The effect of human capital on economic growth: 1970-2006 the case of Turkey

In this study, content, significance and historical context of economic growth and human capital are researched and affects of human capital on economic growth was analysed based on Neo-Classical Growth Theory and Endogenous Growth Theory. This study consists of three parts. In the first part, concept of economic growth and human capital is described. The relationship between these concepts is analysed by comparing ways amongst Turkey and OECD. In the second, neo-classical growth theory and endogenous growth theory are examined theoretically in the frame of literature basis. In the third part of study, impact of human capital on economic growth in Turkey for the period of 1970-2006, is gone through by using time series analysis on the basis of direction and magnitude of interrelation between education expenditure, schooling ratio and economic growth. In the econometric model, to determine the long run relationship between series that we held, cointegration analysis is applied. In this context unit root test, determining the appropriate time lag, determining the existance of co-integration, Johansen co-integration test, vector error correction model and variance decomposition analysis are carryied out. According to findings, changes in educational indicator have carved out of the changes in real GNP per capita by substantially, but change in educational indicators haven?t derived from changes in real GNP per capita.Key Words: Human Capital, Economic Growth, Neo-Classical Growth, Endogenous Growth, Co-integration Analysis, Variance Decomposition.