The Impact of Human Capital on Economic Growth in Saudia Arabia

Abstract

This study examines the impact of human capital development on economic growth in Saudi Arabia over period 1990- 2022. Specifically, it investigates the relationship between human capital and economic growth. employing the Johnsen test and error correction model (ECM). The findings of the study show that human capital development indicators had positive but insignificant impact on economic growth in Saudi Arabia. Further, evidence from the results indicated that labor and physical capital have contributed largely to economic growth in Saudi Arabia. However, their impacts were largely statistically significant which indicates the importance of these two variables in increasing the economic growth. The result also, revealed that there exists a long-run relationship among the economic growth and regressors in the model and the explanatory variables are highly correlated with economic growth in the model. On this basis of the findings, this study recommends there is need for government to invest more in human capital development process and similarly, government should endeavor to pay attention to the issue of school enrolment.

Keywords

• Human capital, economic growth, Saudi Arabia, VECM