The effect of education expenditure on economic growth: The case of the kingdom of Saudi Arabia

Abstract

The relationship between the cost of education and economic growth is among the studies attracting interest in economic literature. This study revealed that education expenses in the Kingdom of Saudi Arabia had a positive effect on economic growth for the period 1990-2017, and is explained as follows: first, in the long term, with an estimated flexibility value of 0.89, which means that a rise in education expenditure of 1% would lead to an increase in economic growth of 0.89%, and second, in the short term, the relationship between domestic production and the volume of expenditure is also statistically positive and significant with the estimated value of partial flexibility being 0.3, which means that an increase in education expenditure by 1% would lead to a rise in the domestic production volume by 0.3%. Furthermore, a higher allocation of resources for education expenses could make the KSA economy more dynamic.