Abstract
This thesis investigates the effects of human capital on labour productivity in four south Asian countries. The research includes education, on-the-job training and R&D as measures of human capital. Theoretically there is a strong link between the skills and education of the workers and the productivity of the enterprises. A worker with more education and on-the-job training contributes more to the productivity of the enterprise. An enterprise invests in training and R&D, because it aims to make the workers more capable of performing their tasks. The firm level data of the manufacturing sector is taken from the World Bank enterprises survey. OLS regression is used to check the effectiveness of human capital in micro, small, medium and large size enterprises in south Asian countries. Rather than pooling the data, the research provides in-depth and detailed analysis of each size of enterprise. Chi-square test statistics are used to test for the equality of coefficients across countries, across different firm size and also for exporting and non-exporting enterprises. Education is found to be significant in Bangladesh rather than India, Nepal and Pakistan. Training is found to be more effective in medium and large enterprises in India and Pakistan as compared to Bangladesh and Nepal. The results bode well for the areas where policymakers can focus in order to increase productivity in small and medium enterprises.