Decomposing the relationship between human capital and GDP:an empirical analysis of Bangladesh

Nazneen Ahmad and Joseph French

Journal of Developing Areas, 2011, vol. 44, issue 2, 127-142

Abstract: This paper dissects the relationship between human capital stock and real GDP per capita in Bangladesh using VEC and VAR techniques. Results show that GDP granger causes aggregate human capital stock. This paper constructs a measure of Bangladesh's human capital stock for the period of 1973-2004 using the perpetual inventory method. Innovations in secondary and higher secondary education are found to have the greatest short to medium-term impact on the country's real GDP. Consistently this research also finds evidence that the variance of the human capital sequence is strongly influenced by shocks to the GDP sequence, whereas the evolution of GDP over the medium term is relatively unaffected by shocks to aggregate human capital stock. These results show that increases in human capital tend to follow income. The findings of this research suggest that secondary and higher secondary education should be emphasized by Bangladesh.

Keywords: Human capital; education; GDP (search for similar items in EconPapers)
JEL-codes: I2 O1 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:jda:journl:vol.44:year:2011:issue2:pp:127-142

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