Investigation of the effect of human capital on economic growth in BRICS-T countries within the framework of the lucas model

Throughout the history of economics, many economic issues, such as what economic growth is, what it is affected by, what it affects, what kind of policies should be applied in order to achieve bigger economic growth, have been researched by economists. As the growth models are concerned, there are four main factors that affect economic growth: natural resources, labor force (labor), physical capital and technological development. Accordingly, if natural resources are assumed to be fixed in short term, economic growth will occur as a result of the real increase in the other three factors. However, the insufficient effect of physical capital alone in explaining economic growth has led to the emergence of the concept of human capital over time. Schultz (1961), the economist who introduced human capital to the economics literature, first focused on the productivity of labor and aimed to increase the economic growth rate with this view. The studies conducted in various countries have led to the emergence of new growth theories in time. The increase in the numbers of the economists following Schultz in the following years and the existence of studies in this field have led to the idea that human capital can be used as a production factor accepted in endogenous growth models. Human capital, which is regarded as one of the basic dynamics of economic growth in endogenous growth models, has been used in many empirical studies and it has been demonstrated that the relation between human capital and economic growth is significant and strong. Among these studies, the approach by Lucas (1988) that human capital is at least as important and necessary as physical capital is regarded as an important model in endogenous growth theories. Therefore, the subject of the research is the empirical examination of the relationship between human capital and economic growth within the framework of the Lucas Model for the period of 1990-2019 for the BRICS-T countries. This research consists of four main sections. In the first section, economic growth is discussed with its conceptual and theoretical dimensions and examined in detail, while in the second section, the concept of human capital is included and the importance of human capital, its characteristics, elements, indicators and measurement are discussed. While the relationship between human capital and growth within the growth theories is examined in the third section, information on the "Lucas Model" on which the study is based is also provided in this section. The fourth chapter, which constitutes the empirical part of the study, includes the results of domestic and foreign literature review, econometric methodology and empirical findings. In the last part, after the general evaluation, suggestions are made within the scope of the subject. As the empirical findings obtained in the study are analyzed, firstly, the correlation results between the variables are given, and the results show that there is a positive and strong correlation between the dependent and independent variables. Cross-sectional dependence and heterogeneity are determined in the pre-tests for the variables and the panel. In this case, it is concluded that second generation tests should be used. Smith et. all Bootstrap (2004) Panel Unit Root Test with Level Shifts, one of the second generation tests, is used to analyze the stability, which includes cross-sectional dependence and is determined to be heterogeneous. In order to test whether there is a long-term relationship between the variables, the Testing for Panel Cointegration with Westerlund and Edgerton (2007) LM Bootstrap is applied and the existence of the cointegrated relationship are determined. Finally, CCE and AMG estimators are used to estimate the coefficients of the variables found to be in a cointegrated relationship, and the validity of the "Lucas" model for the countries mentioned in the study is investigated. As the effect of human capital on economic growth in the countries included in the study is considered, the country with the largest human capital coefficient is India, while the following countries are determined as Brazil, Turkey, South Africa and Russia, respectively. In addition, it is observed that the "Lucas Model" is valid for India, Brazil, South Africa and Turkey as well as for the whole panel, but not for Russia and China. Key Words: Economic Growth, Human Capital, Lucas, BRICS-T, Panel Data Analysis