The relationship between education and economic growth: A cross-country analysis
DOI:
https://doi.org/10.33448/rsd-v12i5.40522Keywords:
Economic Growth; Education; Systems Generalized Method of Moments; Low-Middle-and-High-Income Countries.Abstract
This study investigates the effects of education on economic growth in 89 low, middle, and high-income countries using an index of human capital developed by Penn World Table and economic growth data from the World Bank’s World Development Indicators. This study specifies a growth accounting empirical model to examine the effects of education on economic growth. Using systems Generalized Method of Moments estimation technique on annual data covering the periods from 2002 to 2020, the results show that education significantly enhances economic growth. On average, an increase in the education index by 0.1 increases the growth of real GDP per capita by 0.8 percentage points. The results also show that education does have higher returns for low- and middle-income countries compared to high-income countries. The results of this study lend credence to the argument that poor countries should focus and pool adequate resources towards education as a means to achieving growth.
References
Agasisti, T., & Bertoletti, A. (2022). Higher education and economic growth: A longitudinal study of European regions 2000–2017. Socio-Economic Planning Sciences, 81, 100940.
Appiah, E. N., & McMahon, W. W. (2002). The social outcomes of education and feedbacks on growth in Africa. Journal of Development Studies, 38(4), 27-68.
Arellano, M., & Bover, O. (1995). Another look at the instrumental variable estimation of error-components models. Journal of Econometrics, 68(1), 29-51.
Barro, R. J. (1991). Economic growth in a cross section of countries. The Quarterly Journal of Economics, 106(2), 407-443.
Barro, R. J., & Lee, J. W. (2013). A new data set of educational attainment in the world, 1950–2010. Journal of Development Economics, 104, 184-198.
Barro, R. J., & Sala-i-Martin, X. I. (2003). Economic growth. MIT press.
Bassanini, A., & Scarpetta, S. (2001). 2001 The driving forces of economic growth. Panel data evidence from OECD countries.
Benhabib, J., & Spiegel, M. M. (1994). The role of human capital in economic development evidence from aggregate cross-country data. Journal of Monetary Economics, 34(2), 143-173.
Benos, N., & Zotou, S. (2014). Education and economic growth: A meta-regression analysis. World Development, 64, 669-689.
Bhattacharyya, S. (2009). Unbundled institutions, human capital and growth. Journal of Comparative Economics, 37(1), 106-120.
Blundell, R., & Bond, S. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87(1), 115-143.
Cohen, D., & Leker, L. (2014). Health and education: Another look with the proper data.
Coman, A. C., Lupu, D., & Nuţă, F. M. (2022). The impact of public education spending on economic growth in Central and Eastern Europe. An ARDL approach with structural break. Economic Research-Ekonomska Istraživanja, , 1-18.
Feenstra, Robert C., Robert Inklaar and Marcel P. Timmer (2015), "The Next Generation of the Penn World Table" American Economic Review, 105(10), 3150-3182, available for download at www.ggdc.net/pwt
Gemmell, N. (1996). Evaluating the impacts of human capital stocks and accumulation on economic growth: some new evidence. Oxford Bulletin of Economics and Statistics, 58(1), 9-28.
Griliches, Z. (1996). The discovery of the residual: a historical note. journal of Economic literature, v. 34, n. 1.
Hansen, L. P. (1982). Large sample properties of generalized method of moments estimators. Econometrica: Journal of the Econometric Society, , 1029-1054.
Hanushek, E. A., & Woessmann, L. (2008). The role of cognitive skills in economic development. Journal of Economic Literature, 46(3), 607-668.
Harmon, C., Oosterbeek, H., & Walker, I. (2003). The returns to education: Microeconomics. Journal of Economic Surveys, 17(2), 115-156.
Kalaitzidakis, P., Mamuneas, T. P., Savvides, A., & Stengos, T. (2001). Measures of human capital and nonlinearities in economic growth. Journal of Economic Growth, 6(3), 229-254.
Lee, C. G. (2010). Education and economic growth: further empirical evidence. European Journal of Economics, Finance and Administrative Sciences, 23(8), 161-169.
Lee, D. W., & Lee, T. H. (1995). Human capital and economic growth tests based on the international evaluation of educational achievement. Economics Letters, 47(2), 219-225.
Maneejuk, P., & Yamaka, W. (2021). The impact of higher education on economic growth in ASEAN-5 countries. Sustainability, 13(2), 520.
Psacharopoulos, G. (1994). Returns to investment in education: A global update. World Development, 22(9), 1325-1343.
Roodman, D. (2009). A note on the theme of too many instruments. Oxford Bulletin of Economics and Statistics, 71(1), 135-158.
Sianesi, B., & Reenen, J. V. (2003). The returns to education: Macroeconomics. Journal of Economic Surveys, 17(2), 157-200.
Solow, R. M. (1957). Technical change and the aggregate production function. The Review of Economics and Statistics, 312-320.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2023 Ibrahim Abubakarr Bah
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors who publish with this journal agree to the following terms:
1) Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
2) Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
3) Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work.
