PUBLIC EXPENDITURE ON EDUCATION AND ECONOMIC GROWTH: EVIDENCE FROM NORTH MACEDONIA
Journal
Journal of Liberty and International Affairs
Date Issued
2023-03-25
Author(s)
Shapkova Kocevska, Katerina
DOI
https://doi.org/10.47305/JLIA2391022shk
Abstract
In this paper, we studied the impact of public education expenditure on GDP per capita in North Macedonia from 1991 to 2020. The main questions we examined were: 1) What is the relationship between public education expenditure and GDP per capita in the country in the short run?;
2) Does a long-term relationship between the aforementioned variables exist?; and 3) What are the policy implications? This research was based on the Auto-Regressive Distributed Lag (ARDL) model, originally developed by Pesaran et al. (2001). The empirical estimations produced interesting
findings. In the short run, the relationship between public spending on education and GDP per capita in North Macedonia was negative and statistically significant. The long-term relationship between the variables remained negative but statistically insignificant. These results were robust
and consistent with results from earlier empirical studies. The results suggested that government expenditures on education did not contribute to economic growth in North Macedonia in the analyzed period, ceteris paribus. We concluded that, from a public policy standpoint, intervention in the education system's financing is necessary to facilitate the transformation of education expenditures into productive human capital and enhance the nation's economic development.
2) Does a long-term relationship between the aforementioned variables exist?; and 3) What are the policy implications? This research was based on the Auto-Regressive Distributed Lag (ARDL) model, originally developed by Pesaran et al. (2001). The empirical estimations produced interesting
findings. In the short run, the relationship between public spending on education and GDP per capita in North Macedonia was negative and statistically significant. The long-term relationship between the variables remained negative but statistically insignificant. These results were robust
and consistent with results from earlier empirical studies. The results suggested that government expenditures on education did not contribute to economic growth in North Macedonia in the analyzed period, ceteris paribus. We concluded that, from a public policy standpoint, intervention in the education system's financing is necessary to facilitate the transformation of education expenditures into productive human capital and enhance the nation's economic development.
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