A Review Study on the Strategic Importance of Human Capital Through Education in Driving Socio-Economic Development

Farah Khan; Mohd Sofian Omar Fauzee

doi:10.22159/ijoe.2025v13i3.53951

Authors

Farah Khan Institute of Education & Research, Women University Mardan, KP-Pakistan. INTI International University, Nilai, Malaysia
Mohd Sofian Omar Fauzee INTI International University, Nilai, Malaysia https://orcid.org/0000-0002-6841-9647

DOI:

https://doi.org/10.22159/ijoe.2025v13i3.53951

Keywords:

human capital, education, socio-economic development, sustainable development goals

Abstract

Human capital through education is the most important key factor in production/output (national income) and, therefore, in the socio-economic development of any country. Education fosters workers’ creativity and productivity, promotes entrepreneurship, and contributes to socio-economic development. The main aim of the present study is to increase understanding of the indispensable role played by education in promoting social welfare. After reviewing prior theoretical and empirical studies, the results indicate that education is the most significant factor in the process of socio-economic development and, thereby, sustainable development goals of the United Nations. The results of the present study recommend that policymakers focus on promoting the education sector. Consequently, this will further enhance the social welfare of the people.

Downloads

Download data is not yet available.

References

Abbas, Q., & Foreman-Peck, J. (2008). Human capital and economic growth: Pakistan, 1960–2003. The Lahore Journal of Economics, 13(1), 1–27. https://doi.org/10.35536/lje.2008.v13.i1.a1

Alataş, S., & Çakir, M. (2016). The effect of human capital on economic growth: A panel data analysis. Administrative Sciences, 14(27), 539–555. https://dergipark.org.tr/tr/download/article-file/660519

Ali, M. (2024). Unlocking opportunities: The socio-economic impact of quality education. International Journal of English Literature and Social Sciences, 9(6), 183–186. https://doi.org/10.22161/ijels.96.30

Ali, M., Egbetokun, A., & Memon, M. H. (2018). Human capital, social capabilities and economic growth. Economies, 6(1), 2. https://doi.org/10.3390/economies6010002

Al-Zu’bi, M. A. A., Al-Mseidin, K. I. M., Yaakob, M. F. M., Fauzee, M. S. O., Mahmood, M. H. H., Sohri, N., Al-Mawadieh, R. S. M., & Senathirajah, A. R. B. S. (2024). The impact of the school educational environment on primary school teachers’ commitment to educational quality. Discover Sustainability, 5(1), 449. https://doi.org/10.1007/s43621-024-00633-4

Arabi, K. A. M., & Abdalla, S. Z. S. (2013). The impact of human capital on economic growth: Empirical evidence from Sudan. Research in World Economy, 4(2), 43–53.

Arksey, H., & O’Malley, L. (2005). Scoping studies: Towards a methodological framework. International Journal of Social Research Methodology, 8(1), 19–32. https://doi.org/10.1080/1364557032000119616

Azam, M. (2019). Inequality and Economic Growth in Asia and the Pacific Region. African and Asian Studies, 18(3), 288–314. https://doi.org/10.1163/15692108-12341429

Azam, M., & Ahmed, A. M. (2015). Role of human capital and foreign direct investment in promoting economic growth: Evidence from Commonwealth of Independent States. International Journal of Social Economics, 42(2), 98–111. https://doi.org/10.1108/IJSE-05-2014-0092

Azam, M., & Ather, M. (2010). Role of human capital in economic development: Evidence from Pakistan: (1961–2009). Interdisciplinary Journal of Contemporary Research in Business, 2(4), 220–233.

Azam, M., & Gavrila, L. (2015). Inward foreign capital flows and economic growth in African countries. Journal of Applied Economic Sciences. X, 3(33), 362–371.

Azam, M., Khan, S., Zainal, Z., Karuppiah, N., & Khan, F. (2015). The impact of foreign direct investment on human capital in developing countries. Investment Management and Financial Innovations, 12(3), 155–162.

Azam, M., & Raza, S. A. (2016). Do workers’ remittances boost human capital development? Pakistan Development Review, 55(2), 123–149.

Bakar, N. A., Haseeb, M., & Azam, M. (2014). The nexus between education and economic growth in Malaysia: cointegration and Toda-Yamamoto causality approach. Actual Problems of Economics, 12(162), 131–141.

Barro, R. J. (1991). Economic growth in a cross section of countries. The Quarterly Journal of Economics, 106(2), 407–443. https://doi.org/10.2307/2937943

Barro, R. J., & Lee, J. (1993). International comparisons of educational attainment, 1960–1985. Journal of Monetary Economics, 32(3), 363-394. https://doi.org/10.1016/0304-3932(93)90023-9

Becker, G. S. (1962). Investment in human capital: A theoretical analysis. Journal of Political Economy, 70(5, Part 2), 9–49. https://doi.org/10.1086/258724

Becker, G. S. (1964). Human capital. Columbia University Press.

