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The Economics and Finance Letters

December 2020, Volume 7, 2, pp 218-235

Human Capital and Economic Growth in Latin America: A Cointegration and Causality Analysis

Ejiro U. Osiobe

Ejiro U. Osiobe¹

College of Business, Westcliff University, USA. ¹

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Osiobe Ejiro U.

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Osiobe Ejiro U.

Pages: 218-235

DOI: 10.18488/journal.29.2020.72.218.235

Article History:

Received: 20 July, 2020
Revised: 28 August, 2020
Accepted: 16 September, 2020
Published: 01 October, 2020

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Abstract:

This paper investigates the causal relationship between government spending on education and economic growth in eight selected Latin American countries by using panel unit root test and panel cointegration analysis for the period 2000-2014. A three-variable model was formulated with trade volume as the second independent variable. The findings conclude that government spending on education and economic growth in the selected countries is positively and significantly associated, in the long and short-run, with evidence of a bidirectional Granger causal relationship between the dependent and the variable of interest, a unidirectional Granger causal relationship between trade volume and economic growth. The implication of our results shows that government secondary school spending on education has a positive impact on the selected countries, and our analysis can be replicated with other countries.

Contribution/ Originality
The paper's main contribution to the existing literature by investigating the cointegration and Granger causal relationship between human capital and economic growth for eight selected Latin American countries: Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, Peru, and El Salvador. The study is one of the few studies which have examined this relationship, which makes it unique and of great value to the field of economics and economic development.

Keywords:

Government spending on education, Economic growth, Economic development, Latin America, Panel cointegration, Eductaion.

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