Education Expenditure and Economic Growth: Some Empirical Evidence from the GCC Countries

This paper examines the nature and direction of the relationship between education expenditure as a proxy for human capital and economic growth in the six GCC economies using time-series data for the period 1977-2004. The analysis employs a Granger-causality test within an error-correction framework. The empirical results are mixed and vary across both countries and measures of human capital. The implications of the results are two fold. First, to deepen our understanding of the complex relationship between education and economic growth, additional studies need to be conducted on the issues at hand with a special focus on countries that are similar in their policy and institutional environment using time-series data. Second, empirical results in this area can be more insightful if researchers could develop more accurate measures of human capital than the existing ones.