Education and economic growth in India an interstate analysis

Abstract

Education is an indispensable tool for the economic growth of countries. Education adds value to labour leading to more efficiency, innovations, fostering research and economic growth. The objective of the study was to empirically analyse the impact of education on economic growth for India and High-Income States and Low-Income States over the period 1971-72 to 2019-20. Employing a Cobb-Douglas production function education was proxied by Gross Enrolment Ratio and Public Expenditure on education at the Primary, Secondary and Higher level of education and economic growth was proxied by Real Per Capita Income and Real GDP. It was found that at the national level, GER in Secondary education and Public Expenditure on Secondary education had the most significant impact on Economic Growth in the long run. There existed a unidirectional long-run causality running from Secondary education to economic growth. In High-Income States, GER in Secondary and Higher education had the most significant impact on economic growth, with a bidirectional causality between Secondary education and economic growth and a unidirectional causality from economic growth to Higher education. Public expenditure on Secondary education had the most significant impact on economic growth in these states. In Low-Income States GER in Primary education and Public expenditure on Primary education had the most significant impact on economic growth with a unidirectional causality from economic growth to Primary education. The study confirmed the importance of education in promoting economic growth and suggested increasing public expenditure on education especially at the Secondary and Higher levels of education. newline