TY  - GEN
AU  - Contreras, Dante
AU  - Galindo, Arturo
AU  - Lepe, Ignacio
TI  - Education Spending and Economic Growth: Short and Long-term Effects
PY  - 2025
Y1  - 2025/08/11
DO  - 10.18235/0013634
AB  - This paper examines the short- and long-term effects of education expenditure on economic growth using a global panel of 107 countries from 1970 to 2019. Employing a CS-ARDL model with an error correction framework, we estimate dynamic responses to both aggregate and disaggregated real education spending across primary, secondary, and tertiary levels. The results show that public investment in education has a statistically significant and positive impact on real GDP per capita, both in the short and long run. The long-run elasticity is highest for aggregate expenditure and comparable across primary and secondary education, while it is lower for tertiary education. We further explore heterogeneity in long-run effects and find that higher educational achievement, proxied by PISA scores, amplifies the growth impact of education spending. Simulations confirm that countries with higher PISA scores experience faster and stronger returns on investment. These findings underscore the role of education quality in enhancing the productivity of public education spending and support targeted policy efforts to improve both the quantity and quality of educational investment.
UR  - https://doi.org/10.18235/0013634
ER  -