Technology, Human Capital and Growth: Evidence from a Middle Income Country Case Study Applying Dynamic Heterogeneous Panel Analysis

This paper examines whether endogenous growth processes can be found in middle income country contexts. Estimation proceeds by means of dynamic heterogeneous panel analysis. Empirical evidence finds in favour of both knowledge spill-over effects, and of positive impacts on total factor productivty growth by Schumpeterian innovative activity. A crucial finding is that spill-over effects emerge from investment in human rather than physical capital, and that the quality dimension in human capital investment is vital in generating innovation.