International journal of

ADVANCED AND APPLIED SCIENCES

EISSN: 2313-3724, Print ISSN:2313-626X

Frequency: 12

line decor
  
line decor

 Volume 6, Issue 6 (June 2019), Pages: 43-50

----------------------------------------------

 Original Research Paper

 Title: Human capital in the manufacturing sector from 1972 to 2015 and its association with economic growth of Pakistan

 Author(s): Sehresh Hena, Luan Jingdong *, Ouxiang Zhang

 Affiliation(s):

 College of Economics and Management, Anhui Agricultural University, Hefei, China

  Full Text - PDF          XML

 * Corresponding Author. 

  Corresponding author's ORCID profile: https://orcid.org/0000-0001-8049-8651

 Digital Object Identifier: 

 https://doi.org/10.21833/ijaas.2019.06.007

 Abstract:

The manufacturing sector has been a large contribution towards promoting economic growth, generating employment, competitiveness and trade development in the world. Human capital plays a significant role in the growth of the manufacturing sector, while its determination on manufacture sector growth in Pakistan has remained unexplored in literature. The main objective of this study is to define the proxy role of human capital formation (e.g., secondary school enrolment, infant mortality rate, and life expectancy) and their direct impact on manufacturing sectors in Pakistan for the period of 1972–2015. An autoregressive distributed lag (ARDL) bounds testing approach was applied to investigate and co-integrate the causality link between the study variables. These tests put a spotlight on the long-run connection among the variables, while in addition, the results revealed that human capital, employed labor force, gross fixed capital formation, inflation rate, energy consumption, tax on GDP, domestic credit had a positive impact on the manufacturing growth in Pakistan. 

 © 2019 The Authors. Published by IASE.

 This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

 Keywords: Human capital, Manufacturing sector growth, Pakistan, Autoregressive distributed lag

 Article History: Received 9 January 2019, Received in revised form 2 April 2019, Accepted 4 April 2019

 Acknowledgement:

No Acknowledgement.

 Compliance with ethical standards

 Conflict of interest:  The authors declare that they have no conflict of interest.

 Citation:

 Hena S, Jingdong L, and Zhang O (2019). Human capital in the manufacturing sector from 1972 to 2015 and its association with economic growth of Pakistan. International Journal of Advanced and Applied Sciences, 6(6): 43-50

 Permanent Link to this page

 Figures

 Fig. 1 Fig. 2 Fig. 3 Fig. 4 Fig. 5 Fig. 6 Fig. 7 Fig. 8 Fig. 9 

 Tables

 Table 1 Table 2 Table 3 Table 4 

----------------------------------------------

 References (39) 

