The relationship between education and economic growth in Malaysia

Kong, Hsiao Hwa (2007) The relationship between education and economic growth in Malaysia. Universiti Malaysia Sabah. (Unpublished)


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During the first fifteen years (1991-2005) towards 2020, Malaysia's economy has been growing rapidly at an average rate of 6.2 percent per annum. Physical capital and labour inputs are important basic factors that contribute to economic growth. However, a mere dependence on these basic factors may not uphold the economic growth. Conversely human capital and technology are crucial to sustain the economic growth. This study examines the relationship between education and economic development in Malaysia for the period of 1980-2005. Education is the major component of human capital. Three variables used as proxies for education are the enrolment rate in primary school, secondary school and institutions of higher learning. The study is based on the Cobb-Douglas production function which can easily be extended to include human capital as determinant of economic growth. This function is estimated using a multiple regression model. The long-run relationship between educational variables and gross domestic product (GOP), as well as the causal direction between them are examined. Several tests are conducted to support the model. The results suggest that all the time series data are stationary after the first and second differences but there exists a co-integrating relationship between educational variables and GOP. Causality runs through enrolment rate in primary to GDP while reverse causality runs through GOP to enrolment rate in secondary and tertiary

Item Type: Academic Exercise
Uncontrolled Keywords: physical capital, labour input, economic growth, education, multiple regression model, gross domestic product
Subjects: H Social Sciences > HB Economic Theory
Divisions: SCHOOL > School of Science and Technology
Date Deposited: 03 Apr 2014 06:13
Last Modified: 13 Oct 2017 09:04

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