Government expenditure on education and economic growth: a panel data analysis

Md. Mizanur  Rahman; Tahsin Binta  Anis

doi:10.35782/JCPP.2023.2.03

Md. Mizanur Rahman Research Officer, Bangladesh Public Administration Training Centre, Savar, Dhaka, Bangladesh
Tahsin Binta Anis Lecturer of Economics, School of Business, Canadian University of Bangladesh, Pragati Swarani, Dhaka, Bangladesh

DOI: https://doi.org/10.35782/JCPP.2023.2.03

Keywords: Public Expenditure, Fiscal Policy, Economic Growth, Resource Allocation, Public Policy, Expenditure on Education

Abstract

The fiscal policy of the government determines the long-run economic growth through optimal decisions on government expenses. For robust economic growth and prosperity, efficient allocation of resources is a necessary condition. An efficient labor force will refer to high productivity and high economic growth. The main reason for expecting a link between education and economic growth is straightforward. Education certainly enhances efficiency, which increases productivity and is a precondition for long-run economic growth. This work attempted to find the correlation between public spending on education and economic growth and the magnitude of this relationship. In the analysis, panel data of 63 countries were chosen randomly from each continent from 1981 to 2010. This study also included other variables that impact economic growth, including inflation rate, unemployment rate, Foreign Direct Investment, total export, and capital formation. The study revealed a significant positive correlation between public spending on education and economic development.