Dynamic Effects of Education Investment on Sustainable Development Based on Comparative Empirical Research Between China and the United States

Junjing Zhao, Qi Li and Xiaobing Hu ()
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Junjing Zhao: School of Economics and Finance, Xi’an Jiaotong University, Xi’an 710061, China
Qi Li: School of Economics and Finance, Xi’an Jiaotong University, Xi’an 710061, China
Xiaobing Hu: School of Economics and Finance, Xi’an Jiaotong University, Xi’an 710061, China

Sustainability, 2025, vol. 17, issue 7, 1-21

Abstract: Sustainable development is a complex dynamic process covering economic, social, and ecological dimensions. Theoretically, education investment can enhance educational capacity and offer high-quality education services, thus improving human resource quality, promoting social justice, and strengthening ecological awareness, which significantly and positively impacts sustainable development across these three dimensions. An empirical study using four-variable vector autoregressive models, with data from 2003 to 2020 on education investment and sustainable development in China and the United States as a contrast, reveals the following: (a) The impact of educational investment on sustainable development is dynamic, with the direction and strength of the effect varying over time and depending on different countries’ development conditions. In the U.S., previous-year educational investment can boost its own growth, social equality, and ecological development but may reduce per capita schooling years and human capital growth due to diminishing marginal effects. (b) In China, the previous year’s educational investment promotes current social equality but slightly hampers talent capital accumulation, ecological development, and its own growth. The investment from the year before last still promotes social equality, increases per capita schooling years for talent capital accumulation, has a less negative impact on ecological development, and inhibits its own growth more weakly than the previous year, showing declining effect strength. (c) Policy-wise, countries should diversify education investment sources, target areas with high positive marginal effects on sustainable development, and establish a dynamic adjustment mechanism for education investment to better promote sustainable development.

Keywords: education investment; sustainable development; dynamic effect; VAR model (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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