Abstract

Education is a fundamental foundation in the development of a nation. History reveals that success, honor and dignity become the pride of those nations who lead in education in the world. This study elaborates on the role of education in India and Sri Lanka’s economic growth. Growth is 1981-2016. Auto-Regressive Distributed Lag (ARDL) technique is applied in this study. It is pragmatic that India focused more on Tertiary education and Sri Lanka concentrated on Primary education. Tertiary education has a major role in India’s GDP growth, whereas, in Sri Lanka, Primary education has a robust role in economic growth. It is evident that India’s number of research scholars and highly skilled persons netted good recognition and distinction in the global world. This is due to the focus on tertiary education.  

Key Words

GDP Growth, Primary Education and Tertiary Education

Introduction

Education is critical to the advancement of the world's economy. Many observational studies have also shown that education has a positive and fundamental impact on the Gross Domestic Product (GDP) (Torruam, Chiawa, & Abur 2014; Yardimcioglu, Gürdal, & Altundemir, 2014). Some studies have shown that education affects development through various channels (Lv, Yu, Gong, Wu, & Xu, 2017; Sunde, 2017). Education expenses significantly affect long-term economic gains relative to short-term ones (Mallick & Dash, 2015; Sunde, 2017). Sunde 2017 also finds that skilled workers are better for economic growth (Sunde, 2017). Similarly, (Lv et al., 2017) added a higher impact on development on average primary education. However, similar tests in developing and developed countries have different primary, secondary and tertiary school outcomes. Various researches have demonstrated the importance of primary education for economic development, although others have demonstrated the more significant influence of tertiary education on economic condition. (Glewwe, Maiga & Zheng, 2014; Hannif & Ar Shed, 2016; Hassan & Cooray, 2015). (Barro, 2013; Benos & Zotou, 2014; D?n?cic?, Bela Umbert, & Ilie, 2010).

After independence, India's higher education institutions have grown quite rapidly. Universities were 40 times, universities were 82 times higher between 1950-2015, and students were more than 127 times higher in a significant number (Yogesh & Kiran, 2018). Even though India focuses on higher education and highly educated people like to participate in its development activities, increasing economic growth (Layard, 2009; Mishra & Mishra, 2015). (Mishra & Mishra, 2015) found that in India, there is unidirectional causation from education spending to GDP. While the Indian government agreed to raise spending by about 6% of the GDP ratio to the education sector in 1968. (Mishra & Mishra, 2015). 

In India, the growth of the education sector is indeed remarkable, particularly in tertiary education. At the end of 2020, India will have the world's highest tertiary students and number two in graduate students. India now has a demand of US$100 billion in education. Higher education currently adds 59.7 percent to the market, 38.1 percent to school buildings, 1.6 percent to pre-school education, and 0.6 percent to skills, technology, and multimedia. India's tertiary education structure is now the largest globally, with over 70 million scholars (Kumari and Shrama, 2017). India concentrated a great deal on tertiary education. India has the world's largest tertiary education structure. The universities are six hundred thirty-four, the universities are 33,000, and the universities are 20. However, in terms of enrollment, it grades third about 17 million scholars (UGC, 2012).

However, after the 1980s, funding of the government of India was declining, and therefore the growth of new universities and colleges for higher education decreased (Tilak, 2005). After that, public universities start offering distance learning opportunities to the growing number of students (Agarwal, 2007), and the fee from these distance courses was the key earning source for public universities in India. As a result, in 2005, around 12 new open universities and 106 conventional universities established for a distance learning course; because of lack of resources, the state of India decided to allow the private institution to offer distance learning opportunities to the students in India (Kapur & Mehta, 2004). Similarly, (Castelló-Climent, Chaudhary, & Mukhopadhyay, 2015) stated that positive and unidirectional causality exists in India when they control the rich size of geographical and historical characteristics. 

Sri Lanka is consistently focusing on economic development with the fall of the colonial empire. So, for attaining higher economic growth goals, Sir Lanka's national strategy focuses on educated labour by investing in human resources (Ganegodage & Rambaldi, 2011). Therefore, Siri Lanka's Government has agreed to offer free primary education (Ranasinghe & Hartog, 2002; Visaria & Pal, 1981) as primary education contributes much more to economic development than higher education (Ganegodage & Rambaldi, 2011). Several studies have agreed that education expenditure promotes capital and enhances economic activity development (Al-Yousif, 2008; Clements, Gupta & Inchauste, 2004; Maitra & Mukhopadhyay, 2012; Psacharopoulos & Patrinos, 2004). According to Mallick, Das & Pradhan (2016), education is one of the primary 