Becker, G. S., Murphy, K. M., & Tamura, R. (1990). Human capital, fertility, and economic growth [Suppl.]. Journal of Political Economy, 98(5, Part 2), S12–S37. https://doi.org/10.1086/261723

Benhabib, J., & Speigel, M. M. (May 1992). The role of human capital and political instability in economic development [Unpublished manuscript]. New York University.

Burchi, F. (2006). Identifying the role of education in socio-economic development. International Conference on Human and Economic Resources, Izmir, Turkey (pp. 193–206).

Danacica, D.-E. (2011). Causality between school education and economic growth in Romania. Argumenta Oeconomica, 1(26), 57–72.

Farswan, D. S. (2023). Role of education and culture in social development. Journal of Social Review and Development, 2(1), 13–16.

Gebrehiwot, K. G. (2014). The impact of human capital development on economic growth in Ethiopia: Evidence from ARDL approach to co-integration (December 30, 2014). American Journal of Trade and Policy, 1(3), 125–134.

Haldar, S. K., & Mallik, G. (2010). Does human capital cause economic growth? a case study of India. International Journal of Economic Sciences and Applied Research, 3(1), 7–25.

Hanif, N., & Arshed, N. (2016). Relationship between school education and economic growth: SAARC countries. International Journal of Economics and Financial Issues, 6(1), 294–300.

Hanushek, E. A., & Wößmann, L. (2010). Education and economic growth. In P. Peterson, E. Baker & B. McGaw (Eds.), International Encyclopedia of Education (Vol. 2, pp. 245–252). Elsevier.

Harbinson .H. (1973). Human resources as the wealth of nations. University Press.

Hassan, G., & Cooray, A. (2012). The effect of female and male health on economic growth: Cross-country evidence within a production function framework, 07 (Working Paper). The University of Waikato.

Idrees, M., Khan, F., & Bin Omar Fauzee, M. S. (2021). Analysis of the effect of government expenditures on school enrollment in Pakistan. Responsible Education, Learning and Teaching in Emerging Economies, 3(1), 27–35. https://doi.org/10.26710/relate.v3i1.1755.

Javed, Z. H., Khilji, B. A., & Mujahid, M. (2008). Impact on education on socio-economic status of villagers life: A case study of Shrien Wala village of Faisalabad district. Pakistan Economic and Social Review, 46(2), 133–146.

Jehan, N., Khan, F., & Sadiqa, B. A. (2021). Girls’ struggle for education: An exploratory study from Tehsil Balambat, Khyber Pakhtunkhwa, Pakistan. Journal of Managerial Sciences, 15(4), 48–58.

Khan, F., Fauzee, M. S. B. O., & Daud, Y. (2015). Significance of teachers and education in promoting national economic development: A case study of Pakistan. Asian Social Science, 11(12), 290–296. https://doi.org/10.5539/ass.v11n12p290

Khan, F., Khan, M. A., & Rahman, H. U. (2024). Perusing sustainable development through education: Evidence from Malaysia, Indonesia and Pakistan. Environment, Development and Sustainability. https://doi.org/10.1007/s10668-024-05441-4

Khan, F., Sarwar, G., Khan, M. A., Noor, S., & Rehman, Z. U. (2024). Assessing the link between environmental quality and life expectancy in developing nations: An empirical analysis for sustainable development. International Social Science Journal. https://doi.org/10.1111/issj.12553

Khan, F., Uddin, I., Don, Y. B., & Awan, A. M. (2024). Does women’s education play a role in sustainable environment in Pakistan? A quantitative approach. Environment, Development and Sustainability. https://doi.org/10.1007/s10668-024-05479-4

Khan, F., Zahir, S., Rahman, H. U., Raza, A., & Noor, S. (2024). Exploring the role of ICT and education in reducing environmental degradation among Asian countries. Natural Resources Forum. https://doi.org/10.1111/1477-8947.12548

Khembo, F., & Tchereni, B. H. M. (2013). The impact of human capital on economic growth in the SADC region. Developing Country Studies, 3(4), 144–152.

Ki-Moon, B. (2014). Sustainable development begins with Education: How education can contribute to the proposed post-2015 goals. United Nations Educational, Scientific and Cultural Organization. Retrieved January 2, 2025, from http://unesdoc.unesco.org/images/0023/002305/230508e.pdf

Klyachko, T. A., & Semionova, E. A. (2018). Contribution of education to the socio-economic development of the subjects of the Russian Federation. Economy of Region, 14(3), 791–805. https://doi.org/10.17059/2018-3-8

Levin, H. M., & Kelley, C. (1994). Can education do it alone? Economics of Education Review, 13(2), 97–108. https://doi.org/10.1016/0272-7757(94)90001-9

Li, H., & Liang, H. (2010). Health, education, and economic growth in East Asia. Journal of Chinese Economic and Foreign Trade Studies, 3(2), 110–131. https://doi.org/10.1108/17544401011052267

Loening, J. L. (May, 2005). Effects of primary, secondary and tertiary education: Evidence from Guatemala policy research (Working Paper). https://dx.doi.org/10.2139/ssrn.753647

Lucas, R. E. (1988). On the mechanics of economic development. Journal of Monetary Economics, 22(1), 3–42. https://doi.org/10.1016/0304-3932(88)90168-7

Maitra, B. (2016). Investment in human capital and economic growth in Singapore. Global Business Review [Published online before print March 14, 2016], 17(2), 425–437. https://doi.org/10.1177/0972150915619819

Mak, S., & Thomas, A. (2022). Steps for conducting a scoping review. Journal of Graduate Medical Education, 14(5), 565–567. https://doi.org/10.4300/JGME-D-22-00621.1

Mincer, J. (1981). Human capital and economic growth (Working Paper No. 803). National Bureau of Economic Research.

