Impact of Human Capital and Social Capabilities on Economic Growth of Pakistan: A Time Series Analysis

Abstract

Theoretically, human capital has a significant relationship with economic growth. In this regard, the present study was conducted to determine the conditions that have a significant and positive relationship with economic growth. The main objective of the study was to explore the impact of human capital and social capabilities or skills on the economic growth of Pakistan. The study estimates the impact of human capital and social capabilities on economic growth of Pakistan by using time series data from the period of 1980-2018 taken from World Bank. Autoregressive distributed lag framework is used for the valuation of variables relationship and direction of connection of variables. Human capital influenced by education expenditure, social capabilities, gross fixed capital formation (GFCF) and children mortality. This study indicates the role of human capital in growth and development of Pakistan. Results showed that health and education are the two main sectors which need significant attention of government. In addition, more investment on human capital can increase the social capabilities. Final consumption expenditure depends on current economic conditions of a nation. Results showed progressive human capital influence economic growth due to social capabilities. These objectives can be attained through sharing the suitable amount of GDP to these sectors.