IDEAS home Printed from https://ideas.repec.org/a/eee/ecoedu/v30y2011i6p1491-1502.html
   My bibliography  Save this article

The impact of education investment on Sri Lankan economic growth

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0272775711001336
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Eicher, Theo & Turnovsky, Stephen J, 2000. "Scale, Congestion and Growth," Economica, London School of Economics and Political Science, vol. 67(267), pages 325-346, August.
    2. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    3. Isenman, Paul, 1980. "Basic needs: The case of Sri Lanka," World Development, Elsevier, vol. 8(3), pages 237-258, March.
    4. Devarajan, Shantayanan & Swaroop, Vinaya & Heng-fu, Zou, 1996. "The composition of public expenditure and economic growth," Journal of Monetary Economics, Elsevier, vol. 37(2-3), pages 313-344, April.
    5. Nombulelo Braiton, 2007. "Sri Lanka’s Sources of Growth," IMF Working Papers 07/225, International Monetary Fund.
    6. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 407-443.
    7. Qaisar Abbas, 2001. "Endogenous Growth and Human Capital: A Comparative Study of Pakistan and Sri Lanka," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 40(4), pages 987-1007.
    8. Baharumshah, Ahmad Zubaidi & Mohd, Siti Hamizah & Mansur M. Masih, A., 2009. "The stability of money demand in China: Evidence from the ARDL model," Economic Systems, Elsevier, vol. 33(3), pages 231-244, September.
    9. Lau, Sau-Him Paul & Sin, Chor-Yiu, 1997. "Observational equivalence and a stochastic cointegration test of the neoclassical and Romer's increasing returns models," Economic Modelling, Elsevier, vol. 14(1), pages 39-60, January.
    10. Ryo Horii & Akiomi Kitagawa & Koichi Futagami, 2008. "Availability Of Higher Education And Long-Term Economic Growth," The Japanese Economic Review, Japanese Economic Association, vol. 59(2), pages 156-177.
    11. Sudhir Anand & Martin Ravallion, 1993. "Human Development in Poor Countries: On the Role of Private Incomes and Public Services," Journal of Economic Perspectives, American Economic Association, vol. 7(1), pages 133-150, Winter.
    12. Lucas, Robert E, Jr, 1990. "Why Doesn't Capital Flow from Rich to Poor Countries?," American Economic Review, American Economic Association, vol. 80(2), pages 92-96, May.
    13. Ranasinghe, Athula & Hartog, Joop, 2002. "Free-education in Sri Lanka. Does it eliminate the family effect?," Economics of Education Review, Elsevier, vol. 21(6), pages 623-633, December.
    14. Prema-chandra Athukorala & Sisira Jayasuriya, 2000. "Trade Policy Reforms and Industrial Adjustment in Sri Lanka," The World Economy, Wiley Blackwell, vol. 23(3), pages 387-404, March.
    15. Tallman, Ellis W. & Wang, Ping, 1994. "Human capital and endogenous growth evidence from Taiwan," Journal of Monetary Economics, Elsevier, vol. 34(1), pages 101-124, August.
    16. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, March.
    17. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.
    18. Gemmell, Norman, 1996. "Evaluating the Impacts of Human Capital Stocks and Accumulation on Economic Growth: Some New Evidence," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(1), pages 9-28, February.
    19. Athukorala, Prema-chandra & Rajapatirana, Sarath, 2000. "Liberalization and Industrial Transformation: Lessons from the Sri Lankan Experience," Economic Development and Cultural Change, University of Chicago Press, vol. 48(3), pages 543-572, April.
    20. Rozana Himaz, 2010. "Intrahousehold Allocation of Education Expenditure: The Case of Sri Lanka," Economic Development and Cultural Change, University of Chicago Press, vol. 58(2), pages 231-258, January.
    21. Lee, Maw-Lin & Liu, Ben-Chieh & Wang, Ping, 1994. "Education, human capital enhancement and economic development: Comparison between Korea and Taiwan," Economics of Education Review, Elsevier, vol. 13(4), pages 275-288.
    22. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    23. Petrakis, P. E. & Stamatakis, D., 2002. "Growth and educational levels: a comparative analysis," Economics of Education Review, Elsevier, vol. 21(5), pages 513-521, October.
    24. Bhalla, Surjit S & Glewwe, Paul, 1986. "Growth and Equity in Developing Countries: A Reinterpretation of the Sri Lankan Experience," World Bank Economic Review, World Bank Group, vol. 1(1), pages 35-63, September.
    25. Glomm, Gerhard & Ravikumar, B., 1994. "Public investment in infrastructure in a simple growth model," Journal of Economic Dynamics and Control, Elsevier, vol. 18(6), pages 1173-1187, November.
    26. Lau, Sau-Him Paul & Sin, Chor-Yiu, 1997. "Public Infrastructure and Economic Growth: Time-Series Properties and Evidence," The Economic Record, The Economic Society of Australia, vol. 73(221), pages 125-135, June.
    27. Oxley, Les & McAleer, Michael, 1993. " Econometric Issues in Macroeconomic Models with Generated Regressors," Journal of Economic Surveys, Wiley Blackwell, vol. 7(1), pages 1-40.
    28. Pagan, Adrian, 1984. "Econometric Issues in the Analysis of Regressions with Generated Regressors," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 25(1), pages 221-247, February.
    29. McMahon, Walter W., 1998. "Education and Growth in East Asia," Economics of Education Review, Elsevier, vol. 17(2), pages 159-172, April.
    30. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecoedu:v:30:y:2011:i:6:p:1491-1502. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/econedurev .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.