ALLAMATIQBALTOPENTUNIVERSITY Pesaran,TM.TH.,T&TShin,TY.TAnTautoregressiveTdistributed-lagTmodellingTapproachTtoTcointegrationTanalysis.TEconometricTSocietyTMonographs,T31,T371-413(1998). Pesaran,TM.TH.,TShin,TY.,T&TSmith,TR.TJ.T(2001).TBoundsTtestingTapproachesTtoTtheTanalysisTofTlevelTrelationships.TJournalTofTappliedTeconometrics,T16(3),T289-326. Popkin,TB.TM.,TAdair,TL.TS.,T&TNg,TS.TW.GlobalTnutritionTtransitionTandTtheTpandemicTofTobesityTinTdevelopingTcountries.TNutritionTreviews,T70(1),T3-21(2012). Pradhan,TO.TA.THumanTCapitalTFormationTandTEconomicTGrowthTinTIndiaT:TATCGETAnalysis.TNationalTCouncilTofTAppliedTEconomicTResearchT(2012)T. Ranis,TS.T(2000).TEconomicTGrowthTandTHumanTDevelopment.TWorldTDevelopmentTVol.28T,T197-219. Ravn,TB.TA.TGrowth,THumanTCapitalTSpilloversTandTInternationalTPolicyTCoordination.TJournelTofTEconomicsT,T495-515T(1993)

ALLAMATIQBALTOPENTUNIVERSITY TestingTtheTRelationshipTbetweenTHumanTcapitalTandTEconomicTGrowth:TaTStudyTofTPakistan AuthorTname MuhammadTAzeemTBhatti ThesisTsubmittedTforTtheTdegreeTofTM.com 27TAugust,T2017 T CHAPTERT1 INTRODUCTION 1.1TBackgroundTofTtheTstudy SustainedTeconomicTgrowthTaccompaniedTwithTsocialTdevelopmentTisToneTofTtheTnotableTmacroeconomicTobjectivesTofTeveryTcountryTandTinTthisTregardThumanTcapitalTisTdeemedTasTanTessentialTingredient. InTPakistan,TlargeTpartTofTpopulationTliesTbelowTtheTpovertyTline.TMostTofTtheTpolicyTmakersTargueTthatTbyTeconomicTgrowth,TweTcanTreduceTtheTpovertyTandTunemploymentTbutTinTPakistan,TsituationTisTnotTlikeTthis.TTheTmainTreasonTofTslowTeconomicTgrowthTinTPakistanTisTpoorTqualityTofTeducation,TlackTofTgoodThealthTfacilities,TeducatedTunemploymentTandTlackTofTskilledTmanpower. InTPakistanTforTpovertyTelimination,TitTisTnecessaryTthatTgovernmentTallocateTmaximumTbudgetTonThumanTcapitalTformation,TbecauseTitTisTanTactiveTfactorTofTproduction.TManyTresearchersTusedTdifferentTproxiesTforTmeasuringTtheThumanTcapitalTformation.TTheTpresentTliteratureTexpressedThumanTcapitalTbyTeducationTandThealthTcomponents.TEducationTandThealthTareTmainTfactorsTofThumanTcapitalTformation,TbecauseTinTorderTincreaseTgrowthTrateTofTproductivityTandTpeopleTmustTbeTskilledTandTfreeTfromTdiseases. DespiteTtheTsignificanceTofThealthTandTeducationTsectorTforTeconomicTgrowthTofTanyTeconomy;TtheseTareTmostTignoredTsectorsTinTPakistan.TForTboostingTupTtheseTsectorsTitTisTrequiredTtoTplanTpoliciesTandTprogramsTthatTadvantageTtheTpoorTpeople.THumanTcapitalTisTanTimportantTingredientTofTeconomicTgrowth.TByTincreasingTinvestmentTonThumanTcapitalTandTcreatingTmoreTdynamicTlaborTforce,TwillTgetsThigherTfutureTgrowthTandTincome.TIfTPakistanTgovernmentTspendsTmoreTonThealthTsocietyTandTindividualTgetTbenefitsTfromTinvestmentTonTandTeducationTsectors,TthisTwillTleadsTtoTimproveTtheTlivingTstandardTofTpoor. 