Which Contributes More to Economic Growth in the MENA Region: Health or Education? An Empirical Investigation
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Which Contributes More to Economic Growth in the MENA Region: Health or Education? An Empirical Investigation Atif Awad 1 Received: 7 May 2019 / Accepted: 27 April 2020/ # Springer Science+Business Media, LLC, part of Springer Nature 2020
Abstract This study reinvestigates the debate on the potential influence of human capital on economic growth in the Middle East and North Africa (MENA) region and takes into account two different proxies of human capital: health and education. The present study adopts a dynamic model built on the pooled mean group estimator (PMG) and analysed panel data covering 20 countries between 1990 and 2016. The results detect that, in the long run, while education has a positive and significant effect on economic growth, health has a negative but negligible influence on such growth. However, in the short run, health plays a positive and remarkable role in the growth process. This finding suggests the importance of distinguishing between the long- and short-run influences of human capital measurement on economic growth. Keywords Education . Health . MENA . Long and short run . JEL classification . I15 . I25 .
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Introduction The importance of human capital in the economic process is well documented both theoretically and empirically (Gyimah-Brempongand and Wilson, 2004; Hartwig, 2010; Qadri and Waheed, 2014; Awad et al. 2014. Awad et al. 2015; Ogundaria and Awokuseb 2018). The development of human capital enhances economic growth in several ways, for instance, improving workers’ skills and, hence, their productivity; reducing income inequality; and minimising population growth. The expected positive labour productivity influences from the investment in human capital make it a matter of priority for development policy in the MENA region. However, the term human capital * Atif Awad [email protected]
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College of Business Administration, Department of Finance & Economics, University of Sharjah, P.O. BOX 27272, Sharjah, UAE
Journal of the Knowledge Economy
is multifaceted and complex. Human capital has been defined as the set of knowledge, skills, capabilities and abilities that are embodied in people and which people have learnt over time, via training, education, work experience, health care and migration (Schultz 1961; Becker 1964). Consequently, human development can be grouped into three key ingredients: education, health and know-how/training, and its stock could rise through the accumulation of higher education, improved health status and contemporary learning. However, due to the difficulties in measuring new learning and training, education and health statuses have been frequently used as proxies for human capital development in preceding empirical studies that have addressed the human development and economic growth nexus. As we have mentioned previously, scholars have identified several channels through which an improvement in the health and/or education of an individual can directly or indirectly stimulate economic progress. For instance, evidence shows that an appropriat
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