Human Capital, Institutional Quality and Economic Growth - The Mediating Effect of Digital Adoptions, Creative Outputs, and Total Factor Productivity.

Taking a sample of 18 Asian economies and using the path analysis technique and maximum likelihood method of estimation, the present paper contributes to the literature on the interaction between human capital (HC), institutional quality (IQ), and economic growth (EG) in the context of selected Asian economies. The study marks a clear-cut departure from the previous studies by introducing the mediating effect of Digital Adoptions (DA), Creative Outputs (CO), and Total Factor Productivity (TFP) on IQ and helps in obtaining more reliable results of IQ on EG. The path analysis technique allowed us to parse the direct and indirect effects of key variables on each other as well as on IQ. The study demonstrates that HC impacts digital adoptions and creative outputs directly, positively, and significantly and exercises an indirect but positive influence on IQ by mediating variables such as DA, CO, and TFP. TFP growth improves the quality of institutions, which in turn spurs economic growth. The major policy implication of this study is that it very clearly shows that institutional quality is tied to TFP directly and to human capital (via creative outputs and TFP) indirectly. Such a study deserves special attention of policymakers in Asian countries for promoting strategies regarding human capital and digital development along with leveraging the creative industries and services sectors for productivity enhancement, which can significantly improve institutional quality and facilitate broad-based growth. [ABSTRACT FROM AUTHOR]