Institutions, Human Capital, and Economic Growth in the Maghreb countries

This paper considers the relationship between institutional quality, human capital, and economic growth. More specifically, we seek to establish the linkages by which economic freedom affects real GDP growth via its mediating impact on human capital. These associations were investigated using the dynamic system generalized method of moments (GMM) on a panel of 3 Maghreb countries, namely, Tunisia, Algeria, and Morocco over the 1991–2020 period. The results show that (1) in the long run, both institutional quality and human capital can promote economic growth. (2) Institutional quality and human capital have a significant positive interactive effect on the economic growth. Policy implications of these results are that careful attention should be paid to co-development policies to enhance the institutional quality and the human capital in these countries. Policies should also consider economic growth strategies to enable sustainable economic growth rates.