The effect of human capital on total factor productivity growth in the Arab Gulf Cooperation Council countries
Date
2017
Authors
Algarini, Abdullah, author
Bernasek, Alexandra, advisor
Mushinski, David, committee member
Kling, Robert, committee member
Kroll, Stephan, committee member
Journal Title
Journal ISSN
Volume Title
Abstract
This study is based on the understanding that economic growth in the long run can be achieved not only by increasing accumulation of capital and labor, but also through a sustained growth in total factor productivity (TFP). Therefore, knowledge of factors that explain TFP growth is important in explaining economic growth in the long run. Previous studies emphasize that in general education and health have very important effects on TFP growth, but the effects of these factors have not been widely studied in the AGCC countries. The first step in understanding the problem is to estimate TFP growth by using the Solow Model (1957) and Kalio Model (2012) and the second step is to determine the factors that affect TFP growth by using the Miller and Upadhyay (2000), Khan (2005), and Kalio (2012) models. The results from this study show that the contribution of the accumulation of capital and labor is higher than the contribution of TFP to economic growth over the period 1990-2014 and that it is still low or negative in these countries compared to developed countries. The most positively impactful variables on TFP growth in the AGCC are trade openness, oil revenues, and government consumption, while education, health, manufacturing, and FDI show little if any effect in most AGCC countries. In contrast, Jordan shows a positive effect of education, FDI, and manufacturing on TFP growth that may make Jordan more productive in the long term than AGCC countries.