The Impact of Human Capital on Economic Growth

Paper Summary:

This paper analyzes how human capital accumulation and the development of new products and technology, through investments in R&D, interact in the determination of economic growth by providing incentives for each other.

From the Paper:

"By merging these two theoretical frameworks, it is been man's ambition to construct a model of economic growth based on human capital accumulation and R&D which should ideally be able to produce predictions in line with the findings of the empirical growth literature. Empirical studies of economic growth have introduced a variety of explanatory variables to account for cross-country variation in growth performance, e.g. enrolment rates, human capital stock proxies, labor force participation rates, fertility, private and public investment rates, foreign direct investment, equipment investment, revolutions and coups, inflation, black market exchange rate premium, market size, and number of people employed in R&D activities (see e.g. Barro 1991, DeLong and Summers 1991, Backus, Kehoe and Kehoe 1992, Levine and Renelt 1992, Mankiw, Romer, and Weil 1992, and Blomstrom, Lipsey and Zejan 1994). The results from these studies can be summarized in three key areas of importance for growth, namely; human capital, investments, and variables related the business environment."

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