Title: Testing causality between human development and economic growth: a panel data approach

Authors: Muhammad Shahbaz, Azhar Iqbal, Muhammad Sabihuddin Butt

Addresses: COMSATS Institute of Information Technology, Lahore Campus M.A. Jinnah Building Defence Road, Off Raiwind Road, Lahore, Pakistan. ' Wachovia Corporation, Securities and Exchange Commission, Washington, D.C. 20549, USA. ' Applied Economics Research Centre, University of Karachi, Karachi, 75270, Pakistan

Abstract: This study provides evidence on human development-economic growth causality by employing a large macro panel dataset. We followed the UNDP|s approach for human development. With the help of Hurlin (2004) fixed coefficient approach, we tested causality between human development and economic growth (EG). The results show homogeneous causality from HD to EG. This is not the same when we tested causality from EG to HD. A heterogeneous causality is found from EG to HD. Only Korea and Singapore have bidirectional causality between human development and economic growth. On the other hand, Bangladesh and Philippines have no causality from EG → HD (human development index, education-index, life-index, and PPP index). Result suggests that HD will lead EG but EG not always lead HD.

Keywords: panel causality test; human development; economic growth.

DOI: 10.1504/IJEED.2011.037968

International Journal of Education Economics and Development, 2011 Vol.2 No.1, pp.90 - 102

Published online: 11 Oct 2014 *

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