Human Capital Stock and Flow and Economic Growth Analysis: Note zy KEVIN T. MCNAMARA WARREN P. KRIESEL zyx BRADY J. DEATON ABSTRACT Human capital is becoming recognized as an increasingly im- portant factor in rural economic development. Economic research, however, has not provided clear empirical support of the relationship between human capital investment and economic growth. This paper applies stock and flow mn- cepts to human capital and suggests an operational approach for applying stock and flow concepts to the analysis of the impact of human capital investments through education on economic growth. HE IMPORTANCE OF HUMAN CAPITAL INVESTMENT to the T future growth and vitality of rural economies has been a central theme of several recent studies on the future of rural areas zyx (Shadows in the Sunbelt 1986, Halfway Home and A Long Way to Go 1986, and After the Factories by Rosenfeld et al. 1985). While the positive returns to invest- ment in human capital in both national income growth (Schultz 1961) and individual income (Hines, Tweeten, and Redfern 1970) have been demonstrated, limited progress has been made in isolating the spatial im- pacts of specific local investment in human capital on economic develop- ment. McNamara, Kriesel, and Deaton (1984) argue that economists’failure to differentiate between human capital stocks and flows has contributed to difficultiesin empirically demonstrating the relationship between human capital investments and local economic growth. This paper discusses the application of stock and flow concepts to human capital resource measure- ment and suggests an operational approach for including education measures for human capital stocks and flows in economic growth analysis. Kevin T. McNamara zyxwv is an assistant professor of agricultural economics with a joint appointment as Rural Development Economist in the Institute of Community and Area Development at the University of Georgia. Warren P. Kriesel zyxwvut is a research assistant in agricultural economics at Ohio State University, and Brady zyxwvu I. Deaton is a professor of agricultural economics and Associate Director of International Development at VirginiaPolytechnic Institute and State University.