Relationship between education and economic growth: Selected countries analysis

The relationship between education and economic growth has long been one of the fundamental topics examined in the economics literature. In recent years, this subject has been increasingly investigated empirically using various methods and tests. While the number of empirical studies showing a positive relationship between education and economic growth is significantly higher, the nature and direction of this relationship can vary across countries and variables. Based on this premise, this study empirically tests the relationship between education expenditure and economic growth using data from the period 1996-2022 for Germany, France, the United Kingdom, and Italy, which are among Europe's most developed economies. The Durbin-Hausman cointegration test used in the study reveals a long-term relationship between education expenditure and economic growth. However, the results of long-term coefficient estimates using the Augmented Mean Group (AMG) estimator indicate that the impact of education expenditure on economic growth is statistically insignificant. According to the causality analysis conducted by Emirmahmutoğlu and Köse (2011) within the framework of econometric tests, a one-way causality from education expenditure to economic growth is found for the panel as a whole. However, when examined at the country level, one-way causality from education expenditure to economic growth is observed only for the United Kingdom, whereas one-way causality from economic growth to education expenditure is found for Italy.