Exploring the Impact of Public Education Expenditure on the Economic Growth in Egypt

Education has been regarded as one of the leading determinants of economic growth since the time of Adam Smith. The belief that education promotes growth has led governments of many developing countries to improve the human capital by pumping more investments in the education sector. But the issue is that whether improved level of education resulting from more education spending can promote economic growth is still controversial. In such a concern, this paper analyzes the impact of public education expenditures on economic growth of Egypt during the period (1908-2014) through the application of Johansen Cointegration technique, and Vector Error Correction Methodology. It examines the direct channel through which human capital investment can affect long run economic growth as being a direct input in the production function. The findings exhibit the existence of long run relationship between public education expenditure and economic growth in Egypt, whereas the impact is found to be negative in the short run owing to the growing rate of unemployment. More efforts should be exerted; the solution for moving forward - developing the current generation’s entrepreneurial capacities and skills and capitalizing on the existing potential —will only materialize through investing in the nation’s “oil”, its human capital