The Relationship Between Human Capital Expenditures and Economic Growth in Türkiye

Ayşegül Durucan and Fatma Pınar EŞSİZ

Fiscaoeconomia, 2023, issue s1

Abstract: The effects of investments in human capital on economic growth are a subject that has been evaluated in the academic literature for a long time. Especially for developing countries with a problem of insufficient savings, it is vital that public expenditures are used most efficiently and resources are not wasted. In this respect, researching whether past public expenditures serve the expected purpose will contribute to the literature in terms of forming an idea for the public expenditures planned to be made in the future and guiding the expenditure policies. In this context, the article empirically analyzes the causality relationship between human capital expenditures -education and health expenditures- and growth, using annual data for the period 1963-2021 in Turkey. The analysis results show that there is a one-way causality from the per-capita gross domestic product variable, which is used as an indicator of growth, to health expenditures; it does not show a causal relationship from any of the human capital expenditures to growth. This result suggests that although any change made by the public authority in education or health expenditures will not cause a change in growth, and although it can be interpreted that a change in growth cannot be made through human capital expenditures, it also suggests that changing expenditure compositions rather than increasing or decreasing education and health expenditures and giving importance to quality rather than quantity, may produce more effective results.

Keywords: Economic Growth; Human Capital Expenditures; ARDL bound test; Toda-Yamamoto Granger causality test; Türkiye. (search for similar items in EconPapers)
JEL-codes: J24 O11 O15 O40 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:fis:journl:23s0127

DOI: 10.25295/fsecon.1345841

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