The impact of human capital on the economic growth of Vietnam’s cities and provinces: a spatial econometrics approach

Abstract

Human capital is crucial for national economic growth and for local economic growth as well. In an attempt to investigate the effect of human capital on the economic growth in Vietnam’s cities and provinces, the author adopts spatial econometric models of SDM, SAR, SEM for panel data. Human capital is measured by regular expenditure on education and numbers of trained labors in each province/city. The data used in this study is obtained from the Statistical Yearbook of 63 provinces published by the General Statistics Office in the period of 2010 - 2017. The results show that the SDM model for panel data is more suitable than the SAR, SEM models for research data. Moreover, the gross output per capita of a province/city is not only affected by its regular expenditure on education but also by that of neighboring provinces/cities. GDP per capital of a province/city is also affected by the GDP of its neighboring provinces/cities. In addition, control variables such as total investment capital, population size, provincial competitiveness index of local or neighboring provinces also exert a positive impact on the GDP per capita of a province/city. The influence of trained labor on the economic growth of a province/city has not been found.