Abstract

The objective of this paper is to examine the impact of human capital and innovation output on economic growth in Malaysia and Turkey, over the period 1988-2013. The conventional Unit Root Tests reveal that all the variables are stationary after taking the first difference, and the Johansen Tests of Co-Integration demonstrate that the variables are co-integrated. Specifically, we find that in both countries, human capital, innovation output and physical capital have a significant positive effect on economic growth. The Causality tests indicate two unidirectional causalities that run from human capital and innovation to economic growth and a bidirectional causality between physical capital and innovation in Malaysia.

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