Education, Human Capital Accumulation, and Economic Growth: The Caribbean Experience

The supply of human capital in production activities is a function of the quality and volume of education services provided at the basic and tertiary levels in the education system. Accordingly, the allocation of resources by government to education is an important determinant of human capital formation. Moreover, depending on its level-specific variations, a given amount of human capital can have differential impacts across sectors and on economic growth. Noting that the accumulation of human capital may be of greater importance than the accumulation of physical capital, this study posits that government spending on education can be identified as an important indicator of human capital formation that in turn propels economic growth. This study examines the level-specific impact of human capital on economic growth in four Caribbean countries using the Lucas (1988) model for its theoretical underpinnings. It was found that human capital at the tertiary level in countries with lower performance indicators had a negative impact on economic growth whereas human capital at the basic level in countries with lower performance indicators had a positive impact on economic growth.