Advertisement

The Impact of Human Capital on Economic Growth: the Case of Mexico

  • Jorge Garza-Rodriguez
  • Natalia Almeida-Velasco
  • Susana Gonzalez-Morales
  • Alma P. Leal-Ornelas
Article

Abstract

In this article, we estimate the relationship between human capital and economic growth for the case of Mexico for the 1971–2010 period. Using an ordinary least squares model and also an ordinary least squares model with structural change, it was found that the independent variables used in the model explain up to 50% of the variability of GDP per worker. The results of the estimated regressions indicated that a 1% change in the gross enrollment ratio at the secondary level leads to a 1.08% increase in GDP per worker. Similarly, a 1% increase in the differences in capital investment as a percentage of GDP leads to a 0.39% increase in GDP per worker. These results show that the impact of human capital on Mexico’s economic growth is significantly greater than that of physical capital, since the estimated coefficients of human capital are almost three times of those of physical capital. Also, the results of the Granger causality test indicated the existence of a bidirectional causality between human capital and economic growth in Mexico.

Keywords

Human capital Economic growth Education Mexico 

References

  1. Barceinas Paredes, F. (2002). Rendimientos privados y sociales de la educación en México. Economía Mexicana, Nueva Época, 11(2), 333–390.Google Scholar
  2. Barro, R. J., & Lee, W. (1993). International comparisons of educational attainment. Journal of Monetary Economics, 32, 363–394 Data available at www.nber.org.CrossRefGoogle Scholar
  3. Barro, R.J., & Lee, J.-W. (1994). Sources of economic growth, Carnegie Rochester Conference Series on Public Policy. 40, June 1994, 40, 1, 46.CrossRefGoogle Scholar
  4. Barro, R. J., & Lee, J. W. (2010). A new data set of educational attainment in the world, 1950–2010. Journal of Development Economics, 104, 184–198.CrossRefGoogle Scholar
  5. Becker, G. (1964). Human capital: a theoretical and empirical analysis, with special reference to education. Cambridge: Harvard University Press.Google Scholar
  6. Benhabib, J., & Spiegel, M. M. (1994). The role of human capital in economic development: evidence from aggregate cross-country data. Journal of Monetary Economics, 34(2), 143–173.CrossRefGoogle Scholar
  7. Breusch, T., & Pagan, A. (1979). A simple test for heteroscedasticity and random coefficient variation. Econometrica, 47, 1287–1294.CrossRefGoogle Scholar
  8. Chaudhary, A. R., Iqbal, A., & Gillani, S. M. (2009). The Nexus between higher education and economic growth: an empirical investigation for Pakistan. Pakistan Journal of Commerce And Social Sciences, 3(1), 1–9.Google Scholar
  9. Chi, W. (2008). The role of human capital in China’s economic development: review and new evidence. China Economic Review, 19(3), 421–436.  https://doi.org/10.1016/j.chieco.2007.12.001.CrossRefGoogle Scholar
  10. Dănăcică, D. E., Belașcu, L., & Ilie, L. (2010). The interactive causality between higher education and economic growth in Romania. International Review of Business Research Papers, 6(4), 491–500.Google Scholar
  11. Durbin, J., & Watson, G. (1951). Testing for serial correlation in least-squares regression, II. Biometrika, 38, 159–178.CrossRefGoogle Scholar
  12. Enders, W. (2004). Applied econometric time series. Estados Unidos: WILEY.Google Scholar
  13. Fisher, I. (1897). Senses of ‘capital’. The Econometrics Journal, 7, 199–213.Google Scholar
  14. Godfrey, L.G., (1978). Testing against general autoregressive and moving average error models when the regressors include lagged dependent variables. Econometrica: 46.Google Scholar
  15. Goldin, C. (2016). Human Capital. In: Handbook of cliometrics. Heidelberg: Springer Verlag.Google Scholar
  16. Granger. (1969). Investigating causal relations by econometric models and cross-spectral methods. Econometrica, 37(3), 424–438.CrossRefGoogle Scholar
  17. Gujarati, D. & Porter, D. (2010). Econometría. México: Mc Graw Hill, 5ta Ed.Google Scholar
  18. Huang, F., Jin, L., & Sun, X. (2009). Relationship between scale of higher education and economic growth in China. Asian Social Science, 5(11), p55.CrossRefGoogle Scholar
