FISCAL STIMULATION OF HUMAN CAPITAL AND RESULTANT ECONOMIC GROWTH IN SOUTH AFRICA

The aim of the paper is to econometrically model the relationship between national fiscal expenditure on human capital (national education and training expenditure) and the efficiency of the human resource base in stimulating economic growth. Data on government spending was collected from the South African Reserve Bank (SARB) quarterly bulletins (for the period 1979 - 2006). A functional form of a production function, namely the constant elasticity of substitution modelling (CES modelling), was employed to test the stated hypothesis. The results of the study indicate that fiscal stimulus of human capital in South Africa does not translate into high technological change and ultimately higher economic growth rates.