Influence of Human Capital Formation on the Economic Growth in Bangladesh During 1990–2019: an ARDL Approach

This study investigates the influence of human capital formation (HCF) on economic growth in Bangladesh based on an ARDL approach The outlay on health and government education spending each as a fraction of gross domestic product (GDP) is used as a proxy for HCF, while the growth rate of GDP is used to measure economic growth. The Autoregressive Distributed Lag (ARDL) model and the Toda-Yamamoto (T-Y) Granger causality test are applied using time-series yearly data for the period 1990–2019 to accomplish the study. The ARDL estimation reveals that the variables are cointegrated. Expenditure on health influences economic growth rate positively in the long run, but not in the short-run, while government spending on education affects economic growth rate in the long run negatively, and in the short-run positively. The T-Y Granger causality test results reveal two unidirectional causalities: from health outlay to economic growth rate, and from education spending to economic growth rate, and hence, confirm the ARDL estimation results.