The Impact of Educational Investment on Sustainable Economic Growth in Guangdong, China: A Cointegration and Causality Analysis

Liping Liao, Minzhe Du, Bing Wang and Yanni Yu
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Liping Liao: Department of Economics, Jinan University, Guangzhou 510632, China
Minzhe Du: Department of Economics, Jinan University, Guangzhou 510632, China
Bing Wang: Department of Economics, Jinan University, Guangzhou 510632, China
Yanni Yu: Institute of Blue and Green Development, Shandong University, Weihai 264209, China

Sustainability, 2019, vol. 11, issue 3, 1-16

Abstract: Education, as an investment in human capital, is regarded as an important determinant of sustainable economic growth [ 1 , 2 ]. The purpose of this study is to explore the cointegration and causality between the investment in education and sustainable economic growth in Guangdong province by using the panel data of 21 cities from 2000 to 2016. We construct a variable intercept panel data model with an individual fixed effect based on the Cobb-Douglas production function, estimating the contribution of the investment in education to economic growth by introducing lags. The findings show the existence of the feedback causality between education and sustainable economic growth. Also, the results reveal that the local financial investment in education plays a positive and statistically significant role in promoting sustainable economic growth. However, the contribution of the local financial investment in education to economic growth varies in different areas. The investment in education in the Pearl River Delta region have the most obvious pull effects on its regional economy, whereas the Western region takes the second place. Meanwhile, the local financial investment in education for its role in promoting economic growth obviously has a two-year hysteresis effect. These findings have important implications for Guangdong’s solution to the imbalance between regional educational investment and sustainable economic growth.

Keywords: educational investment; sustainable economic growth; cointegration; causality; hysteresis effect (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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