In current economic growth literature, there is one approach or hypothesis used to explain the causes of growth. The hypothesis is that institutions cause economic growth, emphasizing that countries should start with democracy and other constraints on government in order to secure property rights, with such political institutions in place, investment in human and physical capital and therefore economic growth, expected to follow (North, 1981, 1990; Knack and Keefer, 1995; Mauro, 1995). Recently the hypothesis had got some empirical tests (Acemoglu et al. 2001, 2002). However, a few doubts are cast on them. One of doubts is that experiences of East Asian countries (regions), such as South Korea, Singapore, Taiwan, China mainland, do not support the hypothesis, because these countries (regions) grew rapidly even under one-party dictatorship, and some of them subsequently turned to democracy. The Experiences seem to raise another approach or hypothesis that causality should run from growth to institutions rather than other way around. According this view, growth substantially comes from increasing human capital rather then democratically political institutions.
In this paper, we use 1960-2000 data relevant to human capital, political institutions and GDP per capita of 9East Asian countries to test the hypothesis that human capital is more important than are the political institutions in promoting economic growth.