The Relationship Between Education and Economic Growth in Egypt Using Vector Auto Regression (VAR)

نوع المستند : المقالة الأصلية

المؤلفون

1 Faculty of Economic Studies and Political Science, Alexandria University, Egypt, Imam Muhammad bin Saud Islamic University Kingdom of Saudi Arabia

2 Faculty of Economic Studies and Political Science, Alexandria University, Egypt,

المستخلص

The study investigates the impact of education on economic growth during the period (1976-2022) where education represents a channel for human capital improvement that fosters economic growth. Vector Auto Regression (VAR) and testing causality in the long run through the Toda & Yamamoto (TY) causality test, dynamic analysis through impulse response functions analysis, and Variance Decomposition analysis were used in examining the relationship between economic growth and education. Education is measured by enrollment rate in higher education, and government expenditure on education while GDP growth rates are used as a proxy for the economic growth in Egypt during the period (1976-2022). Our main findings reveal that a shock to government investment in education led to a positive response of growth in the short and long run. The results asserted a positive relationship between education as measured by the enrollment rate of higher education and economic growth. For the causality test, there is a one-way causality running from the government expenditure on education to economic growth in the long run and a uni-directional relationship running from the government expenditure on education, economic growth, and foreign direct investment to the enrollment rate in higher education in the long run. The research recommends that the government should increase spending on education to promote economic growth both in the short and long run, encourage the expansion of higher education, and enhance the coordination between educational outcomes and labor market requirements.

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