Academic journal article Journal of Economics and Economic Education Research

Social Sector Development and Economic Growth in Haryana

Academic journal article Journal of Economics and Economic Education Research

Social Sector Development and Economic Growth in Haryana

Article excerpt


The social sector development has been considered as an essential prerequisite for sustained human development and economic growth of an economy (Sen, 1989). Because human capabilities provide a firm basis for evaluating living standards and quality of life (Sen, 1989 and 2000). Hence, deliberate attention to the enhancement of freedoms and capabilities would help in the process of economic development. Social (1) sector development sets the foundation for rising income and employment opportunities, productivity growth, technological advancement and hence, helps to enhance the quality of life of people. Development of the social sector is one of the most important components of the economic growth (Romer, 1986, 1989, 1990; Lucas, 1988; Quah and Rauch, 1990, Grossman and Helpman 1991, Rivera-Batiz & Romer 1991).

According to Alvi (2010) "No nation can progress without a strong human capital base". The studies like Nelson and Phelps (1966), Benhabib and Spiegal (1994), Lucas (1988), Mankiw et al. (1992) find that education plays an important role in the process of innovation and human capital accumulation, which helps to increase the labour productivity and hence boost economic growth. Endogenous growth theory explains the causal connection between economic growth and human capital development (for example, Romer 1986, 1989, 1990 and 1991). Because social sector development needs a strong human capital base which could be built through quality education, better health facility, job opportunities in the organized sector with social security measures etc. Social sector development increases the capabilities of human beings which increases labour productivity and hence boosts economic growth (Strauss and Thomas, 1998). Increasing growth of output, on the other hand, it enables the government to increase the share of spending on social sector development which has implications for long- run socioeconomic development.

This study tries to explore the impact of social sector development on economic growth in Haryana. This study has taken Haryana as the study area because of improving of expenditure on social sector in Haryana. The major reason is that this type of study has not been conducted in any states of India. Therefore, this study is different from others.

The rest of the paper is organized as follows. Section two explains about the previous literature related to social sector development and economic growth (that are both national level studies as well as international level studies). Section three explains the data and methodology which includes the variables used in the present study and outlines the regression model. Section four (it has divided into two sub-section descriptive statistics and econometric results) discuss about the empirical results of the study. And finally, section five concludes the paper and draws upon the policy measures based on the findings of the paper.


A review of earlier studies conducted in various parts of the world finds that social sector development and economic growth are closely inter-related. The studies like Hicks (1979), Streeten (1981), Goldstein (1985), Ram (1985), Strauss & Thomas (1995), Duflo (2001) Haddad et al. (2003) and Culter et al. (2005) & Baldacci (2008) have found that social sector development has positive implications for economic growth. Moreover, the empirical studies like Gerdham et al. (1992) & Hitris & Posnett (1992) in OECD countries, Gbesemete and Gerdtham (1992) & Schultz (2000) in Africa and South American region, Reza et al. (2014) in Iran and Pradhan and Hall (provide year) in Asia have found that social sector development has positive impact on economic growth.

Similarly, in India the earlier studies like Sen (2000); Hooda (2013); Gangal & Gupta (2013); Mohapatra (2013); Haldar et al. (2006) and Bhat & Jain (2004) explains that expenditure on health increases the economic growth through the improvement of health conditions of people which leads to productivity of the people. …

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