Islamic countries

In 2010, the World Bank categorized countries in per capita gross domestic product in terms of purchasing power parity (at constant 1990 prices) in three categories: low, middle (lower and upper) and high income. If a country caught at least 28 years in lower middle income level and at least 14 years caught in upper middle-income level, then they are trapped in lower middle and upper middle income traps respectively. The growth of per capita GDP or economic growth, is a factor in avoiding middle income trap. We examined the effect of total factor productivity, human capital and age dependency ratios on GDP per capita growth and the avoidance of middle income trap during 1991 - 2014 for ten Islamic countries, using panel data and constant effects estimation. The findings indicate that human capital and then total factor productivity have positive and significant relationship with per-capita GDP and have the greatest impact on economic growth and the avoidance from middle income trap. If the ratio of age dependency is high, it has a positive and significant effect on economic growth and can keep the country in the middle income trap.

The present paper attempts to estimate the relationship between labor productivity and health, technological progress and education, using panel data observing 57-nation Orgamization of Islamic Coopeation, OIC over the period of 1995-2009. A two-step procedure was used with the first involving an estimate of labor productivity based on observations in the OPEC, GCC and ECO member countries and also African nations within the Islamic countries. The second step involved an estimate of the effect on labor productivity of health, technological progress and education. Our findings indicate that labor productivities in Islamic countries with some exceptions on an average are above 3 with the highest of 12 belonging to Azerbaijan. Exceptions are Somalia and Gabon with negative productivities and Brunei and Cameroun with productivities around one. The only variable influencing labor productivity in the Islamic countries is health with technology and education having no meaningful influence.

Foreign direct investment (FDI) as a growth accelerating component has received a great attention in developed countries even in developing and less developed countries during recent years. It has a matter of greater concern for the economists how FDI affects economic growth of the host country economy. In closed economy there is no access to the foreign instruments and savings, this type of economy solely based on the domestic savings and investment sources. But in open economy, the investment comes from both sources either from domestic savings or foreign capital inflows like FDI. FDI enables the host country to achieve the investment level beyond its capacity to improve GDP and economic growth.  FDI encourages the process of economic growth by filling up the saving-investment gap; transferring advanced technology, new entrepreneurship. This study investigates the impact of Foreign Direct Investment on economic growth in 30 Islamic countries. The econometric model is estimated by using Pooled Mean Group (PMG) for dynamic heterogeneous panels over the period 1992-2018.  The results of the study show that FDI inflows have positive and significant effects on economic growth. Of course, the impacts of interaction terms between FDI and human capital; FDI, and trade openness on economic growth are more than each of them separately in the long and short run.  The study suggests that the Islamic governments should design and implement appropriate fiscal, monetary and trade policies to make and improve an enabling environment to attract foreign Capital inflows as a supplementary source of domestic investment.