HUMAN CAPITAL, INNOVATION, AND ECONOMIC GROWTH IN PERU: AN EXTENDED MRW-ARDL ANALYSIS (1990–2020)

This paper examines the determinants of economic growth in Peru over the post-liberalisation
period 1990–2020 within an extended Mankiw–Romer–Weil (MRW) neoclassical framework
augmented with foreign direct investment (FDI), trade openness, innovation proxied by
resident patent applications, and disaggregated public expenditure on education and health per
capita. The optimal model, ARDL (1,1,0,1,1,1,1,0), is selected from 64 candidate specifications
via the Akaike Information Criterion, achieving an R² of 0.952 and an F-statistic of 12.56.
Results reveal a negative first-lag auto-effect on GDP per capita (β = −0.443), indicative of
structural growth inertia. Trade openness emerges as the single most robust and statistically
significant growth driver (β = 0.318, p < 0.05), while public expenditure on education per capita
contributes positively and significantly (β = 0.263, p < 0.05). FDI exerts a positive but
marginally significant contemporaneous effect (β = 0.209, p = 0.062). Innovation proxied by
resident patent applications exhibits a consistently negative and insignificant association with
output growth (β = −0.032), revealing a structural disconnect between formal innovation
activity and productive transformation. Bounds cointegration is confirmed (F-statistic = 5.623),
and CUSUM/CUSUM-squared tests confirm full parametric stability across the estimation
window. These findings carry direct comparative implications for resource-dependent
developing economies in Asia, demonstrating that trade-led openness and targeted human
capital investment—rather than innovation proxies alone—represent the most reliable nearterm drivers of per capita income growth at an intermediate stage of development