The Impact of Education and Health Expenditures on Economic Growth in Fragile Five Economies

Authors : Tuğçe Taşar Yıldırım, Yavuz Özek, İnci Taşar
Pages : 354-369
Doi:10.54282/inijoss.1676008
View : 53 | Download : 33
Publication Date : 2025-06-30
Article Type : Research Paper
Abstract :Due to the failure of the neoclassical convergence hypothesis in explaining economic growth, endogenous growth models have turned to alternative macroeconomic parameters. Among these alternative parameters, increasing education and health expenditures aims to enhance societal welfare and total factor productivity. This study examines the effect of education and health expenditures on economic growth in the Fragile Five economies during the period 2004–2021. All three variables exhibit cross-sectional dependence and contain unit roots at their level values. In the short run, a bidirectional causality is observed between education/health expenditures and economic growth, along with a unidirectional causality running from education expenditures to health expenditures. According to the error correction coefficients, the effect of health expenditures on growth emerges in the long run and is less influenced by output cycles. At the country level, causality from health expenditures to output is found only in South Africa, while causality from education expenditures to output is observed in Brazil and South Africa. Finally, there is no evidence of causality from output to health expenditures in any of the economies, whereas causality from output to education expenditures is found only in Turkey. Therefore, it is concluded that in Brazil, public expenditures focus on social transfers; in South Africa, historical inequalities and public health spending have translated into human capital productivity; in India and Indonesia, the efficiency of expenditures directed toward quasi-public goods remains low. In Turkey, findings indicate that economic prosperity does not directly translate into increased investment in education.
Keywords : Eğitim Harcaması, Ekonomik Büyüme, Sağlık Harcaması

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