2017, Volume 70 - Issue 2
RSS feed citation: At RePEc
Publication date: 02 May 2017
THE EFFECT OF LABOR MARKET FREEDOM AND OTHER FACTORS ON U.S. SETTLEMENT PATTERN DECISIONS OF UNDOCUMENTED IMMIGRANTS, 2012 AND 2014Read the article
DETERMINANTS OF THE RELATIVE IMPORTANCE OF EDUCATION IN LOW-INCOME AND LOWER-MIDDLE INCOME COUNTRIESRead the article
ON THE PROTECTION OF INVESTMENT CAPITAL DURING FINANCIAL CRISIS IN THE SOUTH AFRICAN EQUITY MARKET: A RISK-BASED ASSET ALLOCATION APPROACHRead the article
THE IMPACT OF FINANCIAL DEVELOPMENT ON INVESTMENT IN BOTSWANA: AN ARDL-BOUNDS TESTING APPROACHRead the article
SYSTEMIC ANALYSIS OF TRADE LIBERALISATION: POLICY ENTREPRENUERSHIP AND BEHAVIOURAL VARIABLES IN A TWO-LEGAL GAME FRAMEWORKRead the article
Minh Quang DAO , Eastern Illinois University, Charleston, Illinois, USA
This paper empirically assesses the effect of the determinants of the share of educational expenditures in the GDP in low-income and lower-middle income countries while taking into consideration the issue of potential simultaneity bias by introducing interaction variables.
Based on data from the World Bank and using a sample of twenty-five low-income economies in 2014, we find that the share of educational expenditures in the GDP growth is dependent upon both the log of per capita gross national income and its square, the square of the log of the share of public health expenditures in the GDP, and the Polity IV index of democracy/autocracy. Using a sample of thirty-eight lower middle-income countries we find that the ratio of education expenditures to the GDP is dependent upon the square of the log of per capita gross national income, both the Polity IV index of democracy/autocracy and its square, and the log of share of public health expenditures in the GDP.
When interaction variables are added to the model, regression results show that the share of educational expenditures in the GDP is influenced by the Polity IV index of democracy/autocracy, the square of the log of per capita gross national income, the log of the share of public health expenditures in the GDP, the interaction term between the Polity IV index of democracy/autocracy and its square, and that between the Polity IV index of democracy/autocracy and the log of the share of public health expenditures in the GDP. Since education is an example of human capital, which has been shown to be a driver of economic growth in developing countries (see, for instance, Dao, 2014), assessing empirically the effect of the determinants of the relative importance of education in the economy will enable developing countries to devise strategies aimed at fostering education, and hence at economic growth. Data for all variables are from the 2016 World Development Indicators and the 2015 Polity Series. We specify and estimate a semi log and quadratic model and observe that some coefficient estimates do not have the expected sign due to possible collinearity among some independent variables.
Education Expenditure, Per capita Gross National Income, Polity IV index of Democracy/Autocracy, Public Health Expenditures, Low-Income Countries, Lower Middle-Income Countries
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Dao, M.Q. (2014), “Drivers of Economic Growth in Developing Countries”, Journal for Studies in Economics and Econometrics, 38(1), 75-85.
Hillman, A. and E. Jenkner (2004), “Educating Children in Poor Countries”, IMF Economic Issues Series, 33, 1-12.
Todaro, M.P. and S.C. Smith (2003), Economic Development, Addison Wesley Series in Economics: New York.
Wikipedia (2015), Polity Data Series, <https://en.wikipedia.org/wiki/Polity_data_series>.
World Bank (2016), World Development Indicators 2016, World Bank: Washington, DC.