The Relationship Between Government Expenditure on Education and Economic Growth: The Case of France

Abstract

The aim of this study is to investigate the long-run equilibrium relationship between economic growth, capital, labor, and government expenditure on education between the years of 1970 and 2012 for the case of France. Johansen co-integration test results suggest the existence of the long-run equilibrium relationship between variables. Existence of the co-integration relationship indicates that capital, labor, and government expenditure on education are long-run determinants of GDP for the case of France. Granger causality test results suggest that there is a bidirectional long-run causality between GDP and gross capital formation. In addition, there are long-run unidirectional causalities which run from labor and expenditure on education to GDP and from labor and expenditure to capital. Results of the study suggest the existence of education-induced economic growth for the case of France.