Social Indicators Research

, Volume 137, Issue 1, pp 231–256 | Cite as

Re-Examining Vicious Circles of Development: A Panel Var Approach

  • Bahar Bayraktar-Sağlam Bayraktar-Sağlam
Original Research


Using panel data from 102 countries in 1975–2010, this paper explores the dynamic interaction among health, education and growth by applying panel VAR techniques. Empirical findings reveal that the predictive pattern among health, education and economic growth is not stable in the cross section of countries. While health has positive contribution to growth for all countries, education has benefited only higher middle income and high-income OECD countries. Economic growth has predictive power for the components of human development in the high-income OECD countries. Further, econometric evidence reveals that bi-directional relationship between health and education should be supported to reap the benefits of human development on economic growth.


Economic growth Health Education Dynamic panel data 

JEL Classification

C12 C23 I10 O40 


  1. Ahmad, N., & French, J. J. (2011). Decomposing the relationship between human capital and GDP: An empirical analysis of Bangladesh. The Journal of Developing Areas, 44, 127–142.CrossRefGoogle Scholar
  2. Arellano, M., & Bond, S. R. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. Review of Economic Studies, 58, 277–297.CrossRefGoogle Scholar
  3. Arellano, M., & Bover, O. (1995). Another look at the instrumental variables estimation of error-components models. Journal of Econometrics, 68, 29–51.CrossRefGoogle Scholar
  4. Arendt, J. N. (2005). Does Education cause better health? A panel data analysis using school reform for identification. Economics of Education Review, 24, 149–160.CrossRefGoogle Scholar
  5. Asteriou, D., & Agiomirgianakis, G. M. (2001). Human capital and economic growth time series evidence from Greece. Journal of Policy Modeling, 23, 481–489.CrossRefGoogle Scholar
  6. Baldacci, E., Clements, B., Gupta, S., & Cui, Q. (2008). Social spending, human capital, and growth in developing countries. World Development, 36(8), 1317–1341.CrossRefGoogle Scholar
  7. Barro, R. (1996). Health, human capital and economic growth. Paper for the Program on Public Policy and Health, Pan American Health Organization and World Health Organization. Washington, DC: Pan American Health Organization.Google Scholar
  8. Barro, R., & Lee, J. W. (2013). A new data set of educational attainment in the world, 1950–2010. Journal of Development Economics, 104, 184–198.CrossRefGoogle Scholar
  9. Barro, R., & Sala-i-Martin, X. (1995). Economic growth. Cambridge: MIT Press.Google Scholar
  10. Bills, M., & Klenow, P. J. (2000). Does schooling cause growth? American Economic Review, 90(5), 1184–1208.CrossRefGoogle Scholar
  11. Bleakley, H., Costa, D., & Lleras-Muney, A. (2013). Health, Education and Income in the United States, 1820–2000 (p. w19162). Washington: National Bureau of Economic Research.Google Scholar
  12. Blundell, R., & Bond, S. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87, 115–143.CrossRefGoogle Scholar
  13. Colantonio, E., Marianacci, R., & Mattoscio, N. (2010). On human capital and economic development: Some results for Africa. Procedia-Social and Behavioral Sciences, 9, 266–272.CrossRefGoogle Scholar
  14. Dahal, G. (2016). The triangular causality among education, health and economic growth: A time series analysis of Nepal. In Proceedings of International Academic Conferences (No. 3606364). International Institute of Social and Economic Sciences.Google Scholar
  15. De Meulemeester, J. L., & Rochat, D. (1995). A causality analysis of the link between higher education and development. Economics of Education Review, 14, 351–361.CrossRefGoogle Scholar
  16. Eide, R. E., & Showalter, M. H. (2011). Estimating the relation between health and education: What do we know and what do we need to know? Economics of Education Review, 30, 778–791.CrossRefGoogle Scholar
  17. Gyimah-Brempong, K., & Wilson, M. (2004). Health human capital and economic growth in Sub-Saharan African and OECD countries. The Quarterly Review of Economics and Finance, 44(2), 296–320.CrossRefGoogle Scholar
  18. Hanushek, E. A., & Kim, D. (1995). Schooling, labor force quality, and economic growth. National bureau of economic research, Washington. NBERW5399.Google Scholar
  19. Hartwig, J. (2010). Is health capital formation good for long-term economic growth? Panel Granger-causality evidence for OECD countries. Journal of Macroeconomics, 32(1), 314–325.CrossRefGoogle Scholar
  20. Holtz-Eakin, D., Newey, W., & Rosen, H. S. (1988). Estimating vector autoregressions with panel data. Econometrica, 56, 1371–1395.CrossRefGoogle Scholar