ingredients in developed countries like Sri Lanka that boost economic development. Sri Lanka gives primary education particular importance and support to India, while India focuses mainly on tertiary education. Sri Lanka used more money for primary education and in 2016 ranked 98 countries on the list (primary education spending percentage of government educational expenditure). However, India ranked 124 in primary education spending worldwide as one percent of government education expenditure in 2013. However, for tertiary education, India was 36th worldwide in 2013, and in 2016 Sri Lanka was 133th in the world (Territorial education spending percentage of government educational costs), the United Nations Institute for Education, Science and Culture (UNESCO) 1. New research in Sri Lanka finds that high-income returns occur if male schooling increases again for one year (Himaz & Aturupane, 2016). However, it argued that education yields are 4% lower than in other developed countries. Likewise, Sri Lanka's return on investment in the education sector is less than other developed countries but positively. At the global stage, the average education return was at least 10 percent higher than that of Siri Lanka (Fasih, Kingdom, Patrinos, Sakellariou & Soderbom, 2012). However, some reports have indicated that developed countries rely more on primary education, as higher education returns are less in developing economies (Ganegodage & Rambaldi, 2011; Mukherjee, Cabraal, & Terrado, 2005; Todaro & Smith, 2009). 

Literature has indicated that both India and Sri Lanka are focusing on education, but their emphasis is different, and India is focused on tertiary education, though studies have shown that tertiary education in India is better for economic development (Layard, 2009; Mishra & Mishra, 2015; Tilak, 2005). Sri Lank, on the other hand, focuses on primary education to encourage development. The Global Index on Competition (2005) shows that Sri Lanka's primary education had increased from 36 in 2005 to 26 in 2015. Primary school enrollment was up from 96.1 in 2005 to 98.5 in 2014. The priority in Sri Lanka was more primary than tertiary. This study sought to examine the relative relevance to both primary and tertiary education countries through its impact on economic development. The researchers set the study's objective to determine 

whether primary or secondary education is more beneficial to Sri Lankan and Indian economic growth.

Hypotheses of the Study

H0 = Primary Education does not have a significant role in Sri Lankan economic growth.

H0 = Therapeutic education has no significant role in India's economic growth.

Literature Review

Although a thorough investigation into the relationship between various levels of education and economic progress has been carried out, it has been discovered that education at all levels, including secondary and tertiary education, facilitates global economic growth. Barro, 2013; Benos & Zotu, 2014; D?n?cic? et al., 2010; Gyimah-Brempong, Paddison, & Mitiku, 2006; Hanif & Arshed, 2016; Jalil & Idrees, 2013; Gyimah-Brempong, Paddison, & Mitiku, 2006; Hanif & Arshed, 2016; Hanif & Arshed, 2016; D?n?cic?, Bela?cu, and colleagues investigate the long-term association between higher education and per capita GDP in Romania (2010).

In addition, a one-way causal link between GDP per capita and tertiary education has been established. Similarly, Hanif and Arshed (2016) found that tertiary education has a greater impact than primary and secondary education on real GDP growth in SAARC countries. However, the lack of experience and knowledge that leads to economic responsibilities not linked to a stable career is the reason for the lower impact on GDP in primary education. In addition, a panel report (Papageorgiou 2003) found that primary and secondary schools have a positive influence on growth. Low revenue countries can focus on policy growth, notably schooling, and policymakers can concentrate on secondary education; in high-income countries where employment is most important, employment policies can be formulated (Ali, Chani & Hussain, 2019). He argues that primary education increases overall efficiency, while tertiary education contributes to the adoption and innovation of new technologies. A study in the developed country of Pakistan also found that increased education financing led to an increase in GDP growth (Jalil & Idrees, 2013).

Fewer recent meta-regression studies show that higher education has an important positive effect on economic growth for males, while higher education for females has no effect (Benos & Zotou, 2014; Hassan & Cooray, 2015). Male primary school, on the other hand, has little impact on economic growth, while the female primary school has an indirect economic impact due to lower fertility rates (Benos & Zotou, 2014). According to Hassan and Cooray (2015), education at every level has a positive effect on Asian countries' development: primary, secondary, and tertiary. (Oketch, McCowan, & Schendel 2014) went on to point out that tertiary learning has a greater impact on economic growth and graduate income in low- and lower-middle-income countries. Some figures show that low education levels in Sub-Saharan Africa have a lower effect on the economic development of the region than in other countries (Glewwe et al., 2014). The relationship between secondary and third-school education and economic development was discovered in another longitudinal study (Pegkas 2014), but there was no such connection between primary and secondary education or economic growth in Greece.




Sources of Data Collection and Econometric Methodology

This research compares and contrasts India and Sri Lanka's educational success in terms of economic development. Primary and tertiary education was used in the evaluation, while World Development Indicators and the United Nations Educational, Scientific, and Cultural Organization (UNESCO) provided services from 1981 to 2016 considered as the data source.

