Human Capital Formation and Economic Performance: A Case Study of Pakistan

Abstract

Education is the great pillar of human capital formation. This study analyzes the long run relationship between education enrollment and economic growth in Pakistan. Secondary data has been used in this study for the period of 1972-73 to 2012-13. Augmented Dickey-Fuller test and Johanson-Jeselius cointegration test have been utilized in our model to measure the impact of human capital formation on economic performance of Pakistan. To measure the significant relation among variables for the long run, we will use unrestricted co-integration rank test. The long run results of our study interpret the cointegration among dependent and  explanatory variables. In our study, Error correction analysis explores the stability condition. It is also concluded that Education Enrollment Index (LEEI) has positive sign and significant impact on economic growth.

Keywords: Pakistan,Human Capital,Economic Performance,Education Enrollment Index, Co-integration, Error Correction.