Absorptive Capacity of Human Capital and International R&D Spillover on Labour Productivity in Egypt

Abstract

The purpose of this chapter is to investigate the relationship between labour productivity, human capital and international R&D spillover during the period 1982–2011. It estimates a single equation model which employs long-run cointegration analysis and short-run analysis (ECM). It is based on annual data collected from the World Bank and the Ministry of Planning in Egypt and the OECD database for the period 1982–2011. The results show a conventional result for international R&D and human capital. we infer from the emperical results of this study the significant positive role played by international R&D and human capital on labour productivity. This chapter highlights an important area for policy decision-making which stresses the idea that human capital’s absorptive capacity, enhanced by high-quality education, intensifies the positive effect of R&D spillover on labour productivity. This was determined by our survey of the literature and our empirical model. This chapter takes a different approach from the literature by examining the effect of international R&D spillover and human capital on labour productivity in the Egyptian manufacturing industries. Other studies were conducted by examining the effect of these variables on either total factor productivity or gross domestic product of recipient countries. This study was conducted on a limited scale on Egypt with the research method used in this chapter and with emphasis on human capital.