The Effect of Social Capital on the Relationship between Human Capital and Economic Growth

Document Type : Scientific paper

Authors

1 Master of Arts, Department of Economics, Ayatollah Boroujerdi University, Boroujerd, Iran,

2 Assistant Professor, Department of Economics, Ayatollah Boroujerdi University, Boroujerd,

3 Assistant Professor, Department of Economics, Ayatollah Boroujerdi University, Boroujerd, Iran,

Abstract

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Human capital is one of the basic requirements of economic growth from the perspective of recent theories of economic growth. However, many developing countries have not been successful in achieving sustainable economic growth and ultimately economic development despite their large investments on expanding the education system and strengthening the human capital. The purpose of this article is to answer the following research question: Under what conditions human capital can be a productive force for sustainable economic growth and ultimately economic development? For this purpose, the hypothesis of the effect of social capital level on the relationship between human capital and economic growth has been tested. The sample included 20 developed and currently developing countries, including Iran. The data has been obtained from the World Bank and the Legatum Institute for the years 2009-2018. In this study, the Threshold Dynamic Panel Model (TDPM) and the Generalized Method of Moments (GMM) method have been used. The results of model estimation have shown that the impact of human capital on economic growth depends on the level of social capital, i.e., when the level of social capital is below the threshold of 50.8 of the social capital index, the human capital cannot have a positive effect on economic growth. However, issues such as graduate unemployment and brain drain phenomenon also have a negative effect on the economic growth. In contrast, when the level of social capital is high exceeding the threshold of 50.8, the impact of human capital is positive and in such societies, social capital acts as a platform for the flourishing of human capital.

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References

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Macroeconomics Research Letter
Volume 16, Issue 31
August 2021
Pages 179-198

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History

  • Receive Date: 20 October 2021
  • Revise Date: 21 February 2022
  • Accept Date: 23 February 2022

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