Long-run and Short-run Impacts of Higher Education on Iran's Manufacturing Exports

Technology and scientific knowledge developed by higher education play imperative role in the production process of manufacturing goods. Labor forces, in a higher level of education, are able to cause technological changes by which significant rises are occurred in commodity exporting capacity and competitive ability in international markets. The present paper investigates the impact of higher education on Iran’s manufacturing exports, and it tests the hypothesis that improvement in higher education, particularly in long run, can influence positively the non-oil export supply. Specifying an empirical framework and then using data for the period 1966–1999, we employ the Johansen – Juselius co-integration method and Error Correction Model (ECM) to estimate, respectively, long-run and short-run determinants of Iran’s manufacturing export supply. Overall, estimation results obtained reveal the fact that there is a substantial significant flexibility of higher education coefficient in the long-run export model, whereas the correspondent short-run coefficient is not statistically significant. The implication is that the policy makers should consider enhancement in higher education as the human capital role in the promotion of Iranian non-oil exports.