Human development, public expenditure and economic growth: a system dynamics approach

Purpose – It is now widely recognized that human development (HD) and economic growth (EG) are intertwined in two‐way feedback processes either leading to an upward spiral of development or a poverty trap. This concept is used to overcome one of the limitations of a previous study by Qureshi which assumes exogenous gross domestic product (GDP). With endogenous GDP formulation, the impact of public expenditure on HD and EG in Pakistan is examined.Design/methodology/approach – System dynamics approach is used to model, identify and help manage the development path of HD and EG in Pakistan given alternative policies for public expenditure on HD and EG. For this purpose the model endogenously determines path of population cohorts, and education, health and economic indicators.Findings – The simulation results suggest that the current level of public expenditure on HD is extremely low and any further decrease will have irreversible negative impact on HD and economic indicators, even if the resources so saved a...

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