Human Capital Capacity and Economic Growth: A Worldwide Analysis

Abstract

Human capital capacity proved to be an effectual indicator for potential growth of any economy.
Current study analyzed the effect of human capital capacity on economic growth around the world.
We took the cross-sectional data for the year of 2016 as a sample for130 countries across the globe.
Different techniques like t-test, F-test, ordinary least squares and standardized β coefficients were
used to analyze the data. Economic growth was measured by GDP per capita and used as dependent
variable while explanatory variables of the study comprised of human capital capacity, initial GDP
per capita, gross fixed capital formation, and population size. The study concluded that human
capital capacity enhanced the potential of the countries for economic growth around the world.
The initial GDP per capita (as in 1960) had negative coefficient which reinforced the theory of
growth convergence. The rest of independent variables had positive impacts on economic growth.
The study suggested that policy makers should focus on promotion of skills, training and
vocational and technical education in order to enhance the human capital capacity of its people.
Such undertakings will result in better standard of living and speedy economic growth.