To What Extent Does Investment in Human Capital Contribute to Physical Capital Growth?

Jordaan, Johannes C.; Blignaut, James N.
April 2005
Problems & Perspectives in Management;2005, Issue 2, p45
Academic Journal
With globalisation and increasing information, technology, transfers between countries and human migration, one could have believed that economic performances of the different countries in the world would be levelled out, but the reality is that the gap between the developed countries and developing ones (especially in Africa) has increased. Factors that drive the economy, with goals of long-term economic growth and convergence between the rich and poor have been one central aspect of development since World War Two. The main question asked is if increases in human capital contribute to increases in physical capital. African countries are compared with emerging countries as well as with developed ones. The conclusion drawn is that human capital by means of higher education may be a source of more capital and long-term economic growth. Capital per capita is taken as a function of tertiary education and rule of law and the results show that increased tertiary education is needed especially in Africa, along with a decrease in the risk involved.


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