Human Capital Investment and Industrial Productivity in Malaysia

Izza Hazira Zailan, Masturah Ma’in, Arlinah Abd Rashid, Zarina Denan

Abstract


Human capital is seen as the major factor in determining the productivity of a firm. In order to achieve its goals and sustain in the global market, a firm needs to invest in human capital. Malaysia has shown various efforts in improving the quality of human capital; however, those efforts are still inadequate. In order to increase the industrial production in Malaysia, a firm needs to hire more skilled workers. Hence, this study investigated the short and long-run relationship between human capital and industrial productivity in Malaysia. Using a time series data spanned through 1982-2015, this study analysed the cause and effect of human capital towards industrial productivity. In order to achieve the objectives of the study, appropriate econometrics techniques such as co-integration and error correction Model (ECM) were applied. The study found that the total expenditure on education and gross capital formation has a short run effect of the industrial productivity. While labour with educational attainment has a long-run impact towards industrial productivity. In line with Malaysian aspiration in developing human capital, some improvements must be made to boost the industrial production.


Keywords


Human Capital Investment, Industrial Productivity, Output Growth

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References


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