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The impact of education investment on Sri Lankan economic growth

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  • Ganegodage, K. Renuka
  • Rambaldi, Alicia N.

Abstract

We evaluate the contribution of investment on education to Sri Lanka’s economic growth during the period 1959–2008. Physical capital, economic policy changes and the ethnic war are also evaluated due to their substantial importance. This study uses a framework encompassing both the neoclassical and endogenous growth model. The impact of education is assessed through a quality adjusted human capital stock measure. The returns to investment in education are positive but significantly lower than those found for other developing economies. Unlike the case of most developed economies, higher returns from investment in physical capital cannot produce any sizable positive externalities. The war has had the expected negative effect on output, and the results on economic policy changes are inconclusive. The results indicate a need for an appropriate strategy to allocate resources on education to improve its returns to the economy.

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  • Ganegodage, K. Renuka & Rambaldi, Alicia N., 2011. "The impact of education investment on Sri Lankan economic growth," Economics of Education Review, Elsevier, vol. 30(6), pages 1491-1502.
    • Handle: RePEc:eee:ecoedu:v:30:y:2011:i:6:p:1491-1502
    DOI: 10.1016/j.econedurev.2011.08.001
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    Cited by:

    1. Mundle, Sudipto, 2018. "Development of Education and Health Services in Asia and the Role of the State," Working Papers 18/239, National Institute of Public Finance and Policy.
    2. Ganegodage, K. Renuka & Rambaldi, Alicia N., 2014. "Economic consequences of war: Evidence from Sri Lanka," Journal of Asian Economics, Elsevier, vol. 30(C), pages 42-53.
    3. Silu Chen & Liang Peng, 2025. "Road to Resilient Cities: The Power of Education Investment from China’s Cities," Sustainability, MDPI, vol. 17(7), pages 1-24, April.
    4. Gazi Mainul Hassan & Arusha Cooray, 2013. "Effects of Male and Female Education on Economic Growth: Some Evidence from Asia Using the Extreme Bounds Analysis," Working Papers in Economics 13/10, University of Waikato.
    5. Sieng, Lai Wei & Yussof, Ishak, 2014. "Human Capital Accumulation and Economic Growth in Malaysia - Investigating the Long Run Nexus," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 48(1), pages 155-165.
    6. Huang, Juan & Rangkakulnuwat, Poomthan, 2024. "Does years of schooling matter for economic growth at different development levels? New evidence from China," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 75, pages 5-32.
    7. R.A.Susantha Kumara Ranasinghe & Ichihashi Masaru, 2014. "The Composition of Government Expenditure and Economic Growth : The Case of Sri Lanka," IDEC DP2 Series 4-7, Hiroshima University, Graduate School for International Development and Cooperation (IDEC).
    8. Sudipto Mundle, 2018. "Fifty years of Asian experience in the spread of education and healthcare," WIDER Working Paper Series 97, World Institute for Development Economic Research (UNU-WIDER).
    9. Hassan, Gazi & Cooray, Arusha, 2015. "Effects of male and female education on economic growth: Some evidence from Asia," Journal of Asian Economics, Elsevier, vol. 36(C), pages 97-109.
    10. Bai, Xuejie & Sun, Xianzhen & Chiu, Yung-Ho, 2020. "Does China's higher education investment play a role in industrial growth?," Technology in Society, Elsevier, vol. 63(C).
    11. Liping Liao & Minzhe Du & Bing Wang & Yanni Yu, 2019. "The Impact of Educational Investment on Sustainable Economic Growth in Guangdong, China: A Cointegration and Causality Analysis," Sustainability, MDPI, vol. 11(3), pages 1-16, February.
    12. Shreya Pal, 2024. "Do economic globalization and the level of education impede poverty levels? A non-linear ARDL approach," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 22(3), pages 621-667, September.
    13. Paravee Maneejuk & Woraphon Yamaka, 2021. "The Impact of Higher Education on Economic Growth in ASEAN-5 Countries," Sustainability, MDPI, vol. 13(2), pages 1-28, January.
    14. Sudipto Mundle, 2018. "Fifty years of Asian experience in the spread of education and healthcare," WIDER Working Paper Series wp-2018-97, World Institute for Development Economic Research (UNU-WIDER).

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    More about this item

    Keywords

    Secondary school education; University education; Physical capital; Human capital; Externality effects;
    All these keywords.

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies
    • I2 - Health, Education, and Welfare - - Education

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