Government Expenditure on Education and Human Development in Developing Countries: Evidence from a Pre-2022 Unbalanced Panel Dataset

Abstract

This study examines the relationship between government expenditure on education and human development in developing countries using a pre-2022 unbalanced panel dataset covering 115 countries and 459 country-year observations. The study employs a descriptive, panel-based analytical framework to assess whether public education spending is associated with improvements in the Human Development Index (HDI). The descriptive results show that average HDI increased from 0.549 in 2000 to 0.657 in 2021, while average government expenditure on education rose from 3.895% to 4.501% of GDP during the same period. These findings indicate that education finance remains an important policy instrument for strengthening human capital and supporting development outcomes. However, the study also emphasizes that higher spending alone does not automatically produce higher human development. The effectiveness of education expenditure depends on how public resources are allocated, governed, and transformed into improvements in learning, access, equity, and welfare. The paper concludes that developing countries should move beyond expenditure expansion alone and focus on improving the efficiency, quality, and institutional management of education spending. The study contributes to the literature by distinguishing between simple spending levels and the broader policy conditions required to convert education finance into sustainable human development gains.