THE EFFECT OF INVESTMENT IN HUMAN RESOURCES ON ECONOMIC GROWTH OF DEVELOPING COUNTRIES

Özet

This study basically examined the effect of investment inhuman resources on economic growth of developing countries. It used a panel dataset comprise of 98 middle and upper middle developing countries over the period 1981-2014. The dataset comprises 12 observations for each country at three year intervals. Analytical technique was the Hasuman test which showed that fixed effect model is appropriate for our research analysis. The results obtained from using fixed effect model were quite interesting. That is, Gross enrolment ratio from primary to tertiary, infant mortality rate , school life expectancy, gross capital formation, consumer price index (at 10 per cent level) and poverty head count ratio showed a significant effect on growth whereas GINI index was insignificant to influence economic growth. The study concludes that gross enrolment ratio, poverty head count ratio and consumer price index has an adverse effect on annual growth rate i.e. they are negatively related. Similarly the study also concludes that infant mortality rate, school life expectancy, gross capital formation and GINI coefficient have positive effect on growth of countries. Thus it is concluded that different variables have different effect on economic growth.