital accumulation also positively affects the growth rate of the GDP per capita. The retirement rate of the human capital is also estimated which is higher than the depreciation rate of the physical capital. Robustness analysis also shows that the coefficients estimated from this system are robust and not sensitive to the inclusion of new variables in the model. Supervisor:- Dr. Sajid Amin

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Supervisor: Sajid Amin Javed

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