Analysis of the V.A.R. as a tool to investigate the impact of higher education on economic growth in Macau in the period 2000–2019

Abstract

This article employs the panel data model to investigate the influence of both higher education scale and quality on economic growth in Macau from 2000–2019 and constructs a V.A.R. model to examine the impact of the higher education scale on economic growth. The model is constructed based on the Cobb–Douglas production function with an alteration derived from existing relevant studies to include enrolled university students as one of the variables. It is found that all-time series are stationary; through the pairwise Granger Causality test, it is observed that the number of students enrolled in the Granger cause of G.D.P. Study results show a high level of a statistically significant relationship in the positive direction between higher education and economic growth, while a 1% increase in enrolled students will lead to a 0.5547% increase in G.D.P. Moreover, in general, higher education exerts a significant positive effect on economic growth in Macau, while the effect of fixed capital formation appears insignificant. In addition, the labour force plays a remarkably positive role in the economic growth of Macau.