Do Human Capital and Technological Innovation Promote Sustainable Economic Growth in India? Evidence from an ARDL Cointegration Model

Abstract

Sustainable economic growth remains a central policy objective for India, particularly in the context of demographic transition, technological transformation, and fiscal expansion. While human capital formation and technological innovation are widely acknowledged as key growth drivers, empirical evidence on their long-run and short-run dynamics within an integrated framework remains limited. This study investigates whether human capital development and technological innovation promote sustainable economic growth in India, incorporating government expenditure as a complementary factor. The novelty of the study lies in applying the Autoregressive Distributed Lag (ARDL) cointegration model to examine both short-run adjustments and long-run equilibrium relationships within a unified empirical setting. Using annual time-series data over an extended period, the ARDL bounds testing approach is employed to test for cointegration among the variables. The empirical findings confirm the existence of a long-run relationship between economic growth, human capital, technological innovation, and government expenditure. Results indicate that human capital and technological innovation significantly and positively influence sustainable economic growth in the long run, while government expenditure enhances growth primarily through productivity-enhancing channels. The error correction term demonstrates a stable adjustment mechanism toward equilibrium. The findings suggest that sustained investment in education, skill development, research and development (R&D), and innovation ecosystems is crucial for maintaining long-term growth momentum. Policymakers should prioritize knowledge-based development strategies and ensure efficient allocation of public expenditure toward human capital and innovation-driven sectors. Strengthening institutional quality and fostering technology diffusion can further accelerate sustainable growth outcomes.