Impact of Education on Economic Growth: Analyzing the Relationship and Key Factors

Abstract

The role of education is very important in the life of individuals. It is instrumental in reducing poverty, addressing inequalities, and improving health and social status. It is integral to life and a cornerstone of success, providing opportunities for personal and professional advancement. For instance, it broadens an individual's mind and enhances critical thinking. The study analyzes the positive impact of education and its beneficial effect on the economy growth. The analysis is based on time series data from the period of 1991–2023. The data is obtained from the website of World Development Indicators. Various econometric methods, including Ordinary Least Squares, Autoregressive Distributed Lag models, Unit Root, Bound, and Long-Run Bound Tests, were employed for the analysis. The findings indicate a direct relationship between the growth of the economy and education. As literacy rates improve, a larger proportion of the population gains access to employment opportunities, thereby contributing to an increase in Gross Domestic Product.