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Linkages between education expenditure and economic growth: Evidence from CHINDIA

Author

Listed:
  • Harpaljit Kaur

    (Taylors Business School, Taylors University, 47500, Subang Jaya, Malaysia)

  • Baharom A.H

    (Taylors Business School, Taylors University, 47500, Subang Jaya, Malaysia)

  • Muzafar Shah Habibullah

    (Faculty of Economics and Management, Universiti Putra Malaysia, 43500, Serdang, Malaysia)

Abstract

This paper examines the relationship between education expenditure and economic growth in China and India by employing annual data from 1970 to 2005. This study utilizes multi econometric tools such as the Johansen-Juselius (1990) co-integration test, Ordinary Least Square (OLS) method, Dynamic Ordinary Least Square (DOLS), Vector Error Correction Model (VECM) as well as variance decomposition to obtain a robust and consistent result. The findings indicate that there exists a long run trending relationship between income level (Gross Domestic Product per capita (GDPpc) and education expenditure in both China and India. In the long run, a unidirectional causal relationship could be detected for both countries, running from income level to education expenditure for the case of China, while for the case of India education expenditure Granger causes income level. The results are robust and consistent across all methods.

Suggested Citation

  • Harpaljit Kaur & Baharom A.H & Muzafar Shah Habibullah, 2014. "Linkages between education expenditure and economic growth: Evidence from CHINDIA," E3 Journal of Business Management and Economics., E3 Journals, vol. 5(5), pages 109-119.
    • Handle: RePEc:etr:series:v:5:y:2014:i:05:p:109-119
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    References listed on IDEAS

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