IMPACT OF HUMAN CAPITAL FORMATION ON ECONOMIC GROWTH: EVIDENCE FROM BANGLADESH.

The purpose of this study is to investigate the impact of human capital formation on economic growth of Bangladesh. The study uses the current expenditure on health and public expense on education to measure the human capital formation and growth of gross domestic product as an economic growth proxy. The study employs the time-series data for the period 1998-2017 and performs Augmented Dickey Fuller unit root test to determine data stationarity, Johansen cointegration test to examine the long-run relationship among the variables and Granger causality test to explore the direction of causality. The findings reveal that public expenditure on education causes economic growth positively, while current expenditure on health has no impact on economic growth. Similarly, growth in GDP causes expenditure on health to rise, but it has no impact on education spending. Moreover, education spending causes health expenditure to rise as well. Therefore, the policy makers need to focus more on education and find the way out to materialize the outcome of health expenditure. [ABSTRACT FROM AUTHOR]