Labour markets and economic growth in the MENA Region

The role and relationship between human capital and growth

Does understanding growth and development require an understanding of the creation and deployment of human capital? The purpose of this paper is to point out the links between human capital and growth that need empirical verification and discuss some summary data for the region that might help point directions for the country papers.

The paper discusses the role that human capital occupies in growth theory and its likely empirical contribution in the MENA region.

The paper shows that:

it is unlikely that human capital has contributed significantly to growth in this region
examination of the sectoral composition of employment and the institutional structure that governs wage determination and the employment relationship is required to find reasons for the apparent wasteful use of human capital in the region

Conclusions include:

human capital occupies a central role in modern thinking about growth
there is no consensus about the role of human capital in growth and development, probably because this role varies across different institutional settings and national environments
the study of the links between labour markets and growth should concentrate on a study of labour market influences on the quantity, quality and productivity of human capital
for each individual country covered, studies need to find our what the institutional settings are that influence the acquisition and employment of human capital and how effective are they in enhancing growth

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Labour markets and economic growth in the MENA Region