Education and Economic Growth in NER States of India: A Panel Cointegration Analysis

Abstract

The main purpose of this study is examines the long run relationship between social expenditures and economic growth in North-Eastern states of India. The long run impact of expenditures in social sector such as education, health and social welfare on economic growth is investigated by applying the Pedroni’s panel Cointegration using balanced panel data analysis of eight (8) North Eastern states over the period from 2000 to 2014. In this study empirical analysis suggest the existence of dynamic relationship among expenditures on education, health and social welfare and economic growth for all cases of eight sample states. The study concludes that expenditures in the social sector can affect economic growth. Such social expenditures enhance productivity by providing infrastructure, education, health and harmonizing social interests. Thus, expenditure composition can also play an important role in promoting economic growth in North-Eastern region.