AN EMPIRICAL ANALYSIS OF EDUCATION EXPENDITURE, HEALTH CARE EXPENDITURE AND ECONOMIC GROWTH IN MALAYSIA

WONG SING YUN; REMALI YUSOFF

doi:10.51200/jaaab.v0i0.1740

Authors

WONG SING YUN
REMALI YUSOFF

DOI:

https://doi.org/10.51200/jaaab.v0i0.1740

Keywords:

Education Expenditure, Health Care Expenditure, Economic Growth, Johansen Co-integration, Error Correction Model

Abstract

This paper aims to empirically analyze the relationship between the education expenditure, health care expenditure and economic growth in Malaysia over the period of 1980 to 2012. The main interest of this study will be to review and address the mixed results presented by past researches regarding the relationship between education and health care expenditure towards economic growth. The relationship between the variables will be empirically examined for both the short-run and long-run by employing the Johansen Co-integration Technique and Vector Error Correction Model (VECM). The existence of a long run relationship between public education spending, health care expenditure and economic growth was well indicated. It was therefore ascertained that the public spending on education and healthcare sectors are very much a long-run phenomenon as it only generates a return over an extended period of time.

Author Biographies

WONG SING YUN

Faculty of Business, Economics and Accountancy, Universiti Malaysia Sabah.

REMALI YUSOFF

Faculty of Business, Economics and Accountancy, Universiti Malaysia Sabah.

References

Abdul Jabbar Abdullah. (2013). Education and economic growth in Malaysia: The issues of education data. Procedia Economics and Finance, 7 (2013), 65 – 72.

Akram, N., Ihtsham Ul Haq Padda, & Khan, M. (2008). The long term impact of health on economic growth in Pakistan. The Pakistan Development Review, 47 (4), 487 – 500.

Apergis, N., & Padhi, P. (2013). Health expenses and economic growth: Convergence dynamics across the Indian States. International Journal of Health Care Finance and Economics, 13 (34), 261 – 277.

Asghar, N., Hussain, Z., & Rehman, H. U. (2012). The impact of government spending on poverty reduction: evidence from Pakistan 1972 to 2008. African Journal of Business Management. 6 (3), 845 – 853.

Bukenya, J. (2009). Do fluctuations in health expenditure affect economic growth? The Open Economics Journal, 2, 31 – 38.

Chor, F. T. (2010). The determinants of health expenditure in Malaysia: A time series analysis. MRPA Paper No. 24356. Economic Programme, School of Sciences, Universiti Sains Malaysia.

Djafar, F. 2009. Economic growth, public expenditure and human development in Asia. Prosiding PERKEM IV, 1, 77 – 88.

Economic Planning Unit. (2013). Retrieved from http://www.epu.gov.my/public-sector.

Elmi, Z. M., & Sadeghi, S. (2012). Healthcare expenditures and economic growth in developing countries: Panel co-integration and causality. Middle-East Journal of Scientific Research, 12 (1), 88 – 91.

Faraq, M., Nandakumar, A. K., Wallack, S., Hodgkin, D., Gaumer, G., & Erbil, C. (2012). The income elasticity of health care spending in developing and developed countries. International Journal of Health Care Finance and Economics, 12 (2), 145 – 162.

Gounden, A. M. N. (1967). Investment in education in India. The Journal of Human Resources, 2 (3), 347 – 358.

Govindaraju, V. C., Rao, R., & Anwar, S. (2011). Economic growth and government spending in Malaysia: A re-examination of Wagner and Keynesian views. Economic Change and Restructuring, 44 (3), 203 – 219.

Gupta, S., Clements, B., & Tiongsan, E. (1998). Public spending on human development. Finance and Development, 35 (3), 1 – 9.

Magazzino, C. (2011). GSP and health expenditure in Italian regions. International Journal of Business and Management, 6 (12), 28 – 35.

Matsushita, S., Siddique, A., & Giles, M. (2006). Education and economic growth: A case study of Australia. Economic Discussion/ Working Paper. The University of Western Australia, Department of Economics.

Ministry of Higher Education. (2009). Education system of Malaysia. Retrieved from http://www.mohe.gov.my/educationmsia/education.php?article=system.

Mohd Yahya Mohd Hussin, Fidlizan Muhammad, Mohd Fauzi Abu @ Hussin & Azila Abdul Razak. (2012). Education expenditure and economic growth: A causal analysis for Malaysia. Journal of Economics and Sustainable Development, 3 (7), 71 – 81.

Muhammad, S. H., & Rukhsana, K. (2012). The triangular causality among education, health and economic growth: A time series analysis of Pakistan. World Applied Sciences Journal, 18 (2), 196 – 207.

Musila, J. W., & Belassi, W. (2004). The impact of education expenditures on economic growth in Uganda: Evidence from time series data. The Journal of Developing Areas, 38 (1), 123 – 133.

Noraina Mazuan Sapuan & Nur Azura Sanusi. (2010). Assessing the effect of public social expenditure and human capital development on malaysian economic growth: A bound testing approach, knowledge management. International Conference 2010. Universiti Utara Malaysia, May 25 – 27 2010.

Noraina Mazuan Sapuan & Nur Azura Sanusi. (2013). Cointegration analysis of social services expenditure and human capital development in Malaysia: A bound testing approach. Journal of Economic Cooperation and Development, 34 (1), 1 – 18.

Odubunmi, A. S., Saka, J. O., & Oke, D. M. (2012). Testing the cointegrating relationship between healthcare expenditure and economic growth in Nigeria. International Journal of Economics and Finance, 4 (11), 99 – 107.

Omojimite, B.U. (2010). Education and economic growth in Nigeria: A Granger causality analysis. African Research Review, 4 (3a), 90 – 108.

Rahmah, I., & Selvaratnam, D. P. (1999). Health, education and economic growth in Malaysia. IIUM Journal of Economics & Management, 7 (2), 1 – 15.

Rahman, M. M. (2011). Causal relationship among education expenditure, health expenditure and GDP: A case study for Bangladesh. International Journal of Economics and Finance, 3 (3), 149 – 159.

Rajah Rasiah, Nik Rosnah Wan Abdullah, & Makmor Tumin. (2011). Markets and healthcare services in Malaysia: Critical issues. International Journal of Institutions and Economies, 3 (3), 467 – 486.

Reeves, A., Basu, S., McKee,M., Meissner, C., & Stuckler, D. (2013). Does investment in the health sector promote or inhibit economic growth? Globalization and Health, 9 (1), 43. https://doi.org/10.1186/1744-8603-9-43

Tilak, J. B. G. (1989). The recession and public investment in education in Latin America. Journal of Interamerican Studies and World Affairs, 31 (1/2), 125 – 146.

World Bank. (2014). Retrieved from http://data.worldbank.org/country/malaysia.