Diagnosing Human Capital As A Binding Constraint To Growth

The empirical literature on the contributions of human capital investments to economic growth shows mixed results. While evidence from OECD countries demonstrates that human capital accumulation is associated with growth accelerations, the substantial efforts of developing countries to improve access to and quality of education, as a means for skill accumulation, did not translate into higher income per capita. In this Element, we propose a framework, building on the principles of 'growth diagnostics', to enable practitioners to determine whether human capital investments are a priority for a country's growth strategy. We then discuss and exemplify different tests to diagnose human capital in a place, drawing on the Harvard Growth Lab's experience in different development context, and discuss various policy options to address skill shortages.

This book provides an in-depth investigation of the link between human capital and economic growth. The authors take an innovative approach, examining the determinants of economic growth through a historical overview of the concept of human capital. The text fosters a deep understanding of the connection between human capital and economic growth through the exploration of different theoretical approaches, a review of the literature, and the application of nonlinear estimation techniques to a comprehensive data set. The authors discuss nonparametric econometric techniques and their application to estimating nonlinearities—which has emerged as one of the most salient features of empirical work in modeling the human capital-growth relationship, and the process of economic growth in general. By delving into the topic from theoretical and empirical standpoints, this book offers an insightful new view that will be extremely useful for scholars, students, and policy makers.

‘Diagnosing the Philippine Economy’ describes the conditions that depress economic growth in the Philippine economy and their causes and potential solutions. The studies’ findings provide insight for politicians, academicians, and economists into the issues and their potential solutions.

The present paper takes a fresh theoretical and empirical look into the relationship between Wagner’s law and economic development. It introduces human capital into a classic two-sector model of unbalanced growth. It shows that, as an economy develops, changes in the relative returns to human capital and unskilled labor, as a result of changes to their relative scarcities, could have a significant impact on the size of the government sector, depending in part also on the difference in relative factor intensities between outputs of the private and government sectors. This conjecture is broadly supported by empirical evidence based on a cross-section analysis of a large sample of developed and developing countries.

This Element investigates how the Ghanaian household wealth index is impacted by travel time reduction, which is a direct effect of infrastructural investments from 2000 to 2016. The wealth index is constructed based on the possession of selected assets and reflects the well-being of residents in Ghana. The Element employs two datasets, the Demographic and Health Survey (DHS) and the DHS Covariates. The two-stage least square estimation is implemented to establish the causal relationship. The Element finds that a ten percent reduction in travel time from 2000 to 2015 would result in a 1.2 percent increase in the wealth index from 2003 to 2016. This finding is robust to various settings, including the addition of more control variables, the use of different instrumental variables, and the study of both short-term and long-term effects. The analysis lends support to the Ghanaian government's current economic and infrastructure development plans.

This Element highlights the idea that men and the society at large will benefit with women owning land. Land ownership by women improves their bargaining power and enhances their ability to survive outside unproductive power structure or gender relationships.

Sovereign Wealth Funds are government investment vehicles that have been present for decades. They are usually characterized by minimum information disclosure, however, this situation differed after worldwide events shed light on the role they possess to mitigate their downturns. The substantial economic influence they bring along due to their size and long term impact have recently created an uproar of debate that eventually led to the ratification of the Santiago Principles. The Principles set the stage for governing SWFs' operations and grant them more clarity. They also contribute to a more stable environment for cross-border investment flows. With the importance of SWFs, emerging economies also rose as key institutional investors; only this time they called for harnessing their funds towards sustainable development investment strategies. Despite pressuring need to improve transparency and governance structures of SWFs in EMs, the former are regarded as promising means for achieving the sustainable development goals.