The Relationship between Human Capital, Trade Openness and Structural Changes in OPEC Countries: Panel Vector Auto-Regressive Approach

Document Type : Scientific paper

Authors

1 PhD Student in Economics, Department of Economics, Faculty of Economics, Management & Administrative Sciences, Semnan University, Semnan, Iran

2 Associate Professor of Economics, Department of Economics, Institute for Management & Planning Studies, Tehran, Iran.

3 Professor of Economics, Department of Economics, Faculty of Economics, Management & Administrative Sciences, Semnan University, Semnan, Iran

4 Associate Professor of Economics, Faculty of Economics, Management & Administrative Sciences, Semnan University, Semnan, Iran

Abstract

The role and importance of human capital as one of the factors and resources of accelerating economic development has been considered by economic researchers for a long time and is still a challengeable subject. Many economic policies and variables affect the accumulation and level of human capital. According to the empirical researches, trade openness and structural changes are important variables affecting the human capital. However, considering the existing literature, the type of relationship among these variables may vary under different conditions and in different countries. Thus, these relationships need to be examined more precisely. Therefore, given the importance of this issue, the current study sought to examine the relations between human capital, trade openness and structural changes in the selected OPEC countries. To achieve this goal, panel vector auto-regressive approach was used in the period 1990-2019. The findings of this study and the analysis of impulse-response functions showed that the shock of structural changes on human capital was positive in the model with the average years of schooling, while the shock of trade openness on human capital was negative. Moreover, the results of variance decomposition indicated that trade openness do not play a significant role in explaining the changes of human capital in the OPEC countries even in the long run. It seems that trade openness increases the demand of primary sectors which use low-skilled labor and therefore decreases the demand for human capital.

Keywords

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References

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Macroeconomics Research Letter
Volume 16, Issue 31
August 2021
Pages 219-243

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History

  • Receive Date: 09 March 2022
  • Revise Date: 13 June 2022
  • Accept Date: 30 June 2022

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