Human capital and economic growth in Spanish regions

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Publisher: Springer
Document Type: Article
Length: 2,800 words

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Abstract

Modern economic growth theory has emphasized on the human capital effects on economic growth. In this case, the externalities from a better education could enhance economic growth process and facilitate the progress in different regional areas. The main objective of this paper is to analyze the effects of human capital on economic growth process by taking into account the case of Spanish regions. The authors examine whether a better education process and social capital can improve the economic growth process in such area and if it can explain the differences in per capita GDP existing in those regions. The paper uses data from Spanish Statistical Institute and from different institutes of the European Union. (JEL O1)

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Introduction

Traditionally, economists have been worried to analyze the factors that generate differences among countries evolution, showing the policies that must be designed to avoid a non desirable evolution. Regional studies were difficult to attain due to the scarcity of data. However, since scarcity of data is no longer a problem, a large number of literature analyzing regional economy have appeared in the last decades.

In these kind of studies, exogenous growth neoclassical models and endogenous growth models have generally been used. The introduction of the latter models and due to the improvement of statistical information, one can use better information on the growth process. In this sense, different variables such as fiscal policy, human capital, and social capital have been introduced in the economic growth analysis in a national and regional level while other variables previously considered, that is, income distribution, show a different effect on economic growth in the new analysis in comparison with the initial.

The main goal of this paper is to study the effects of human capital, considering also the technological role, on economic growth process. Specifically, this paper estimates a model that explains the Spanish Regions growth process during 1995-2000 period. In such analysis, the paper introduces human capital behaviour to show the relationship between human capital investment and regional economic growth process in the latter years and the role of the capital on the rate of productivity and income-level convergence of the regions. The latter is relevant to value the territorial distribution of the growth results. Some authors have paid special attention to that problem [Barro and Lee, 1994; Islam, 1995; Perez, Goerlich, and Mas, 1996; and Perez and Serrano, 1998].

Human Capital

Lucas [1988] was one of the first authors that considered human capital as an alternative to technological process to improve growth. Traditionally, education and learning by doing were considered as main sources of human capital and, for that reason, many growth models have introduced these factors in their models.

The main contribution of social capital to economic growth is produced by the direct effect on productive capacity of the economy, that is, as production factor, physical capital, or labor. In a similar way, as physical capital increases, human capital increases as will labor productivity. For that reason, investment in human capital will improve...

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Gale Document Number: GALE|A126157147