Public education, growth, and political regimes

Abstract

This study investigates some of the reasons why countries spend public money on education, the impact of education on economic growth, why and how political regimes interfere in the impact of education on growth and how education can be a lever for political change. Conclusions are derived from theoretical models and modern econometric techniques. The research puts forward altruism as one of the determinants of the cross-country variation in public subsidies to education: altruism tends to act as a deterrent for public subsidies to education. The research into altruism and education subsidies exploits previously underused data to present a new proxy to make international comparisons between levels of altruism. The analysis of this thesis shows how the defence-education trade-off constrains the extractive powers of a dictator, it illustrates why dictatorial regimes may have incentives to undermine the effects of education on economic growth, and how this relates to regime transitions. The analysis also demonstrates that more redistributive policies should be expected in democracies than in non-democracies. Finally, this research provides evidence of the more tangible effects of education on growth once the democratic environment is taken into account, clearing the 'micro-macro' paradox of the effects of education on income. This thesis sets an agenda for future research, including the need to observe the evolution of altruism over time and how it relates to variations in cross-country expenditure in education. Also, it demands a continuous re-test of the relationship between education and growth under different political regimes as longer and more informative time series become available.