Testing causality between human development and economic growth: a panel data approach

Muhammad Shahbaz, Azhar Iqbal and Muhammad Sabihuddin Butt

International Journal of Education Economics and Development, 2011, vol. 2, issue 1, 90-102

Abstract: This study provides evidence on human development-economic growth causality by employing a large macro panel dataset. We followed the UNDP's approach for human development. With the help of Hurlin (2004) fixed coefficient approach, we tested causality between human development and economic growth (EG). The results show homogeneous causality from HD to EG. This is not the same when we tested causality from EG to HD. A heterogeneous causality is found from EG to HD. Only Korea and Singapore have bidirectional causality between human development and economic growth. On the other hand, Bangladesh and Philippines have no causality from EG → HD (human development index, education-index, life-index, and PPP index). Result suggests that HD will lead EG but EG not always lead HD.

Keywords: panel causality test; human development; economic growth. (search for similar items in EconPapers)
Date: 2011
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