Innovativeness and human capital capacity towards economic development in asia pacific

Abstract

Scholars agree on the stylized fact that human capital and innovation are the decisive factors that explain why some countries are rich and others remain poor (Aghion et al. 2009; Goldin and Katz 2008; Goldin and Katz 1998; Jones and Romer, 2010). On the one hand, human capital is seen as a substitute for technology: Better educated managers and workers are able to increase production even when the technology they use is constant. On the other hand, human capital is interpreted as an input in the R&D process and therefore rather a complement to technology. According to this view, an increase in human capital will lead to a more efficient adaption of superior technologies thereby shifting the frontier of the production possibility set outwards.