Evaluating the Relationship Between Education Spending and Economic Growth in Egypt: An ARDL Model Analysis

Abstract

Education plays a pivotal role in driving economic growth, acting as a catalyst for human capital development and fostering innovation. Additionally, investing in education cultivates a skilled workforce, which not only attracts foreign investment but also enhances economic growth by bolstering competitiveness and market efficiency. Ultimately, these factors positively impact the standard of living, reflecting the interconnectedness between education, economic prosperity, and quality of life. This research comes to evaluate the impact of spending on education on the standard of living and then on economic growth in Egypt. The research is centered on employing a quantitative approach to assess the influence of education on economic growth. Additionally, it includes a descriptive analysis of variables and the presentation of results to provide a comprehensive understanding. The research functions the Auto Regressive Distributed Lag (ARDL) Bounds testing method in examining the cointegration from 1990 to 2021 based on annual time series data in Egypt. The research utilizes the numbers of classes in schools in the three educational stages (primary - preparatory - secondary) and the number of students enrolled in theoretical and practical colleges. The findings affirm that expenditure on education across all levels has a positive impact on economic growth in Egypt, albeit weak. This trend is attributed to the reduction in education spending relative to the growing number of students.