Misati, R. N., & Nyamongo, E. M. (2012). Financial liberalization, financial fragility and economic growth in Sub-Saharan Africa. Journal of Financial Stability, 8(3), 150–160. https://doi.org/10.1016/j.jfs.2011.02.001

Misra, S. (October 15, 2012). Contribution of education in the socio-economic development an empirical study. In Theoretical and methodological challenges in social sciences : International scientific conference journal (Vol.5, pp. 369-394).

Mitaj, A., Muco, K., & Avdulaj, J. (2016). The role of human capital in the economic development and social welfare in Albania. International Journal of Human Resource Studies, 6(1), 63–72. https://doi.org/10.5296/ijhrs.v6i1.9059

Mukudi, E. (2003). Education and nutrition linkages in Africa: Evidence from national level analysis. International Journal of Educational Development, 23(3), 245–256. https://doi.org/10.1016/S0738-0593(02)00050-0

Mulligan, C. B., & Sala-i-Martin, X. (June, 1992). Some empirical evidence on two-sector models of endogenous growth [Unpublished manuscript]. University of Chicago.

Munn, Z., Peters, M. D. J., Stern, C., Tufanaru, C., McArthur, A., & Aromataris, E. (2018). Systematic review or scoping review? Guidance for authors when choosing between a systematic or scoping review approach. BMC Medical Research Methodology, 18(1), 143. https://doi.org/10.1186/s12874-018-0611-x

Nelson, R. R., & Phelps, E. S. (1966). Investment in humans, technological diffusion, and economic growth. The American Economic Review, 56(1/2), 69–75.

Organization for Economic Co-operation and Development. (2024). 2024: OECD indicators. OECD Publishing. https://doi.org/10.1787/c00cad36-en

Ozturk, I. (2008). The role of education in economic development: A theoretical perspective. https://doi.org/10.2139/ssrn.1137541

Pegkas, P. (2014). The link between educational levels and economic growth: A neoclassical approach for the case of Greece. International Journal of Applied Economics, 11(2), 38–54.

Pelinescu, E. (2015). The impact of human capital on economic growth. Procedia Economics and Finance, 22, 184–190. https://doi.org/10.1016/S2212-5671(15)00258-0

Ramirez, A., & Ranis, G., & Stewart. F. (1997). Economic growth and human development (Working Paper No. qehwps18). Queen Elizabeth House, University of Oxford.

Rasheed, S. (2000). Children: What future in the new millennium? Development. Kluwer Academic Publisher, 43(1), 7–13. https://doi.org/10.1057/palgrave.development.1110109

Romer, P. M. (1990). Human capital and growth: Theory and evidence. Carnegie-Rochester Conference Series on Public Policy, 32(1), 251–286. https://doi.org/10.1016/0167-2231(90)90028-J

Ruiz-Perez, I., & Petrova, D. (2019). Scoping reviews. Another way of literature review. Medicina Clinica, 153(4), 165–168. https://doi.org/10.1016/j.medcli.2019.02.006

Schultz, T. (1975). The value of the ability to deal with disequilibira. Journal of Economic Literature, 13(3), 827–846. https://www.jstor.org/stable/i347551

Soukiazis, E., & Antunes, M. (2012). Foreign trade, human capital and economic growth: An empirical approach for the European Union countries. The Journal of International Trade and Economic Development, 21(1), 3–24. https://doi.org/10.1080/09638199.2012.643013

Spence, M. (1973). Job market signaling. The Quarterly Journal of Economics, 87(3), 355–375. https://doi.org/10.2307/1882010

Stevens, P., & Weale, M. (2004). Education and economic growth. In G. Johnes & J. Johnes (Eds.), International Handbook on the Economics of Education. Edward Elgar Publishing. https://doi.org/10.4337/9781845421694.00009

Tilak, J. B. G. (2002). Education and poverty. Journal of Human Development, 3(2), 191–207. https://doi.org/10.1080/14649880220147301

Wood, A. (1994). North–South trade, employment and inequality: Changing fortunes in a skill-driven world. Oxford University Press. https://doi.org/10.1093/0198290152.001.0001

Zaman, M. (2012). Human capital and economic growth: An empirical investigation using panel data. IOSR Journal of Humanities and Social Science, 4(6), 43–46. https://doi.org/10.9790/0837-0464356