Diagnosing Human Capital as a Binding Constraint to Growth: Tests, Symptoms and Prescriptions

The empirical literature on the contributions of human capital investments to economic growth shows mixed results, with evidence from OECD countries demonstrating that human capital accumulation is associated with growth accelerations, but efforts of developing countries to improve access to and quality of education have not translated into higher income per capita. This Element proposes a framework to determine whether human capital investments are a priority for a country's growth strategy and discusses and exemplifies different tests to diagnose human capital in a place, drawing on the Harvard Growth Lab's experience in different development contexts.

Format: Paperback / softback
Length: 75 pages
Publication date: 16 December 2021
Publisher: Cambridge University Press

The empirical literature on the contributions of human capital investments to economic growth presents a complex and varied picture. While evidence from Organisation for Economic Co-operation and Development (OECD) countries indicates that human capital accumulation is linked to accelerated growth, the substantial efforts of developing countries to enhance access to and quality of education, aimed at fostering skill accumulation, have yet to yield significant increases in income per capita. In this Element, we propose a framework that builds upon the principles of growth diagnostics to assist practitioners in evaluating whether human capital investments should be a central focus of a country's growth strategy. We then delve into the discussion and illustration of diverse tests to diagnose human capital in a particular place, drawing upon the expertise of the Harvard Growth Lab in various development contexts. Additionally, we explore various policy options to address skill shortages, drawing upon insights from the literature and practical experiences.

The empirical literature on the contributions of human capital investments to economic growth shows mixed results.

While evidence from Organisation for Economic Co-operation and Development (OECD) countries demonstrates that human capital accumulation is associated with growth accelerations, the substantial efforts of developing countries to improve access to and quality of education, as a means for skill accumulation, did not translate into higher income per capita.

In this Element, we propose a framework, building on the principles of growth diagnostics, to enable practitioners to determine whether human capital investments are a priority for a country's growth strategy.

We then discuss and exemplify different tests to diagnose human capital in a place, drawing on the Harvard Growth Lab's experience in different development contexts, and discuss various policy options to address skill shortages.

Weight: 110g
Dimension: 229 x 152 x 4 (mm)
ISBN-13: 9781108971591
Edition number: New ed