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Education Expenditures Indicator

Description

This indicator measures the government’s commitment to investing in education.

Relationship to Growth & Poverty Reduction

While MCC generally strives to measure outcomes rather than inputs, educational outcome indicators can be very slow to adjust to policy changes, and adequate data on educational quality do not yet exist in a consistent manner across a large number of countries. Therefore, the Education Expenditures indicator is used to gauge the extent to which governments are currently making investments in the education of their citizens. Research shows that, for given levels of quality, well-managed and well-executed government spending on education can improve educational attainment and increase economic growth.33 There is also evidence that the returns to education to an economy as a whole are larger than the private returns.34 Investments in basic education are also critical to poverty reduction.35 Research shows that regions that begin with higher levels of education generally see a larger poverty impact of economic growth.36

Methodology

Indicator Institution Methodology

UIS attempts to measure total current and capital expenditure on education at every level of administration—central, regional, and local. UIS data generally include subsidies for private education, but not foreign aid for education. UIS data may also exclude spending by religious schools, which plays a significant role in many developing countries.

Government outlays on education include expenditures on services provided to individual pupils and students and expenditures on services provided on a collective basis. For FY25, MCC will use the most recent UNESCO data from 2018 or later.

MCC Methodology

MCC uses the most recent data point in the past six years (since 2018) 37

This indicator measures public expenditure on education as a percent of GDP. MCC relies on the United Nations Educational, Scientific and Cultural Organization (UNESCO) Institute of Statistics as its source. Specifically, MCC uses the indicator named “Government expenditure on education as a percentage of GDP (%).” For FY25, MCC first determines if a country has a value reported by UNESCO in 2018 or later. If so, the most recent data available within those years are used. If a country does not have UNESCO data at any point since 2018, it does not receive an FY25 score.

For UNESCO data, the GDP estimates used in the denominator are provided to UNESCO by the World Bank. As better data become available, UNESCO makes backward revisions to historical data.

In FY24 MCC revised its methodology for this indicator shift from a focus on Primary Education Expenditures to Education Expenditures. As a result, the scores from FY24 or later are not comparable to scores from FY23 and earlier.

Footnotes
  • 33. Maneejuk, P. & Yamaka, W. 2021. The Impact of Higher Education on Economic Growth in ASEAN-5 Countries. Sustainability, 13(520). Patrinos, H.A. and Psacharopoulos, G., 2020. Returns to education in developing countries. In The Economics of education (pp. 53-64). Academic Press. https://doi.org/10.3390/su13020520; Rajkumar, A.S. and V. Swaroop. 2002: Public Spending and Outcomes: Does. Governance Matter? World Bank Policy Research Working Paper 2840. Baldacci, E., Benedict Clements, Sanjeev Gupta and Qiang Cui. 2004. Social Spending, Human Capital and Growth in Developing Countries: Implications for Achieving the MDGs. IMF Working Paper 04/217. Rajkumar, A.S. and V. Swaroop. 2002: Public Spending and Outcomes: Does. Governance Matter? World Bank Policy Research Working Paper 2840. Castro-Leal, F., J.Dayton, L. Demery, and K.Mehra. 1999. Public Social Spending in Africa: Do the Poor Benefit? World Bank Research Observer 14(1):49–72. Barro, R. J. 1991. Economic Growth in a Cross Section of Countries. Quarterly Journal of Economics 106 (2):407-43. Krueger, Alan, and Mikael Lindahl. 2001. Education for Growth: Why and for Whom? Journal of Economic Literature 39 (4): 1101–36.
  • 34. Moretti, E. 2004. Estimating the Social Return to Higher Education: Evidence From Longitudinal and Repeated Cross-Sectional Data. Journal of Econometrics 121(1-2).
  • 35. Olopade, B.C., Okodua, H., Oladosun, M. and Asaleye, A.J., 2019. Human capital and poverty reduction in OPEC member-countries. Heliyon, 5(8). Liu, F., Li, L., Zhang, Y., Ngo, Q.T. and Iqbal, W., 2021. Role of education in poverty reduction: macroeconomic and social determinants form developing economies. Environmental Science and Pollution Research, 28, pp.63163-63177.
  • 36. Datt, Gaurav and Martin Ravallion. 1998. Why have Some Indian States Done Better than Others at Reducing Rural Poverty? Economica 65: 17-38. Christiaensen, L., L. Demery, and S. Paternostro. 2003. Macro and Micro Perspectives of Growth and Poverty in Africa. The World Bank Economic Review 17: 317-334.
  • 37. Missing data points on the historic graphs may either denote data points that are off the scale of the chart, or years in which data is missing. If there is no data for the past six years, MCC indicates this with an “n/a”.

Source

  • United National Educational, Scientific, and Cultural Organization Institute for Statistics (UNESCO/UIS)

    UIS compiles education expenditure data from official responses to surveys and from reports provided by education authorities in each country. Specifically, MCC uses government expenditure on education as a percentage of GDP (%) from the SDG database.