Role of Spending on Education in Growth of Bangladesh: Few Insights

Education is one of the prime movers of growth and no matter what level of mechanization and automation a country achieves, it needs to have competent work force for its growth. Importance of education has been emphasised both in theoretical as well as empirical studies. Bangladesh has recently graduated as a country from low income group to middle income group (following the definition of the World Bank). In this process, role of education is more important than ever for Bangladesh. Surviving as a middle-income country and ensuring further growth will be difficult without getting support from adept, articulated workers. Bangladesh has invested huge amount of money along with taking necessary policy measures to enhance education. The most striking of those is mandatory primary education for all and stipends for female students. Using disaggregated data of education (primary, secondary and tertiary) and for the period 1980-2012, preliminary results found considerable evidence for education effecting economic growth. Using Granger Causality test, it shows that all levels of education affects growth in two to four years. Results are found to be robust across different specifications and estimation techniques. For inequality, there is considerable evidence of effect from primary and secondary education.

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