  19. Jones, G., & Schneider, W. J. (2006). Intelligence, human capital, and economic growth: a Bayesian averaging of classical estimates (BACE) approach. Journal of Economic Growth, 11(1), 71–93.CrossRefGoogle Scholar
  20. Kehoe, T. J., & Meza, F. (2013). Crecimiento rápido seguido de estancamiento: México (1950-2010). El Trimestre Económico, 80(2), 237–280.CrossRefGoogle Scholar
  21. Kim, C., & Hong, M. (2010). Education policy and industrial development: the cases of Korea and Mexico. Journal of International and Area Studies, 17(2), 21–30.CrossRefGoogle Scholar
  22. Loening, J. L. (2005). Effects of primary, secondary, and tertiary education on economic growth: evidence from Guatemala. Policy Research Working Paper series 3610, The World Bank.Google Scholar
  23. Mahadeva, L., and Robinson, P. (2004). Unit root testing to help model building. Bank of England, (Working Paper, no 2).Google Scholar
  24. Mankiw, N. G., Romer, D., & Weil, D. (1992). A contribution to the empirics of economic growth. Quarterly Journal of Economics, 107(2), 407–437.CrossRefGoogle Scholar
  25. Mincer, J. (1958). Investment in human capital and personal income distribution. Journal of Political Economy, 66, 281–302.CrossRefGoogle Scholar
  26. Neter, J., Wasserman, W. and M. H. Kutner. (1990). Applied linear statistical models. 3a edn., M.A: Irwin.Google Scholar
  27. Paradiso, A., Kumar, S., & Rao, B. B. (2013). The growth effects of education in Australia. Applied Economics, 45(25–27), 3843–3852.CrossRefGoogle Scholar
  28. Pegkas, P., & Tsamadias, C. (2014). Does higher education affect economic growth? The case of Greece. International Economic Journal, 28(3), 425–444.CrossRefGoogle Scholar
  29. Phillips, P. C. B., & Perron, P. (1988). Testing for a unit root in time series regression. Biometrika, 75(2), 335–346.CrossRefGoogle Scholar
  30. Potrafke, N. (2012). Intelligence and corruption. Economics Letters, 114(1), 109–112.CrossRefGoogle Scholar
  31. Qadri, F. S., & Waheed, A. (2013). Human capital and economic growth: cross-country evidence from low-, middle-and high-income countries. Progress in Development Studies, 13(2), 89–104.CrossRefGoogle Scholar
  32. Ram, R. (2007). IQ and economic growth: further augmentation of Mankiw–Romer–Weil model. Economics Letters, 94(1), 7–11.CrossRefGoogle Scholar
  33. Rodríguez Andrés, A., and Salahodjaev, R. (2016). Do cognitive able societies nurture entrepreneurs?”. Economics Bulletin, 36(3), 1453–1462.Google Scholar
  34. Sala-i-Martin, X., Doppelhofer, G., & Miller, R. (2004). Determinants of long-run growth: a Bayesian averaging of classical estimates (BACE) approach. American Economic Review, 94(4), 813–835.CrossRefGoogle Scholar
  35. Salahodjaev, R. (2015). Democracy and economic growth: the role of intelligence in cross-country regressions. Intelligence, 50, 228–234.CrossRefGoogle Scholar
  36. Salahodjaev, R. (2016a). Intelligence and deforestation: international data. Forest Policy and Economics, 63, 20–27.CrossRefGoogle Scholar
  37. Salahodjaev, R. (2016b). Does intelligence improve environmental sustainability? An empirical test. Sustainable Development, 24(1), 32–40.CrossRefGoogle Scholar
  38. Schultz, T. W. (1961). Investment in human capital. American Economic Review, 51, 1–17.Google Scholar
  39. Smith, A. (1776). An inquiry into the nature and causes of the wealth of nations, book 2. Google Scholar
  40. Son, L., Noja, G. G., Ritivoiu, M., & Tolteanu, R. (2013). Education and economic growth: an empirical analysis of interdependencies and impacts based on panel data. Timisoara Journal of Economics and Business, 6(19), 39–54.Google Scholar
  41. Summers, R., & Heston, A. (1991). The Penn World Table (Mark 5): an expanded set of international comparisons, 1950–1987. NBER Working Paper, (R1562).Google Scholar
  42. Tsamadias, C., & Prontzas, P. (2012). The effect of education on economic growth in Greece over the 1960-2000 period. Education Economics, 20(5), 522–537.CrossRefGoogle Scholar
  43. University of Pennsylvania. (2006). Penn World Table 7.1. Retrieved on May 7, 2015 from: website: pwt.sas.upenn.edu: https://pwt.sas.upenn.edu/php_site/pwt70/pwt70_form.php
  44. White, H. (1980). A heteroskedasticity-consistent covariance matrix and a direct test for heteroskedasticity. Econometrica, 48, 817–838.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Departamento de EconomíaUniversidad de MonterreySan Pedro Garza GarciaMexico

Personalised recommendations