  1. Aggrey N (2010). Effect of human capital on labor productivity in Sub-Saharan African manufacturing firms. In the Globelics Conference, Malaysia: 1-18.   [Google Scholar]
  2. Ali S, Chaudhry IS, and Farooq F (2012). Human capital formation and economic growth in Pakistan. Pakistan Journal of Social Science, 32(1): 229-240.   [Google Scholar]
  3. Anwar S (2008). Foreign investment, human capital and manufacturing sector growth in Singapore. Journal of Policy Modeling, 30(3): 447-453. https://doi.org/10.1016/j.jpolmod.2007.12.008   [Google Scholar]
  4. Ayaaz SS, Anwar S, Sial MH, and Hussan Z (2011). Role of intuitional credit on production efficiency of farming sector a case study of district Faisalabad Pakistan. Economic and Social Review, 49(2):149-162.   [Google Scholar]
  5. Balta N and Mohl P (2014). The drivers of total factor productivity in catching-up economies. Quarterly Report on the Euro Area (QREA), 13(1): 7-19.   [Google Scholar]
  6. Baltagi BH and Griffin JM (1988). A general index of technical change. Journal of Political Economy, 96(1): 20-41. https://doi.org/10.1086/261522   [Google Scholar]
  7. Broadberry S and Gupta B (2010). The historical roots of India’s service-led development: A sectoral analysis of Anglo-Indian productivity differences, 1870–2000. Explorations in Economic History, 47(3): 264-278. https://doi.org/10.1016/j.eeh.2009.09.004   [Google Scholar]
  8. Burki AA and Terrell D (1998). Measuring production efficiency of small firms in Pakistan. World Development, 26(1): 155-169. https://doi.org/10.1016/S0305-750X(97)00122-8   [Google Scholar]
  9. Chaudhry IS, Ayyoub M, and Imran F (2013). Does inflation matter for sectoral growth in Pakistan? An empirical analysis. Pakistan Economic and Social Review, 51(1): 71-92.   [Google Scholar]
  10. Colombo MG, Delmastro M, and Grilli L (2004). Entrepreneurs' human capital and the start-up size of new technology-based firms. International Journal of Industrial Organization, 22(8-9): 1183-1211. https://doi.org/10.1016/j.ijindorg.2004.06.006   [Google Scholar]
  11. Conti M and Sulis G (2016). Human capital, employment protection and growth in Europe. Journal of Comparative Economics, 44(2): 213-230. https://doi.org/10.1016/j.jce.2015.01.007   [Google Scholar]
  12. Davidsson P and Honig B (2003). The role of social and human capital among nascent entrepreneurs. Journal of Business Venturing, 18(3): 301-331. https://doi.org/10.1016/S0883-9026(02)00097-6   [Google Scholar]
  13. Evangelista R, Lucchese M, and Meliciani V (2013). Business services, innovation and sectoral growth. Structural Change and Economic Dynamics, 25: 119-132. https://doi.org/10.1016/j.strueco.2012.02.005   [Google Scholar]
  14. Gielen AC, Kerkhofs MJ, and Van Ours JC (2010). How performance related pay affects productivity and employment. Journal of Population Economics, 23(1): 291-301. https://doi.org/10.1007/s00148-009-0252-9   [Google Scholar]
  15. GOP (2006). Labour Force Survey 2005-06. Statistics Division, Federal Bureau of Statistics, Government of Pakistan, Islamabad, Pakistan. Available online at: http://www.pbs.gov.pk   [Google Scholar]
  16. Hamid A and Pichler JH (2009). Human capital spillovers, productivity and growth in the manufacturing sector of Pakistan. The Pakistan Development Review, 48(2): 125-140. https://doi.org/10.30541/v48i2pp.125-140   [Google Scholar]
  17. Hatch NW and Dyer JH (2004). Human capital and learning as a source of sustainable competitive advantage. Strategic Management Journal, 25(12): 1155-1178. https://doi.org/10.1002/smj.421   [Google Scholar]
  18. Hausman JA and Taylor WE (1981). Panel data and unobservable individual effects. Econometrica: Journal of the Econometric Society, 49(6): 1377-1398. https://doi.org/10.2307/1911406   [Google Scholar]
  19. Hena S, Jingdong L, Zhang O, Wagan SA, and Adil R (2019). Does good health have direct relation with economic growth. Journal of Social Sciences and Humanity Studies, 5(1): 1-13.   [Google Scholar]
  20. Hena S, Zhang O, Jingdong L, Adil R, Khalil IU, Sahar S, and Rehman A (2018). Impact of human capital on sectoral growth in Pakistan: A review essay. Journal of Applied Environmental and Biological Sciences, 8(11): 7-31.   [Google Scholar]
