Abstract
The importance of human capital in explanations of growth processes is crucial both in theoretical and empirical analyses. Nevertheless, the results obtained in empirical studies do not always show the expected positive relation, normally because the proxy used to measure human capital is not the most appropriate and because this variable is usually considered as an explanatory variable. This paper tries to deal with these two problems considering a sample of 18 Latin American countries for the period 1950-2000. To this end, a complex human capital index has been constructed and using the Granger-causality methodology. The paper shows how the causation between this variable and growth runs in both directions, even after taking the physical investment rate into consideration. Moreover, the paper confirms that investment in physical capital precedes human capital in the poorest countries of the region whereas the two types of investments operate together in the richest.