Indian Journal of Industrial Relations: Economics & Social Dev.

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Human Capital Contributions to Economic Growth in India: An Aggregate Production Function Analysis


Affiliations
1 Export Import Bank of India, Mumbai 400005, India
2 Department of Economics, Sri Sathya Sai University, Prasanthi Nilayam, Andhra Pradesh, India
3 Sri Sathya Sai University, India
     

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Education is a merit as well as a public good and is associated with large sets of externalities which are often indirect, invisible and nonquantifiable. The modern theory of endogenous growth has brought this out very prominently. Using an aggregate production function approach, the present study estimates the contributions of human capital and physical capital to economic growth in India using cross section data for 26 Indian states and union territories relating to the years 1995-96 and 1998-99. Several alternative specifications of functional forms are estimated and most of them gave robust results. The important finding that emerges from this study is that a strong positive relationship exists between investments in human capital and economic growth.
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  • Human Capital Contributions to Economic Growth in India: An Aggregate Production Function Analysis

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Authors

Jandhyala Viswanath
Export Import Bank of India, Mumbai 400005, India
K. L. N. Reddy
Department of Economics, Sri Sathya Sai University, Prasanthi Nilayam, Andhra Pradesh, India
Vishwanath Pandit
Sri Sathya Sai University, India

Abstract


Education is a merit as well as a public good and is associated with large sets of externalities which are often indirect, invisible and nonquantifiable. The modern theory of endogenous growth has brought this out very prominently. Using an aggregate production function approach, the present study estimates the contributions of human capital and physical capital to economic growth in India using cross section data for 26 Indian states and union territories relating to the years 1995-96 and 1998-99. Several alternative specifications of functional forms are estimated and most of them gave robust results. The important finding that emerges from this study is that a strong positive relationship exists between investments in human capital and economic growth.

References