Human capital dynamics are the key to economic growth: source of value of the future

Abstract

Sustainable economic growth is possible not only with physical investments but also with strong human capital that enables the training of qualified, productive, and innovative individuals. The relationship between the number of university students (doctorate, master’s, and undergraduate) in higher education was selected as a proxy for human capital, and economic growth was estimated using vector autoregressive analysis with four models for the periods 1982Q1–2021Q4. In addition, the effect of gender was examined for all levels of education. While economic growth has a stable effect at the doctoral level, it positively affects master’s and undergraduate students. A one-unit shock in economic growth does not affect gender at doctoral, master’s, and undergraduate education levels. It was determined that the master’s degree explained the economic growth variable more than other education levels. It is seen that female students explain more at the doctoral level of education, and male students at the master’s and undergraduate levels of education. In sustainable economic growth and development, it is much more important and valuable to strengthen graduate education qualitatively and increase knowledge production capacity rather than simply increasing it. Education policies should focus on strengthening education, which is the building block of human capital that contributes to economic growth and social welfare.