Is there any causality between human resource development and economic growth? A provincial case study on Pakistan

The present study aims to investigate the causality between economic growth and human resource development. In doing so, LLL (Larsson et al., 2001) panel co-integration rank test for heterogeneous panel models and recently developed panel causality tests by Hurlin and Venet (2001) are employed on panel of four provinces. The results of panel rank tests indicate that there exists a long run relationship between human resource development and economic growth in Pakistan. The results based on panel homogeneous causality hypothesis show that economic growth does not cause human resource development, while human resource development causes economic growth. However, panel non-homogeneous hypothesis suggest that there exist bi-directional causality relationship between human resource development and economic growth in Pakistan. The empirical evidence of heterogeneous causality hypothesis confirms the existence of bi-directional casual relationship between human resource development and economic growth in Punjab, while human resource development causes economic activity in Sind.