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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.

Suggested Citation

  • 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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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. 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.
    3. 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.
    4. 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).

    More about this item

    Keywords

    Secondary school education; University education; Physical capital; Human capital; Externality effects;

    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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