Human Capital and Productivity Growth: A Comperative Analysis of Turkey

Abstract

This paper analyzes the role of human capital in productivity growth for a panel of around 50 countries from different levels of development, including Turkey. We particularly focus on the relevance of different quantitative measures of human capital in explaining productivity growth and a detailed examination of the case of the Turkish economy. The analysis covers the period 1981-2002 and the average years of education of the labor force and schooling rates for different education levels are proxy variables used for human capital. The initial year productivity level, physical investment, foreign direct investment, export intensity and the share of agricultural employment in total employment are other productivity growth explanatory variables considered in the study. Confirming the majority of other relevant studies, this study finds a positive contribution from human capital to productivity growth for the whole sample of countries considered. However, we find that this relation is not valid for the Turkish economy. Beside the quality dimension of human capital, the low level of human capital accumulation and lack of adequate environment conducive for both ordinary production and technological activities are regarded as possible explanations for this finding.