The Effect of Human Capital on Business Space in Islamic Countries

Business refers to the activities of producing and purchasing goods and services for the purpose of selling for making profit. The business space is characterized by factors such as the health of the administrative system, social security, government economic policies stability, laws and regulations, and the quality of the judicial system, which are outside the remit of the business unit managers and affect the performance of business. Business ease index can be considered as one of the indicators of economic development of the country. It is important to consider the factors affecting business space index in different countries. Purpose of this article is to study the impact of human capital on business space index in Islamic countries. So, 26 countries member of the Organization of Islamic Cooperation (OIC) with information on model variables were selected on the World Bank website. The panel regression method, fixed effects approach was used to analyze and estimate the research model. The findings of the study indicate the positive impact of human capital and capital formation rate on business space in Islamic countries. Accordingly, the effect of foreign direct investment on business space in the sample countries has not been confirmed. Also, the effect of inflation on the dependent variable has been negative.