Hostname: page-component-76fb5796d-5g6vh Total loading time: 0 Render date: 2024-04-27T00:51:42.970Z Has data issue: false hasContentIssue false
  • English
  • Français

Education and Economic Growth: Evidence from the EUROMED Countries

Published online by Cambridge University Press:  28 July 2023

Ebru Topcu
Ebru Topcu*
Affiliation:
Department of Economics, Faculty of Economics and Administrative Sciences, Nevsehir Haci Bektas Veli University, Nevsehir, Turkey.
*
Email: ebruerdogan@nevsehir.edu.tr
Get access Rights & Permissions [Opens in a new window]

Abstract

The Mediterranean Strategy on Education for Sustainable Development (MSESD) Report reveals that the Mediterranean is an exceptional eco-region not only due to its geographical characteristics, but also its heterogeneous economic structure, in which education is regarded as a key driver of sustainable development. Given this importance, this study attempts to investigate the impact of education as a channel for human capital accumulation on two different growth concepts in a panel group of eight Euro-Mediterranean Partnership (EUROMED) countries. We utilize an endogenous growth model using annual observations spanning from 2000 to 2017 by employing the Augmented Mean Group (AMG) estimator. Empirical results obtained from the Augmented Mean Group estimator indicate a positive impact of education, regardless of the growth proxy. In addition, empirical findings reveal that the impact of education on inclusive growth is five times higher than that on output growth. We also find that capital is the main driver of growth while inclusive growth is primarily triggered by education. One of the main policy implications raised in this study is that education reforms that attempt to improve educational quality will assist policymakers to achieve sustainable development goals. Extensive policy discussions related to the experiential findings are also provided.

Type
Article
Information
European Review , Volume 31 , Issue 6 , December 2023 , pp. 632 - 646
Copyright
© The Author(s), 2023. Published by Cambridge University Press on behalf of Academia Europaea Ltd

