The Relationship Between Human Capital Development and Economic Growth: Evidence from Malaysia

Abstract

This study aims to determine the behavior of education and health data in driving economic growth in Malaysia before the COVID-19 pandemic hit the world, namely, in the period from 2000 to 2019. This period was chosen to assess the behavior of data in the past so that it can be an indicator for decisionmaking for the future. To achieve this goal, the Quantitative Threshold Autoregressive method is used to predict data behavior so that the relationship between data can be seen in order to forecast economic growth when investing in health and education. This study focuses on secondary data sourced from the World Bank, including data on Malaysian gross domestic product, health investment in Malaysia and investment in education. We find that education and health are very important means of investing in human capital to drive economic growth. Education and health have the potential to be the two means of awakening and developing and restoring the economy during a pandemic and post-pandemic period. Education is a human resource development mechanism. However, education will be difficult to improve human performance without support from health. Education and health support each other in improving economic performance in Malaysia.