*Topic: Human Capital and Economic Growth
– Robert J. Barro, Professor, Harvard University, USA
We have learned a lot over the last 15 years about the determinants of economic growth. Many factors influence economic growth, and there is no single silver bullet that is the key. The quality of education, reflected in international test scores, is one of the important factors that contribute to growth. In contrast, years of schooling, per se, do not seem to be a major determinant.
Income inequality does not emerge as a major determinant of growth. However, there is some evidence that inequality is bad for growth in poor countries and good for growth in rich countries.
One robust empirical finding is the property of conditional convergence. Holding fixed an array of growth determinants—ranging from the quality of schooling and health to the efficiency of legal institutions and market openness—countries tend to grow faster if they start out further behind. Since conditional works, poor countries that get their policies and institutions in good order can grow rapidly. The bad news is that poor countries only rarely manage to create policies and institutions that are effective and durable.