Determining Human Capital Impacts on Economic Growth

Abstract

There is debate within development assistance and labor market literature about the impact of investments in human capital and creation of economic growth in lower and middle-income countries. Economists and sociologists often correlate human capital directly with the attainment of education and, have presented various theories supporting human capital linkages to socio-economic mobility. A number of studies support the correlation of educational attainment with better workforce opportunities, and consequently economic growth. There are additional factors influencing returns on investments leading to economic growth. Human capital investments vary, however, shared value approaches providing value-chain linkages prove to be more beneficial to all stakeholders in increasing opportunities, though not necessarily proving a causal relationship between human capital investments and economic growth. Frameworks with adaptive approaches in providing assistance, with regard to human capital investments supporting economic growth and social progress, must be further researched to identify those most successful. Economists and sociologists will then be able to conduct human capital impact studies and assessments based on those successful frameworks and approaches. Further studies will also support the betterment of monitoring and evaluation measurement tools that maximize returns on investments while minimizing risk to investors and foster economic growth.

Keywords: Human Capital, Economic Growth, Workforce Development, Value Chain, Education, Labor Market, Shared Value

JEL Classification: I25, O11, O19, E24