Human Capital as a Driving Force for Economic Growth in GCC Countries: Pooled Mean Group Estimation

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Human Capital as a Driving Force for Economic Growth in GCC Countries: Pooled Mean Group Estimation

Abstract

This study explored the relationship between human capital metrics and economic growth in the Gulf Cooperation Council (GCC) countries from 2000 to 2022. This research utilized a pooled mean group-autoregressive distributed lag approach to empirically assess the influence of selected macroeconomic factors—specifically human capital, gross capital formation, government expenditure on health and education, and foreign direct investment (FDI)—on gross domestic product. The results indicated that, in the short term, all human capital indicators positively impacted economic growth, except for FDI. Conversely, in the long term, all variables’ impact was positive and significant. School enrollment, governmental spending on education and health, FDI, employment, and capital formation positively influenced long-term economic growth. Governments must develop workforce skills in education, health, and productive sectors to enhance economic growth in GCC countries. Implementing robust structural reforms is essential, focusing on manufacturing sector development, economic diversification, reducing oil dependency, and boosting productivity and innovation in research and technology.

Muthanna Journal of Administrative and Economic Sciences, 2024,Volume 14, Issue 3, Pages 151-162

DOI:10.52113/6/2024-14-3/151-162

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