The Effect of Human Capital as an Output of Education on Productivity: A Panel Data Analysis for Developing Countries

In the rapidly changing atmosphere of the global economy, productivity has become a very important concept for long-term economic growth, development, regional and global competitiveness, raising social living standards and increasing the level of welfare for countries. In the 21st century, when scientific knowledge, technology, innovation, R&D and entrepreneurship manifest themselves in every stage of the production process, human capital has come to the fore as an important and determining factor that increases productivity. In the current study, the effect of human capital, one of the most important outputs of education, on country productivity was analyzed for 24 developing countries, including Turkey, which are in the upper middle income group. In the application part, a panel data set was created for the 24 countries included in the study with the series obtained from the database of PWT10.0 for the period of 1980-2019. The Human Capital Index was used to reveal the human capital status of the countries included in the analysis and the Total Factor Productivity Index was used to reveal the productivity status. The Granger Panel Causality Test was employed to determine whether there is a short-term relationship and the Westerlund Panel Cointegration Test was employed to determine whether there is a long-term relationship between the two variables. As a result of a bilateral causality relationship was found between human capital and productivity in the short-term and a cointegration relationship in the long-term. The study is important and different from other studies in that it focuses on the concepts of human capital and productivity, which have a very limited place in the education literature, although they are directly related to education, and it is grounded on an interdisciplinary approach (bringing together education, sociology and econometrics).