Is Education the Cause for Iberian Economic Growth ? A Study in Econometric History

Recent models of growth, such as Romer (1986, 1990) and Lucas (1988), following Arrow (1962) and Uzawa (1965), emphasise human capital investment as an important factor contributing to long-run growth. In the lit erature, human capital investment takes several forms (edu cational attainment, learning by doing, etc.). Our focus in this paper is on human capital accumulation through the formal schooling. It is our thesis that education is more an accompanying investment than a "driving force" behind growth. We test this argument with the concept of the causal relationship formulated by Granger. All the tests are performed on the basis of the aggregate series of public ex penditures on education (EXPEDU), total public expendi tures (EXPTOT), population (Population) and Gross domes tic product (GDP) in Portugal and Spain before World War II.