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How important is human capital for services exports? Evidence from South Asia
Over the last three decades, South Asian economies have shown a continued upsurge in services exports, contributing to their external sector stability and economic growth. In this context, we examine the role of human capital in boosting services exports and revisit the other determinants of services exports by employing data from India, Nepal, Pakistan, Bangladesh, and Sri Lanka from 1980 to 2022. The findings reveal that human capital is a significant determinant of service exports. In addition, endowment factors such as financial and institutional development, telecom networks, broadband connections, and the quality of physical capital, along with other macroeconomic factors, are significant contributors to services exports. Our study distinctively establishes the role of human capital in augmenting services exports from the South Asian region. Removing supply-side bottlenecks in education, quality infrastructure, institutional governance, and broadband tele density, among others, to increase the competitiveness of the region’s service exports.
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