Human Capital and Growth: New Evidences from African Data

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Abstract
Economic theory has long acknowledged a positive relation between human capital and economic growth (Smith, 1776 Smith, A. 1776. The Wealth of Nations, New York : Random House. [Google Scholar] ; Becker, 1964 Becker, G. 1964. Human Capital: A Theoretical Empirical Analysis with Special Reference to Education, New York : Columbia University Press. [Google Scholar] ), which was nevertheless called into question in the late 1990s (Caselli et al., 1996 Caselli, F. , Esquivel, G. and Fernando, L. 1996. Reopening the convergence debate: A new look at cross-country growth empirics. Journal of Economic Growth, 1(3): 363–389. (doi:10.1007/BF00141044) [Crossref] [Google Scholar] ; Pritchett, 2001 Pritchett, L. 2001. Where has all the education gone?. World Bank Economic Review, 15(3): 367–391. (doi:10.1093/wber/15.3.367) [Crossref], [Web of Science ®] [Google Scholar] ). The two primary criticisms evoked were the failure to consider diminishing returns to education and qualitative aspects of the stock of human capital. This work aims to redress inadequacies in the literature related to the usual proxy of human capital by advancing a composite indicator of human capital (PCA). This indicator allows for an integration of the qualitative aspects in question and uses the indicator of the stock of human capital (Mincer, 1974 Mincer, J. 1974. Schooling, Experience, and Earnings, New York : Columbia University Press. [Google Scholar] ) to take diminishing returns into consideration. Adopting the methodology developed by Islam (1995) Islam, N. 1995. Growth empirics: A panel data approach. The Quarterly Journal of economics, 110(4): 1127–1170. (doi:10.2307/2946651) [Crossref], [Web of Science ®] [Google Scholar] allows for the impact of human capital to become positive once again in the process of economic growth. The data also reveal a conditional convergence process for the 22 African countries considered over the period 1970 to 2000.

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