Impact of Human & Social Capital on Economic Growth

In an ever changing globalized world, the success of countries and individuals is linked to how they adapt to change, learn and share knowledge. It is somehow believed that the impact of human and social capital is far broader than whatever positive effects it may have on economic growth or productivity. Taking a broader perspective on human well-being, this study shows how human and social capital is mutually reinforcing and how their nexus contribute in realizing sustainable economic growth. The analysis follows a panel data model for twelve economically and socially developed countries of OECD (Europe) and four developing countries of SAARC (Asia) by using a time series data from 1995 2004. The results indicate both human and social capital are crucial determinants of economic growth and have positive impact on growth in both sets of countries. In particular human (education and health etc) and social (honesty and trust etc) variables have stronger impact on growth in OECD countries which implies developing SAARC countries have yet to cover a long distance to achieve their desirable goals of human and social capital to expect a sustainable impact on economic growth.