Human capital and economic development : an analysis for the Mediterranean countries

Abstract

In this essay we shall dwell on examining the influences of "human capital" on per capita income of the countries bordering the Mediterranean. Since the 60's, physical and human capital emerged as an important theme for analysis. Schultz (1964) demonstrated that for the less developed countries to record a higher growth, it was necessary to disseminate new technologies and to provide infrastructures and services by higher expenditures. Better infrastructures would enable the economy to have low transport costs as in Coase (1937) as well as low costs in the implementation of contracts. But what is human capital? It is made up of all skills and productive knowledge found in individuals, as agents able to product an income inside an economic system. In relation to the characteristics of the individuals incorporating it, we can refer to the human capital and also to all the qualified human resources, whose enterprises have to carry out the production processes. Literature (see amongst others: Prausello and Marenco, 1996) considers higher school education and vocational training as the most important forms of human capital investment. Generally, every time the present consumption is given up in order to increase the stock of individual knowledge and skills, a human capital investment takes place. This means that particular forms of human capital are connected with the expenses, or costs and opportunities faced for health reasons, to buy and deal information and particularly to look for a work, to move to another town or emigrate, to achieve a minimum level of production capabilities by means of food expenses in the case of developing countries and so on. In the first part of this paper we shall dwell on the innovative role given to the theory of economic growth by those researchers that consider also among the productive factors the human capital or endogenous growth models; in the second part the basic hypothesis of these models will be considered; and finally, in the third part, we shall verify (by means of an econometric analysis), the correlation between some proxies of human capital and the per capita income of the countries bordering the Mediterranean; in the fourth conclusive remarks are expressed.