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The relationship between public education expenditure and economic growth: The case of India

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  • Sayantan Ghosh Dastidar
  • Sushil Mohan
  • Monojit Chatterji

Abstract

The paper reviews the theoretical and the empirical case for public investment in education in India. Though the theoretical literature provides a backing for such a policy, the empirical literature fails to find a robust relation between education expenditure and growth. Expenditure on education is a necessary but not a sufficient condition for growth. It seems that the effectiveness of education expenditure depends on the institutional and labour market characteristics of the economy. The effectiveness of education investments also depends on other factors such as trade openness. Due to these aforesaid factors, we argue that the empirical relation between education expenditure and growth for India has been inconsistent.

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File URL: http://www.dundee.ac.uk/media/dundeewebsite/economicstudies/documents/discussion/DDPE_273.pdf
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Bibliographic Info

Paper provided by Economic Studies, University of Dundee in its series Dundee Discussion Papers in Economics with number 273.

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Length: 14 pages
Date of creation: Dec 2012
Date of revision:
Handle: RePEc:dun:dpaper:273

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Keywords: Public education expenditure; economic growth; trade openness; India;

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  1. William F. Blankenau & Nicole B. Simpson & Marc Tomljanovich, 2007. "Public Education Expenditures, Taxation, and Growth: Linking Data to Theory," American Economic Review, American Economic Association, vol. 97(2), pages 393-397, May.
  2. Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1990. "The Allocation of Talent: Implicationsfor Growth," University of Chicago - George G. Stigler Center for Study of Economy and State, Chicago - Center for Study of Economy and State 65, Chicago - Center for Study of Economy and State.
  3. Barry Bosworth & Susan M. Collins & Arvind Virmani, 2007. "Sources of Growth in the Indian Economy," NBER Working Papers 12901, National Bureau of Economic Research, Inc.
  4. Sanat Kaul, 2006. "Higher Education in India: Seizing the Opportunity," Indian Council for Research on International Economic Relations, New Delhi Working Papers, Indian Council for Research on International Economic Relations, New Delhi, India 179, Indian Council for Research on International Economic Relations, New Delhi, India.
  5. Pissarides, Christopher A, 1997. "Learning by Trading and the Returns to Human Capital in Developing Countries," World Bank Economic Review, World Bank Group, World Bank Group, vol. 11(1), pages 17-32, January.
  6. Alan B. Krueger & Mikael Lindahl, 2000. "Education for Growth: Why and For Whom?," NBER Working Papers 7591, National Bureau of Economic Research, Inc.
  7. George Psacharopoulos & Harry Anthony Patrinos, 2004. "Returns to investment in education: a further update," Education Economics, Taylor & Francis Journals, vol. 12(2), pages 111-134.
  8. Sanat Kaul, 2006. "Higher Education in India - Seizing The Opportunity," Development Economics Working Papers 22169, East Asian Bureau of Economic Research.
  9. Christopher A. Pissarides, 2000. "Human Capital and Growth: A Synthesis Report," OECD Development Centre Working Papers 168, OECD Publishing.
  10. Niloy Bose & M. Emranul Haque & Denise R. Osborn, 2007. "Public Expenditure And Economic Growth: A Disaggregated Analysis For Developing Countries," Manchester School, University of Manchester, vol. 75(5), pages 533-556, 09.
  11. Abhijeet, Chandra, 2010. "Does Government Expenditure on Education Promote Economic Growth? An Econometric Analysis," MPRA Paper 25480, University Library of Munich, Germany.
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