1.2TProblemTStatement InTPakistan,TlargeTpartTofTpopulationTliesTbelowTtheTpovertyTline.TMostTofTtheTpolicyTmakersTargueTthatTbyTeconomicTgrowth,TweTcanTreduceTtheTpovertyTandTunemploymentTbutTinTPakistan,TsituationTisTnotTlikeTthis.TTheTmainTreasonTofTslowTeconomicTgrowthTinTPakistanTisTpoorTqualityTofTeducation,TlackTofTgoodThealthTfacilities,TeducatedTunemploymentTandTlackTofTskilledTmanpower. TheTpresentTliteratureTexpressedThumanTcapitalTbyTeducationTandThealthTcomponents.TEducationTandThealthTareTmainTfactorsTofThumanTcapitalTformation,TbecauseTinTorderTincreaseTgrowthTrateTofTproductivityTandTpeopleTmustTbeTskilledTandTfreeTfromTdiseases. 1.3TResearchTGap. EducationTandThealthTisTgrowingTrapidlyTacrossTtheTworldTdueTtoTtheirTdistinctiveTcharectersticsTandTimportanceTinThumanTlifeTandTeconomiesTofTtheTcountries..TYouTneedTtoTincreaseTyourTinvestmentTinTEducationTandTHealthTsectorsTsoTyouTcanTincreaseTtheTlivingTstandardTofTtheTpeopleTandTearnTmoreTprofitTdueTtoTskilledTlaboureTwhoTworkedT78%TmoreTefficientlyTandTeffectively. 1.4TSignificanceTofTStudy HealthTandTEducationTsectorTisTalwaysTimportantTandThisTimportanceTisTincreasingTrapidlyTdayTbyTdayTdueTtoThisTgreatTinfluenceTinTeconomyTofTanyTcountry. ThereTareTfewTstudiesTavailableTinTimportanceTofTtheseTfactorsTbuttTtheseTstudiesTdidTnotTcoverTallTaspects.TInTthisTstudyTweTinsureTtoTcoverTallTimportantTaspectsTofTtheseTfactorsTtoTprovideTgoodTandTqualityTinformationTtoTgovernmentTthatTcanThelpThimTinTbetterTwayTtoTourTcameTtheTproblemsTofThealthTandTEducationTtoTboostTtheTcountryTeconomyTwithTefficiencyTandTeffectiveness. 1.5TResearchTQuestion InTeconomyTofTPakistanTtheTimpactTofThumanTcapitalTandTeconomicTdevelopmentTfactorsTrelationship. HowTtheseTfactorsTcontribute? WhatTbenefitsTweTcanTenjoyTbecauseTofTtheseTfactors. 1.6TResearchTObjective TheTmainTfocusTofTtheTstudyTisTtoTfindToutTtheTrelationshipTofTHumanTcapitalTandTEconomicTdevelopmentTinTtheTenvironmentTofTtheTPakistanTandThowTtheseTfactorsTcontributesTmoreTefficientlyTandTeffectivelyTinTtheTeconomiesTandTovercomeTunstructuredTproblemsTandTincreaseTtheTefficiency. CHAPTERT2 LITERATURETREVIEW THumanTCapitalTandTEconomicTDevelopmentTinTPakistan. AccordingTtoTeconomicTtheoryThumanTcapitalToptimallyTcontributesTinTformationTofTnationalTincome.TDevelopmentTeconomistsTandTpolicyTmakersTacrossTtheTworldTnowTfocusTonTtheTwalfareTandTdevelopmentTofTcountriesTandTimproveTtheTqualityTofThumanTcapital.TAccordingTtoT(PopkinTetTal.T2012),ThumanTcapitalTisTmostlyTlinkedTwithTvariationsTinToutputTperTworker.TAsTSolowTsuggestedTthat,ToutputT(Y)TdependsTonTKnowledgeTofTtheTworkerT(A)TandTstockTofTcapitalT(K) Y=F(K,AL)ALTdenotesTeffectiveTlaborTorTtechnologicalTprogressTwhileTtheTmodelTsummarizesTthatTmoreTknowledgeTwillTleadTtoTmoreTtechnologicalTprogressT(Rehman,T2012).TLiteratureTevidencedTthatTveryTfewTcountriesTreportedTeconomicTgrowthTwhileTfocusingTonTtheirTeducationTandThealthTsectors.TFindingsTevidencedTthatThigherTeducationTinTSouthTKoreaTisT98%,T94%TinTFinland,TandT60%TinTIsrael.TInTPakistanTitTisTaboutT7.8%,TwhereasTIndiaTenjoysT15%T(Oketch,T2006).THence,TtheTstudiesTreportedTthatThumanTcapitalTisTanTimportantTelementTofTgrowthTwhichTnotTonlyTdependsTonTeducationTandThealthTbutTalsoTonTtechnologicalTandTorganizationalTgrowth. TrendsTinTPakistan’sTHDIT1980-2013 48641026670 Source:THumanTDevelopmentTReportT2013-Pakistan InTPakistaniTcontext,TthereTareTmanyTstudiesTwhichTstudiedTtheTassociationTbetweenTGrossTDomesticTProductT(GDP)TgrowthTandTHumanTCapital.TResearchersTreportedTmixtureTofTinconsistencyTinTlastTsixtyTyearsTregardingTEconomicTandTsocialToutcomesTinTPakistan.TDueTtoTPoorTgovernanceTandTunstableTpoliticalTenvironmentTeconomicTgrowthThasTchangedTrespectively.TReportsTevidencedT1.7%TofTitsTGDPTspendingTonTchildrenTeducation.TWhileTonlyT0.22%TgoesTtoThigherTeducationT(Kulkarni,T2012). AgainstTtheTdetailsTgivenTabove,TtheTspecificTobjectivesTofTtheTstudyTincludeTtoTdetermineTtheTeffectTofThumanTcapitalTonTeconomicTgrowthTforTPakistanTandTsuggestingTpolicyTimplicationsTforTitsTimprovement. HumanTcapitalTisTveryTbroadTterm,TthereTareTmanyTfactorsTthroughTwhichTitTcanTbeTenhancedTorTimproved.TWhenTtheTcountryTisTonTitsTwayTtoTachieveThighTproductivityTandTeconomicTdevelopment,TitTmustTensureTtoTenhanceTtheTeffortsTtoTraiseTtheTstandardsTofTitsThumanTcapitalTandTphysicalTcapital.TRavnT(1993)TexaminedTlinkTbetweenTpublicTpolicyTandTeconomicTdevelopmentTforTinterdependentTeconomies.TTheTstudyTformulatedTaTmodelTonTtheTbasisTofTendogenousTgrowthTtheory,TwhichTstatesTthatThumanTcapitalTdependsTonTpublicTexpenditures.TFindingsTofTtheTstudyTsuggestedTthatTgrowthTandTwelfareTareTreallyThigherTunderTcooperationT;TcountriesTareTlinkedTthroughTcross-countryTspilloversTthatTincreaseThumanTcapital.TATsimilarTkindTofTstudyTbyT(Haq,T2008)TpresentedTtwo-countryTendogenousTmodelTwithTmixedTagents.TResultsTpointedToutTthatTbecauseTofTwageTdifferential,TgrowthTandTincomesTofTmigrationTanTeconomyTcanTachieveThumanTcapitalTdevelopment.TTheTresultsTalsoTshowedTthatTtheTperfectTlaborTmobility,Twages,Ttaxes,TandTsubsidiesTwillTresultsTinTentireTpopulationTofTcountryTwithTlowerTwageTandTmigrationTwithThigherTwage. GregorioT(1996)TintroducedTtwoTenginesTofTgrowthTi.e.ThumanTcapitalTandTphysicalTcapital.TLater,TTempleT(1999)TcollectedTdataTfromT64TcountriesTandTevidencedTaTpositiveTrelationTbetweenToutputTandTeducationTlevelTafterTconductingTanTempiricalTanalysis.TRanisT(2000)TalsoTinvestigatedTcrossTcountryTanalysisTofTHumanTdevelopmentTinTtheTcontextTeconomicTgrowth.TTheTdataToverT1960TtoT1992TshowedTaTpositiveTandTsignificantTrelationTbetweenTpublicTexpendituresTandTinvestmentTrateTonThealthTandTeducation.…

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