Investigating the Human Capital Development–growth Nexus

Abstract

In this article, we test whether economic growth depends on human capital development mainly operating through an upgrading of human capital stock in the area where the universities are located. We specify a growth model where a qualitative measure of human capital development, university efficiency, is considered in conjunction with a customary quantitative measure of human capital development, number of graduates. The model is estimated on panel data over the period 2003 to 2011. The evidence suggests that both indicators of human capital development have a positive and significant impact on gross domestic product per capita. Results also show that knowledge spillovers occur between areas through the geographical proximity to the efficient universities, suggesting that the geography of production is affected. Results hold when robustness checks are performed.

Research, knowledge transfer, and innovation: The effect of Italian universities’ efficiency on local economic development 2006−2012

“…When looking at the (average) technical efficiency scores by geographical area (see Table ), the estimates reveal that HE institutions in central and northern areas (north‐western, north‐eastern, and central) outperform those in southern areas. This result is consistent with previous evidence reported, for example, by Agasisti and Dal Bianco (), Agasisti, Barra, and Zotti (), and Barra and Zotti (). Overall, universities should be able to expand their production of output by about 25% without increasing their inputs.…”

“…To analyze the relationship between the efficiency of universities and local economic development, we specify the following dynamic panel model (Barra & Zotti, ): where ln is the natural logarithm, GDPC is GDP per capita (measured as the sum of the gross values added of all units divided by workers in each LMA in which the university is located) and GDPC t ‒1 is its lagged value. EFF refers to the efficiency of universities.…”

“…The performance of HEIs is conceptualized in terms of efficiency, which we estimate using an innovative and robust stochastic frontier analysis that takes into account indicators of all three missions—teaching, research, and the third mission. Our measurement of efficiency is more complete than that proposed by Barra and Zotti (), who ignore the third mission. To handle endogeneity problems between the efficiency of universities and economic development, a system generalized method of moments (Sys‐GMM) and then an instrumental variable (IV) approach are used.…”

“…There are few studies that take advantage of these developments in their empirical analyses. Barra and Zotti (), for example, use the number of graduates and university efficiency scores as indicators of human capital, demonstrating their positive effect on the areas in which HEIs operate. Their paper constitutes a natural key reference point for our study, which extends and improves the preliminary analysis presented by the authors.…”

Human capital development in socio-economic malaise: evidence from the UK

“…Similar findings are documented by the recent studies (see Barra and Zotti, 2016;Crescenzi et al, 2016;Erdem, 2016).…”