Investigating the Interaction of Human Capital and Capital Accumulation in Selected Countries of MENA Region: A Simultaneous Equation System Approach

Document Type : Original Article


1 Assistant Professor of Economics, Faculty of Economics and Political Sciences, Shahid Beheshti University, Tehran, Iran

2 MA in Economic, Faculty of Economics and Political Sciences, Shahid Beheshti University, Tehran, Iran,

3 MA in Economic, Faculty of Economics and Political Sciences, Shahid Beheshti University, Tehran, Iran


Sustainable economic growth and development in countries is the result of interaction and optimal use of influential economic, social, and political factors according to the reality of those countries. Meanwhile, human capital as the most important factor of economic growth and development of countries, not only has a direct effect on production, but also affects other factors of production and it is also affected by them. Therefore, the present study tries to investigate the interaction effects between human capital and capital accumulation in selected countries of the MENA region where the revenue from natural resources is the most important feature of these countries. For this goal, the study uses the system of simultaneous equations approach for the period 1996-2019. The results show that human capital and capital accumulation in the studied countries have a positive and reciprocal effect on each other and increasing inflation as one of the most important macroeconomic variables through the expansion of economic uncertainty reduces capital accumulation. Also, revenues from the sale of natural resources, which is one of the prominent features in the studied countries, have a negative effect on the accumulation of capital and human capital. Finally, non-oil GDP per capita has a positive effect on human capital in the studied countries.


Main Subjects

- Acemoglu, D. & Robinson, J. (2010). The role of institutions in growth and development. Review of Economics and Institutions, 1(2), 1-35.
- Ahmadian Yazdi. F., Homayounifar, M., Mahdavi Adeli, M.H., Fallahi, M. A., Hosseini, S.M. (2018). Accumulation of Tangible and Non-tangible Capital in Iran: Emphasizing on Resource Rents. Economic Researches, 18(1), 75-105 (In Persian).
- Ali, M., Egbetokun, A., & Memon, M. H. (2018). Human capital, social capabilities and economic growth. Economies, 6(1), 2-19.
- Almasi. M., & Gharehbaba. S. (2009). Study on the Relationship between Investment on Human Resource and Physical Capital with Economic Growth in Iran (1971-2005). Quarterly journal of Research and Planning in Higher Education, 15(3), 157-184 (In Persian).
- Amir-ud-Din, R., Usman, M., Abbas, F., & Javed, S.A. (2019). Human versus physical capital: issues of accumulation, interaction and endogeneity. Economic Change and Restructuring, 52(4), 351-382.
- Baltagi, B.H., Bresson, G., and Pirotte, A. (2007). Panel Unit Root Test and Spatial Dependence. Journal of Applied Econometrics, 22(2), 339-360
- Baltagi, B. (2008). Econometric analysis of panel data. John Wiley & Sons.
- Barro, R. & Sala-i-Martin, X.X. (1995). Technological diffusion, convergence, and growth. Center Discussion Paper, No. 735.
- Becker, G. (1993). Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education. Cambridge, MA: Harvard University Press.
- Davis, G.A. (1995). Learning to love the Dutch disease: Evidence from the mineral economies. World development, 23(10), 1765-1779.
- Fisher, G. (2016). Investment Choice and Inflation Uncertainty. London School of Economics.
- Fishlow, A. (1965). American Railroads and the Transformation of the Ante-bellum Economy.  Cambridge, MA: Harvard University Press.
- Gohari, L., Salimifar, M., & Aboutorabi, M.A. (2016) The Effect of Financial Development on Human Capital in Iran. Economic Researches, 16(3), 181-207 (In Persian).
- Gylfason, T. (2001). Natural resources, education, and economic development. European Economic Review, 45, 847–859.
- Grier, R. (2005). The Interaction of Human Capital Accumulation: Evidence from Africa. University of Oklahoma, KYKLOS, 5(2), 195-211.
- Grier, R. (2002). on the interaction of human and physical capital in Latin America. Economic Development and Cultural Change, 50(4), 891-913
- Gylfason, T. (2001). Natural resources, education, and economic development. European Economic Review, 45, 847–859.
- Henderson, J.V., Shalizi, Z., & Venables, A.J. (2001). Geography and development. Journal of Economic Geography, 1(1), 81-105.
- Kar, S., Roy, A., & Sen, K. (2019). The double trap: Institutions and economic development. Economic Modelling, 76, 243-259.
- Lopez-Bazo, E., & Moreno, R. (2008). Does human capital stimulate investment in physical capital?: Evidence from a cost system framework. Economic Modelling, 25(6), 1295-1305.
- Lucas Jr, R.E. (1988). On the mechanics of economic development. Journal of monetary economics, 22(1), 3-42.
- Pérez, C., & Claveria, O. (2020). Natural resources and human development: Evidence from mineral-dependent African countries using exploratory graphical analysis. Resources Policy, 65, 1-10.
- Nelson, R. & Phelps, E.S. (1966). Investment in Humans, Technological Diffusion, and Economic Growth. Rand Paper, Document Number. 3295.
- Rahmani, T., Behpour S. & Ostadzad A.H. (2013). An Empirical Examination of the Relationship between Productivity and Unemployment: Simultaneous Equations Approach. Quarterly Journal of Economic Research and Policies, 21(67), 153-170.
- Sachs, J. and Warner, A. (1995). Economic Reform and Process of Global Integration. Blooming papers on Economic Activity, 1995(1).1-188.
- salmanpour, A., Mousavi, S., & Shokouhifard, S. (2017). Investigating Factors Affecting Capital Accumulation in Iran. Economic Development Policy, 5(2), 107-128 (In Persian).
- Sori, A. (2015). Advanced Econometrics. Farhang Shenasi Press.
- Stiglitz, J. E. (2016). Inequality and economic growth. The Policy Quarterly, 86, 134-155
- Stijns, J.P. (2001). Natural Resource Abundance and Human Capital Accumulation. University of California at Berkeley, unpublished manuscript.
- Thomas, H., Smith, R. R., & Diez, F. (2013). Human capital and global business strategy. Cambridge University Press.
- Zhuang, J., Gunatilake, H., Niimi, Y., Khan, M.E., Jiang, Y., Hasan, R., Khor, N., Lagman-Martin, A. S., Bracey, P. & Huang, B. (2009). Financial Sector Development, Economic Growth, and Poverty Reduction: A Literature Review. ADB Economics Working Paper Series from Asian Development Bank, 173, 1-39.