INVESTMENT IN A SUSTAINABLE FUTURE: TARGETING INCLUSIVE HUMAN DEVELOPMENT WITH FISCAL ALLOCATION IN EDUCATION IN SOUTH-ASIA

Abstract

We examine the impact of public expenditure on education on human development measured by the United Nations Development Programme (UNDP) Human Development Index (HDI) in South Asia. Using country-level data for 32 years from 1991 to 2022 on ten South Asian nations, we estimate fixed effect panel data regression. We find that a 1 percentage point increase in government expenditure in education– measured as a % of GDP– is associated with a 0.01515 increase in HDI for the ten countries during the study period. Considering HDI on a scale from 0 to 1, this is indeed substantial. Additionally, we find a statistically significant and positive association between the number of primary and secondary educators and higher HDI scores. This positive association is also found for training of teachers. Results are stronger for primary level in case of number of teachers. In secondary level, results are stronger for training of teachers. Although the literature explores the topic in detail, empirical evidence in South Asia, particularly for Bangladesh, is inadequate. We believe our findings will inform better fiscal resource allocation in education in Bangladesh.