The Impact of Human Capital on Economic Growth: An Analysis from Pakistan
Keywords:
Human capital, Economic Growth, Trade openness & PakistanAbstract
This study looks at how human capital affects economic growth in Pakistan from 1990 to 2024. Human capital is measured by education (secondary school enrollment). We have used economic growth as the dependent variable. However, trade openness and labor force participation are used as explanatory variables. We obtained annual time-series data from the World Development Indicators (WDI) and the Pakistan Economic Survey for this analysis. The econometric model was estimated using Ordinary Least Squares (OLS) within the Solow growth framework that includes human capital. To ensure validity, we have applied diagnostic tests. The findings indicate that human capital significantly boosts Pakistan's economic growth. Education spending has a strong positive effect on GDP. Trade openness negatively affects economic growth. While labor force participation positively affects economic growth. The study concludes by emphasizing that nurturing human capital is crucial to fostering long-term growth in Pakistan. The policy suggestions aim to enhance the quality of education, improve access to healthcare, and encourage greater labor-market participation, particularly among women and young people. By implementing effective strategies in these areas, Pakistan can transform its demographic advantages into sustainable economic growth, alleviate poverty, and boost its competitiveness on the global stage
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