Testing the impact of educational expenditures on economic growth: new evidence from Latin American countries

Abstract

This paper investigates the impact of educational expenditures on economic growth for 18 Latin American countries over the period 1970-2009 by using cointegration test procedure in the presence of two unknown structural breaks. Considering structural breaks is necessary for our analysis because of that Latin American countries implemented important reforms to expand their educational systems and these reforms may affect the cointegrating relationship. The findings indicate that there is evidence of cointegrating relationship between educational expenditures and economic growth for the considered countries except Chile, Guyana, Jamaica, Nicaragua, Paraguay, Peru and Uruguay. Another finding of the paper is that identified structural breaks refer to the educational reform periods of Latin American countries.