The Effect of Foreign Trade and Human Capital on Economic Growth in OIC Countries

This paper investigates the effect of foreign trade and human capital on economic growth using pooling data for the OIC member countries over the period 1980-2003. For this purpose, the Soderbom-Teal (2003) growth model is re-specified with the variables such as growth of manufacturing exports, manufacturing imports, human capital, labor force and physical capital. The empirical results indicate a positive effect of human capital on economic growth. In addition, an interacted relationship between trade and human capital has significantly affected growth of the selected OIC countries during the period under-consideration. According to the empirical results obtained, the significant role of manufacturing tradable products in economic growth is implemented as a result of human capital effect. Therefore, investment in human resources to improve skill levels of labor force and technology provides the OIC countries with a larger capacity of trade and growth.