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

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.