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Does Expenditure on Education Affect Economic Growth in India? Evidence from Cointegration and Granger Causality Analysis

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  • Lingaraj MALLICK

    (School of Economics, University of Hyderabad, India)

  • Devi Prasad DASH

    (Department of Humanities and Social Science, IIT Ropar, India)

Abstract

The study investigates causal relationship between expenditure on education and economic growth in India form the period 1951 to 2012. The econometric approach of the paper is based on the bivariate VAR model, co-integration, granger causality, variance decomposition and impulse response. The vector error correction result revels long run equilibrium relationship exists between expenditure on education and economic growth while only a unidirectional causality runs from expenditure on education to economic growth in India. Shocks due to expenditure on its own is positive throughout the tenth period and one unit standard deviation shock have positive impact on economic growth up to 10th periods while no significant impact is witnessed economic growth to expenditure on education. The study arrives it policy implication that the government has to focus more on expenditure in education in order to create better human development which can have better contribution to economic growth.

Suggested Citation

  • Lingaraj MALLICK & Devi Prasad DASH, 2015. "Does Expenditure on Education Affect Economic Growth in India? Evidence from Cointegration and Granger Causality Analysis," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(4(605), W), pages 63-74, Winter.
    • Handle: RePEc:agr:journl:v:xxii:y:2015:i:4(605):p:63-74
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    References listed on IDEAS

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    1. Robert J. Barro, 1998. "Determinants of Economic Growth: A Cross-Country Empirical Study," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262522543, April.
    2. Chen, Baizhu & Feng, Yi, 2000. "Determinants of economic growth in China: Private enterprise, education, and openness," China Economic Review, Elsevier, vol. 11(1), pages 1-15.
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    Cited by:

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    2. Nicholas M. Odhiambo, 2020. "Education and economic growth in South Africa: an empirical investigation," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 48(1), pages 1-16, November.
    3. Sunde, Tafirenyika, 2017. "Education Expenditure and Economic Growth in Mauritius: An Application of the Bounds Testing Approach," MPRA Paper 86667, University Library of Munich, Germany.
    4. Shazia Kousar & Farhan Ahmed & Muhammad Afzal & Juan E. Trinidad Segovia, 2023. "Is government spending in the education and health sector necessary for human capital development?," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-11, December.
    5. Georgios Garafas & Ioannis Sotiropoulos & Georgios Georgakopoulos, 2020. "Human Capital and Economic Growth in Greece: Evidence from the Toda–Yamamoto Approach," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 70(3-4), pages 6-11, July-Dece.
    6. Kouton, Jeffrey, 2018. "Education expenditure and economic growth: Some empirical evidence from Côte d’Ivoire," MPRA Paper 88350, University Library of Munich, Germany.
    7. Cordelia Onyinyechi Omodero & Kanalechi C.K. Nwangwa, 2020. "Higher Education and Economic Growth of Nigeria: Evidence from Co-integration and Granger Causality Examination," International Journal of Higher Education, Sciedu Press, vol. 9(3), pages 173-173, June.
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