Relations between education and economics: The case of the state of Kerala, India

Using institutional methodology, this study analyzes the historical development of education and economic growth in the state of Kerala. A large amount of data has been collected from various sources, including the Census of India and the Government of India publications. The data from the post-Independence Censuses of India and other sources are used to test models of relationship between education, as proxy to human capital, and economic output in India with specific emphasis on Kerala state. It is found that the Solow model and its modification do not best describe this relation. Contrary to the Solow model and its modifications for human capital contribution, no variations in higher education in various states, including Kerala and India overall, could be used to explain the income variations. A new model of development and growth should be developed based on the historical analyses of the origins of economic underdevelopment.; Education has played an important role in the development of the Kerala society and was a major contributing factor to the state's achievements in social progress.