The Effect of Education on Economic Growth in Jordan:

Majed Farhan Bader

Abstract


The main aim of this study was to examine the effect of education on economic growth in Jordan over the period 1976-2007. Co-integration analysis was adoptedwith five variables: Real Gross National Product (RGNP), Capital (K), Labor (L), Expenditure on Education (EDU), and Technology (T). Two unit root tests (Dickey-Fuller Test and Philips-Perron Test) have been employed to test the integration order of the five variables. The Johansen Co-integration Test is mainly used. Furthermore, for the purpose of supporting the results, the dynamic relationships among the variables are explained through presenting the variance decomposition of log (RGNP). The empirical results support the main hypothesis of this study that education affects positively economic growth in Jordan. Even though that the most important effect on economic growth is for education, the other three explanatory variables affect also, positively, the economic growth; yet their effect is relatively less important than the effect of education.

Keywords


Education, Economic Growth, Co-integration Analysis.

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