The Human Development Index in an endogenous growth model

Van Zon and Muysken (2001) model both the education and the health sector based on the Lucas-Uzawa model of human capital accumulation. This endogenous growth model is extended here to explicitly consider education next to health and consumption in the CIES utility function. The model is solved for its long run equilibrium in which physical and human capital, consumption and output grow at constant and equal rates. The health level of the population is assumed to be constant. However, as the current situation in developing countries is far from being in a long run equilibrium state, special attention is given to the analysis of the dynamic properties of the system. The development of a country can be interpreted as the transition towards its long run equilibrium. The long run equilibrium of the model can be solved numerically for a variety of parame- ter specications. Central results are growth rate, labor shares in production, education and