Essays on Public Education Expenditure, Trade Openness and Economic Growth of India

  • Sayantan Ghosh Dastidar

    Student thesis: Doctoral ThesisDoctor of Philosophy


    This study addresses some of the widely debated issues in the empirical education and trade literature in the context of India.

    Chapter 3 examines the impact of public education expenditure and trade openness on economic growth of India using aggregate or country level data. The estimation results indicate that public education expenditure has a positive effect on growth but the impact is not very robust and sensitive to different estimation methods. The major contribution of this chapter to the existing literature has been to establish the dynamism in India’s trade-growth nexus. The nature of the relationship between trade openness and economic growth of India has changed following the change in policy regime since the 1980s.

    In Chapter 4, I investigate the trade-growth nexus further by employing disaggregated level analysis. Firstly, I disaggregate GDP by agriculture, manufacturing and services sectors and try to check which sector benefitted most from trade openness. Secondly, I try to assess whether trade openness affects manufacturing sector growth at the Indian state level. The latter analysis has been conducted using panel model analysis for 22 states. Econometric analysis indicates that the effect of trade openness has been heterogeneous across sectors. Only the services sector seemed to have reaped the benefits of increasing openness, so far. Consequently, no significant relationship could be found between agricultural sector performance and trade openness. It seems that the agricultural sector suffers from gross underinvestment and its performance still relies heavily on the monsoon cycles. At the country level, manufacturing sector failed to take advantage of the trade openness but the picture of stagnancy is not uniformly true when we look at the state-level manufacturing performance. I therefore re-estimate the relationship between state-level manufacturing performance and state-level trade openness using state level data. The most notable contribution of this chapter to the existing literature has been the construction of trade openness indices for major Indian states. Overall, I find that there is a robust association between trade openness and manufacturing sector performance at the Indian state level. However, this relationship seems to be driven solely by the performance of the unregistered segment of Indian manufacturing.

    In Chapter 5, I disaggregate the public education expenditure data by primary, secondary and tertiary sectors and examine the nature of the relationship between each sectoral expenditure and growth. None of the sectoral education expenditure had any impact on growth when the analysis is carried out for the entire time period 1951-2011. Both school and tertiary education expenditure started to exert a positive impact on Indian GDP growth once the country started to shift from a state-led growth model to a pro-business regime from the early 1980s. Finally, I examine the determinants of public education expenditure by the state governments using panel data for 16 Indian states. The economic variables such as NSDP per capita and tax revenue came out to be statistically significant indicating that richer states spend more on education compared to their poorer counterparts. States with smaller child population share (0-14 years, as percentage of total population) managed to allocate more funds towards education than those with larger shares. No significant evidence was found to suggest that political factors such as corruption and political ideology of the ruling party affect education spending decisions in Indian states.
    Date of Award2015
    Original languageEnglish
    SupervisorMonojit Chatterji (Supervisor) & Sushil Mohan (Supervisor)


    • Trade openness
    • Education expenditure
    • India

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