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Afzal, M, Rehman, HU, Farooq, MS and Sarwar, K (2011) Education and economic growth in Pakistan: A cointegration and causality analysis. International Journal of Educational Research 50(5-6), 321–335.CrossRefGoogle Scholar
Aghion, P and Howitt, P (1998) Endogenous Growth Theory. Cambridge: MIT Press.Google Scholar
Boutayeba, F and Ramli, M (2019) The link between education and economic growth in Algeria: An empirical investigation. International Journal of Advanced Research in Education and Society 1(1), 35–43.Google Scholar
Becherair, A (2014) Education and economic growth in Algeria: An empirical investigation by using ARDL approach. International Journal of Innovation and Applied Studies 7(3), 1215–1224.Google Scholar
Becker, GS (1962) Investment in human capital: a theoretical analysis. Journal of Political Economy 70(5-2), Investment in Human Beings, 9–49. https://www.jstor.org/stable/1829103 CrossRefGoogle Scholar
Becker, GS (1964) Human Capital. New York: Colombia University Press.Google Scholar
Bond, S and Eberhardt, M (2013) Accounting for Unobserved Heterogeneity in Panel Time Series Models. Discussion Paper, Nottingham, UK.Google Scholar
Daren, C (2017) Education’s Contribution to Economic Growth. Munich Personal RePEc Archive, MPRA Paper No. 77365. https://mpra.ub.uni-muenchen.de/77365/ Google Scholar
Denison, E F (1962) The Sources of Economic Growth in the United States and the Alternatives before US. New York: Committee for Economic Development.Google Scholar
Delhey, J and Steckermeier, LC (2020) Social ills in rich countries: New evidence on levels, causes, and mediators. Social Indicators Research 149, 1–39.CrossRefGoogle Scholar
Dickey, DA and Fuller, WA (1979) Distribution of the estimators for autoregressive time series with a unit root. Journal of the American Statistical Association 47, 427–431.Google Scholar
Easterlin, RA and Angelescu, L (2012) Modern economic growth and quality of life: cross-sectional and time-series evidence. In Land, KC, Michalos, AC and Sirgy, MJ (eds), Handbook of Social Indicators and Quality of Life. New York: Springer, pp. 113–136.CrossRefGoogle Scholar
Eberhardt, M and Bond, S (2009) Cross-section Dependence in Nonstationary Panel Models: A Novel Estimator. Munich Personal RePEc Archive Working Paper No. 17870, Germany.Google Scholar
Eberhardt, M and Teal, F (2010) Productivity Analysis in Global Manufacturing Production. Economic Series Working Paper 515, University of Oxford, Department of Economics.Google Scholar
Griliches, Z (1997) Education, human capital, and growth: a personal perspective. Journal of Labor Economics 15(1, Part 2), 330–344.CrossRefGoogle Scholar
Grossman, GM and Helpman, E (1991) Endogenous product cycles. The Economic Journal 101(408), 1214–1229.CrossRefGoogle Scholar
Guma, M (2014) The relationship between economic growth and education in Albania. UBT International Conference, 39. https://knowledgecenter.ubt-uni.net/conference/2014/all-events/39 Google Scholar
Hadir, MA and Lahrech, A (2015). Human capital development and economic growth in Morocco. International Journal of Education and Human Developments 1(1), 49.Google Scholar
Hall, JC (2006). Positive externalities and government involvement in education. Journal of Private Enterprise 21(2), 165–175.Google Scholar
Hanushek, EA and Wößmann, L (2010) Education and economic growth. In Peterson, P, Baker, E and McGaw, B (eds), Oxford: International Encyclopedia of Education Elsevier, Vol. 2, pp. 245–252.CrossRefGoogle Scholar
Holland, D, Liadze, I, Rienzo, C and Wilkinson, D (2013) The Relationship between Graduates and Economic Growth across Countries. BIS Research Paper No 110.Google Scholar
Hsiao, C, Pesaran, MH and Pick, A (2012) Diagnostic tests of cross-section independence for limited dependent variable panel data models. Oxford Bulletin of Economics and Statistics 74(2), 253–277.CrossRefGoogle Scholar
Im, KS, Pesaran, MH and Shin, Y (2003) Testing for unit roots in heterogeneous panels. Journal of Econometrics 115(1), 53–74.CrossRefGoogle Scholar
International Money Fund (IMF) (2021) International Financial Statistics. Available at https://data.imf.org/?sk=4c514d48-b6ba-49ed-8ab9-52b0c1a0179b&sId=1390030341854 Google Scholar
Jaoul, M (2004). Higher education, causality and growth: a comparison of France and Germany before the Second World War. Compare: A Journal of Comparative and International Education 34(1), 117–133.CrossRefGoogle Scholar
Jihène, S (2013) The impact of human capital on economic growth: case of Tunisia, Morocco, Japan and South Korea. Economic, Finance and Management Outlook, Conscientia Beam 1, 1–2.Google Scholar
Kouton, J (2020) The impact of renewable energy consumption on inclusive growth: panel data analysis in 44 African countries. Economic Change and Restructuring 54, 145–170.CrossRefGoogle Scholar
Liao, L, Du, M, Wang, B and Yu, Y (2019) The impact of educational investment on sustainable economic growth in Guangdong, China: a cointegration and causality analysis. Sustainability 11(3), 766, 1–16.CrossRefGoogle Scholar
Lucas, RE Jr (1988) On the mechanics of economic development. Journal of Monetary Economics 22(1), 3–42.CrossRefGoogle Scholar
Mankiw, G, Romer, D and Weil, D (1992) A contribution to the empirics of economic growth. The Quarterly Journal of Economics 107(2), 407–437. https://doi.org/10.2307/2118477 CrossRefGoogle Scholar
Marquez-Ramos, L and Mourelle, E (2019). Education and economic growth: an empirical analysis of nonlinearities. Applied Economic Analysis 27(29), 21–45.CrossRefGoogle Scholar
Mediterranean Strategy on Education for Sustainable Development (MSESD) (2014) Available at https://ufmsecretariat.org/wp-content/uploads/2014/05/Mediterranean-Strategy-on-Education-for-sustainable-development-.pdf (accessed 15 March 2021).Google Scholar