  21. Heshmati A (2003). Productivity growth, efficiency and outsourcing in manufacturing and service industries. Journal of Economic Surveys, 17(1): 79-112. https://doi.org/10.1111/1467-6419.00189   [Google Scholar]
  22. Kaboski JP (2009). Education, sectoral composition, and growth. Review of Economic Dynamics, 12(1): 168-182. https://doi.org/10.1016/j.red.2008.07.003   [Google Scholar]
  23. Kwon JK (1986). Capital utilization, economies of scale and technical change in the growth of total factor productivity: An explanation of South Korean manufacturing growth. Journal of Development Economics, 24(1): 75-89. https://doi.org/10.1016/0304-3878(86)90145-8   [Google Scholar]
  24. Lebedinski L and Vandenberghe V (2014). Assessing education’s contribution to productivity using firm-level evidence. International Journal of Manpower, 35(8): 1116-1139. https://doi.org/10.1108/IJM-06-2012-0090   [Google Scholar]
  25. Lichtenberg FR (1992). R&D investment and international productivity differences. In the Symposium of Economic Growth in the World Economy, NBER Working Papers NO 4161, National Bureau of Economic Research, Cambridge, Massachusetts, USA: 89-110. https://doi.org/10.3386/w4161   [Google Scholar]
  26. Mankiw NG, Romer D, and Weil DN (1992). A contribution to the empirics of economic growth. The Quarterly Journal of Economics, 107(2): 407-437. https://doi.org/10.2307/2118477   [Google Scholar]
  27. Marimuthu M, Arokiasamy L, and Ismail M (2009). Human capital development and its impact on firm performance: Evidence from developmental economics. Journal of International Social Research, 2(8): 265-272.   [Google Scholar]
  28. Ogunade AO (2011). Human capital investment in the developing world: An analysis of praxis. Seminar Paper, University of Rhode Island, South Kingstown, Rhode Island, USA.   [Google Scholar]
  29. Poterba J (2004). Taxation and corporate payout policy. American Economic Review, 94(2): 171-175. https://doi.org/10.3386/w10321   [Google Scholar]
  30. Raheman A, Afza T, Qayyum A, and Bodla MA (2008). Estimating total factor productivity and its components: Evidence from major manufacturing industries of Pakistan. Pakistan Development Review, 47(4): 677-697. https://doi.org/10.30541/v47i4IIpp.677-694   [Google Scholar]
  31. Rahman MS, Junsheng H, Shahari F, Aslam M, Masud MM, Banna H, and Liya M (2015). Long-run relationship between sectoral productivity and energy consumption in Malaysia: An aggregated and disaggregated viewpoint. Energy, 86: 436-445. https://doi.org/10.1016/j.energy.2015.04.049   [Google Scholar]
  32. Romer PM (1986). Increasing returns and long-run growth. Journal of Political Economy, 94(5): 1002-1037. https://doi.org/10.1086/261420   [Google Scholar]
  33. Safdari M (2011). The effects of human capital on agricultural sector: The case of Iran. European Journal of Experimental Biology, 1(4): 55-65.   [Google Scholar]
  34. Schultz TW (1961). Investment in human capital. The American Economic Review, 51(1): 1-17.   [Google Scholar]
  35. Smolny W (2000). Sources of productivity growth: An empirical analysis with German sectoral data. Applied Economics, 32(3): 305-314. https://doi.org/10.1080/000368400322732   [Google Scholar]
  36. Solow RM (1956). A contribution to the theory of economic growth. The Quarterly Journal of Economics, 70(1): 65-94. https://doi.org/10.2307/1884513   [Google Scholar]
  37. Szirmai A and Verspagen B (2015). Manufacturing and economic growth in developing countries, 1950–2005. Structural Change and Economic Dynamics, 34: 46-59. https://doi.org/10.1016/j.strueco.2015.06.002   [Google Scholar]
  38. Toda HY and Yamamoto T (1995). Statistical inference in vector autoregressions with possibly integrated processes. Journal of Econometrics, 66(1-2): 225-250. https://doi.org/10.1016/0304-4076(94)01616-8   [Google Scholar]
  39. Tsang MC (1987). The impact of underutilization of education on productivity: A case study of the US Bell companies. Economics of Education Review, 6(3): 239-254. https://doi.org/10.1016/0272-7757(87)90003-3   [Google Scholar]