The Impact of Investment in Education on Economic Growth in Libya (An Econometric Analysis)
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Abstract
The main objective of this paper is to carry out an empirical investigation on the relationship between investment in education and economic growth in Libya, using annual time series data from 1970 to 2010. The paper employs Johansen cointegration technique to test that there is an equilibrium relationship between the variables and unit root model to limit the degree of the integration for the variables. The OLS method was used to estimate the parameters of the econometric models. Empirical results indicate that there is, indeed a long-run relationship between investment in education and economic growth. All the variables including, the power of labor force, and the number of students enrolled in higher education and the outputs of general and higher education and educational capital appear with the expected positive signs and are statistically significant (except the numbers listed in general education and investment expenditure on education) in the Libyan economy. The findings have a strong implication on educational policy in Libya. The study seems to suggest that a concerted effort should be made by policy makers to enhance educational investment in order to accelerate growth which would engender economic development.
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Education, Economic Growth, Educational Capital, Economic Development, Libya.
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