Mekdad, Y, Dahmani, A and Louaj, M (2014) Public spending on education and economic growth in Algeria: causality test. International Journal of Business and Management 2(3), 55.Google Scholar
Mincer, J (1958) Investment in human capital and personal income distribution. Journal of Political Economy, 66(4), 281–302.CrossRefGoogle Scholar
Mincer, J (1974) Schooling, Experience, and Earnings. Human Behavior & Social Institutions, No. 2, National Bureau of Economic Research.Google Scholar
Monteils, M (2002) Education and economic growth: endogenous growth theory test. The French case. Historical Social Research/Historische Sozialforschung 27[4(102)], 93–107.Google Scholar
Mulok, D, Kogid, M, Asid, R and Lily, J (2012) Is economic growth sufficient for poverty alleviation? Empirical evidence from Malaysia. Cuadernos de Economía 35(97), 26–32.CrossRefGoogle Scholar
Nelson, RR and Phelps, ES (1966) Investment in humans, technological diffusion, and economic growth. The American Economic Review 56(1/2), 69–75. https://www.jstor.org/stable/1821269 Google Scholar
Odit, MP, Dookhan, K and Fauzel, S (2010) The impact of education on economic growth: the case of Mauritius. International Business & Economics Research Journal (IBER) 9(8), 141–152.CrossRefGoogle Scholar
Oyinlola, MA and Adedeji, A (2019) Human capital, financial sector development and inclusive growth in sub-Saharan Africa. Economic Change and Restructuring 52(1), 43–66.CrossRefGoogle Scholar
Ozatac, N, Taspinar, N, El Rifai, O and Eren, B (2018) The relationship between government expenditure on education and economic growth: the case of France. In Procházka, D (ed.), The Impact of Globalization on International Finance and Accounting. Cham: Springer Proceedings in Business and Economics, pp. 61–70.CrossRefGoogle Scholar
Pesaran, MH (2004) General Diagnostic Tests for Cross Section Dependence in Panels. Cambridge Working Papers in Economics No. 0435, University of Cambridge.CrossRefGoogle Scholar
Pesaran, MH (2006) Estimation and inference in large heterogeneous panels with a multifactor error structure. Econometrica 74(4), 967–1012.CrossRefGoogle Scholar
Pesaran, MH (2007) A Simple panel unit root test in the presence of cross-section dependence. Journal of Applied Econometrics 22(2), 265–312.CrossRefGoogle Scholar
Pesaran, MH and Smith, R (1995). Estimating long-run relationships from dynamic heterogeneous panels. Journal of Econometrics 68(1), 79–113.CrossRefGoogle Scholar
Popović, G, Erić, O, Stanić, S and Krajišnik, M (2019) Education, technological changes and economic development of Bosnia and Herzegovina. International Journal of Cognitive Research in Science, Engineering and Education 7(2), 77–86.CrossRefGoogle Scholar
Qutb, R and El Shennawy, I (2016) Exploring the impact of public education expenditure on the economic growth in Egypt. International Research Journal of Finance and Economics 146.Google Scholar
Radić, MN and Paleka, H (2020) Higher education funding and economic growth: empirical evidence from Croatia. Scientific Annals of Economics and Business 67(3), 409–421.CrossRefGoogle Scholar
Raheem, ID, Isah, KO and Adedeji, AA (2018). Inclusive growth, human capital development and natural resource rent in SSA. Economic Change and Restructuring, 51 (1), 29–48.CrossRefGoogle Scholar
Revoredo, CL and Morisset, JP (1999) Savings and Education: A Life-cycle Model Applied to a Panel of 74 Countries. World Bank Policy Research Working Paper, 1504.CrossRefGoogle Scholar
Romer, PM (1990) Endogenous technological change. Journal of Political Economy 98(5, Part 2), 71–102.CrossRefGoogle Scholar
Rosenzweig, MR (2010) Microeconomic approaches to development: schooling, learning, and growth. Journal of Economic Perspectives 24(3), 81–96.CrossRefGoogle Scholar
Sarafidis, V and Wansbeek, T (2012) Cross-sectional dependence in panel data analysis. Econometric Reviews 31(5), 483–531.CrossRefGoogle Scholar
Schultz, T W (1961) Education and growth. Teachers College Record 62(10), 46–88. https://doi.org/10.1177/016146816106201003 CrossRefGoogle Scholar
Skidelsky, R and Skidelsky, E (2013) How Much is Enough? Money and the Good Life. London: Penguin Books.Google Scholar
Solow, RM (1957) Technical change and the aggregate production function. Review of Economics and Statistics 39(3) 312–320.CrossRefGoogle Scholar
Son, L, Noja, GG, Ritivoiu, M and Tolteanu, R (2013) Education and economic growth: an empirical analysis of interdependencies and impacts based on panel data. Timisoara Journal of Economics and Business 6(19), 39–54.Google Scholar
Temple, J (2002) Growth effects of education and social capital in the OECD countries. Historical Social Research/Historische Sozialforschung 7(4), 5–46.Google Scholar
Topcu, M and Aras, I (2017) Military expenditures and economic growth in central and eastern EU countries: evidence from the Post-Cold War Era. European Review 25(3), 453–462.CrossRefGoogle Scholar
Topcu, M and Çoban, S (2017) Financial development and firm growth in Turkish manufacturing industry: evidence from heterogeneous panel based non-causality test. Economic Research-Ekonomska Istraživanja 30(1), 1758–1769.CrossRefGoogle Scholar
Tsamadias, C and Prontzas, P (2012) The effect of education on economic growth in Greece over the 1960–2000 period. Education Economics 20(5), 522–537.CrossRefGoogle Scholar
United Nations Development Programme (UNDP) (2021) Human Development Report. Available at http://hdr.undp.org/en/indicators/103006 Google Scholar
World Bank (WB) (2021) World Development Indicators. Available at https://databank.worldbank.org/source/world-development-indicators Google Scholar
Yurtkuran, S and Terzi, H (2015) Does education affect economic growth in Turkey? A causality analysis. Dokuz Eylül Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi 30(2), 19–38.Google Scholar
Zimmer, TE (2016) The importance of education for the unemployed. Indiana Business Review 91(1), 9–16.Google Scholar