Higher Education, Real Income and Real Investment in the Selected OIC Members: Evidence from ARDL and Panel Data Approaches

Higher education, through increasing the human capital stock of individuals, improves productivity and therefore contributes to economic growth. From economic point of view, this type of expenditure is considered as a long-run investment which increases growth rate and forms a higher capacity of human capacity. The implication is that a dynamic relationship between growth rates of education, income and investment can be implemented in a specific time path. This paper employs ARDL and Panel Data modeling to test the causal relationship between real income, real investment and human capital using data for the 16 selected OIC members over the period 1980-2005. The empirical results approve a long-run effect of human and physical investments. The results also imply a crucial rate of human capital which will play in the future developments of the OIC countries