  21. Hsiao, F. S. T., & Hsiao, M. C. W. (2006). FDI, exports, and GDP in East and Southeast Asia: Panel data versus time-series causality analyses. Journal of Asian Economics, 17, 1082–1106.CrossRefGoogle Scholar
  22. Jayachandran, S., & Lleras-Muney, A. (2009). Life expectancy and human capital investments: Evidence from maternal mortality declines in Sri Lanka. Quarterly Journal of Economics, 124(1), 349–397.CrossRefGoogle Scholar
  23. Kalemli-Ozcan, S., Ryder, H. E., & Weil, D. N. (2000). Mortality decline, human capital investment and economic growth. Journal of Development Economics, 62, 1–23.CrossRefGoogle Scholar
  24. Kenkel, D. S. (1991). Health behavior, health knowledge, and schooling. Journal of Political Economy, 99(2), 287–305.CrossRefGoogle Scholar
  25. Kónya, L. (2006). Exports and growth: Granger-causality analysis on OECD countries with a panel data approach. Economic Modelling, 23, 978–992.CrossRefGoogle Scholar
  26. Li, H., & Liang, H. (2010). Health, education, and economic growth in East Asia. Journal of Chinese Economic and Foreign Trade Studies, 3(2), 110–131.CrossRefGoogle Scholar
  27. Ljungberg, J., & Nilsson, A. (2009). Human Capital and Economic Growth: Sweden 1870–2000. Cliometrica, 3(1), 71–95.CrossRefGoogle Scholar
  28. Mankiw, N. G., Romer, D., & Weil, D. N. (1992). A contribution to the empirics of economic growth. Quarterly Journal of Economics, 107, 407–437.CrossRefGoogle Scholar
  29. Miguel, E., & Kremer, M. (2004). Worms: Identifying impacts on education and health in the presence of treatment externalities. Econometrica, 72(1), 159–217.CrossRefGoogle Scholar
  30. OECD (Ed.). (1998). Returns to investment in human capital. In Chapter 4 in Human capital investment: An international comparison. Paris: OECD, Centre for Educational Research and Innovation.Google Scholar
  31. OECD. (2010). Social capital, human capital and health: What is evidence?. Paris: OECD.Google Scholar
  32. Podrecca, E., & Carmeci, G. (2001). Fixed investment and economic growth: New results on causality. Applied Economics, 33, 177–182.CrossRefGoogle Scholar
  33. Pradhan, R. P., Arvin, M. B., Norman, N. R., & Bele, S. K. (2014). Economic growth and the development of telecommunications infrastructure in the G-20 countries: A panel-VAR approach. Telecommunications Policy. doi: 10.1016/j.telpol.2014.03.001i.Google Scholar
  34. Pritchett, L. (2001). Where has all the education gone? World Bank Economic Review, 15(3), 367–391.CrossRefGoogle Scholar
  35. Ranis, G., Stewart, F., & Ramirez, A. (2000). Economic growth and human development. World Development, 28(2), 197–219.CrossRefGoogle Scholar
  36. Roodman, D. (2006). How to do xtabond2: An introduction to ‘difference’ and ‘system’ GMM in Stata. Center for Global Development Working Paper No. 103.Google Scholar
  37. Roodman, D. (2009). How to do xtabond2: An introduction to difference and system GMM in Stata. The Stata Journal, 9(1), 86–136.Google Scholar
  38. Saksena, S., & Deb, M. (2016). Economic Growth and Human Development in Indian States after two decades of Economic Reforms. MPRA Working Paper No. 71128.Google Scholar
  39. Schultz, T. P. (1999). Health and schooling investments in Africa. Journal of Economic Perspectives, 13(3), 67–88.CrossRefGoogle Scholar
  40. Selfa, S., & Grabowskib, R. (2003). Education and long-run development in Japan. Journal of Asian Economics, 14, 565–580.CrossRefGoogle Scholar
  41. Şen, H., Kaya, A., & Alpaslan, B. (2015). Education, health, and economic growth nexus: A bootstrap panel granger causality analysis for developing countries. The University of Manchester, Discussion Paper Series EDP-1502.Google Scholar
  42. Silles, M. A. (2009). The causal effect of education on health: Evidence from the United Kingdom. Economics of Education Review, 28(1), 122–128.CrossRefGoogle Scholar
  43. Suri, T., Boozer, M., Ranis, G., & Stewart, F. (2011). Paths to success: The relationship between human development and economic growth. World Development, 39(4), 506–522.CrossRefGoogle Scholar
  44. Temple, J. (1999). The new growth evidence. Journal of Economic Literature, 37(1), 112–156.CrossRefGoogle Scholar
  45. Windmeijer, F. (2005). A finite sample correction for the variance of linear two-step GMM estimators. Journal of Econometrics, 126, 25–51.CrossRefGoogle Scholar
  46. World Bank (1993). World Development Report 1993: Investing in health. The World Bank, Oxford University Press, Oxford.Google Scholar
  47. World Bank. (2013). World Development Indicators Database. Washington: World Bank.Google Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2017

Authors and Affiliations

  1. 1.Department of EconomicsHacettepe UniversityAnkaraTurkey

Personalised recommendations