Econometric Methodology

When we use time-series results, we display the cointegration between or inside the series. However, they must be coupled in the same order in order to study the long-term relationship between time series variables. The root test of the Dicky- or Fuller Augmented Dicky-unit Fuller was widely used to determine if a part was fixed or not. In consequence, we start by evaluating the unit root test results before deciding on the appropriate analytical techniques. If variables are stationary in the order I(0), we can use a basic low-







carrying (OLS) regression technique; if variables 

are combined in the order I( 1), we can use the joint integration process of Johansen to find the long-term relationship between them (Dickey & Fuller, 1979). Furthermore, the autoregressive distributed lag process (ARDL) can be used if the series are combined in mixed order I(0) and I(1) but not I(2) according to Pesaran, Shin and Smith (2001).




Model 1& 2: Models of Primary and Tertiary education of Sri Lanka

Our hypothesis is that the primary and tertiary education of Sri Lanka does not affect to GDP growth rate. This section discovers the association between primary, tertiary education and GDP growth rate. This is accomplished by using the following two models.

 

  (Eq. 1)

  (Eq. 2)

 

Where GDP = Gross Domestic Product, PNRN = Primary Enrolment, CAP = Gross Fixed Capital Formation, FDI = Foreign Direct Investment, DCPP = Domestic Credit to Private Partners, NTRN = Tertiary Enrolment, INF= Inflation, and ?t= Error term

We select the ARDL model to see the long-run and short-run impact of primary and tertiary education on GDP with a set of control variables.

Model 3& 4: Models of Primary and Tertiary Education of India

Our hypothesis is that the primary and tertiary education of India does not affect GDP growth. This section discovers the association between primary, tertiary education and GDP growth. This is accomplished by using the following two models.

 

      (Eq. 3)

 (Eq. 4)




 

Where PRNM = Primary enrolment, POPM = Population, GCEM= Government Consumption expenditure, EXRM = Export, TNRN= Tertiary Education, TOP= Trade Openness

We use the conventional ARDL model to examine the impact of primary and tertiary education on GDP in Siri lank and India

 

?y_t= ?_(z=1)^q??_z  y_(t-z)+?_(z=0)^p???^'?_lz  X_(l,t-z)^r+?_t…………(5)  

The dependent variable y_t is GDP growth, X_(l,t) is a vector of regressor variables that similarly contains selected control variables, and ?_t Is a stochastic error term. Here t shows the time phases from 1, 2,3…to T. The symbol r states that which country gives more importance to primary education or tertiary education. The 

estimations from r equations will be differentiated to realize the effect of primary education or tertiary education on GDP growth (Frank, 2009). We also present the ARDL estimates in error correction form (Frank, 2009). To indicate the ARDL estimations in error adjustment form, on both sides of the equation, we add y_(t-1) Eq. 5. 

 

y_t= ?_(z=1)^q?k_z  y_(t-z)+?_(z=0)^p???^'?_lz  X_(l,t-z)+?_t…………(6)

Where k_z=?_z  ? z?1 & k_z=?_1+1  

After some modification, we get:

?y_t=?_l [y_(t-1)-?_l^' X_l ,_t ]+ ?_(z=1)^(q-1)?k_z  ??y?_(t-z)+?_(z=0)^(p-1)???^'?_lz  ??X?_(l,t-z)+?_t…………(7)

Where

?_l=-(1-?_(z=1)^q??_l ),

?_l=?_(z=0)^p??_lz/(1-?_r?k_lr ),

k_z=-?_(n=z+1)^q?k_m ,

?_lz=-?_(m=z+1)^p??_ln .




 

Empirical Findings

Empirical results are presented in this part of the study. Analysis and comparison between India and Sri Lanka’s primary and secondary education are presented in the viewpoint of economic growth. 

Empirical Findings

Conclusion

The study concluded the economic relationship of growth in primary and tertiary education between India and Sri Lanka; primary and tertiary education in both countries was calculated. In achieving the research objective, the study proposed that India focused on higher education for industrial development while Sri Lanka concentrated on basic education. Both countries' positions in primary and secondary education measured using the econometric ARDL approach. Primary education found to be critical to Sri Lanka's economic development in the report. Primary education in Sri Lanka will boost the country's GDP by 66.93 per cent. Similarly, tertiary education contributes significantly to India's GDP growth. The GDP of tertiary education will increase by 1% or 52.31 per cent.

Education is vital for the economic prosperity of every nation on the planet. Both countries should also focus on all levels of education, according to experts. Sri Lanka should prioritize tertiary education in addition to primary education. India also places a strong emphasis on elementary and secondary education, as well as higher education. Indeed, India has achieved ambitious development goals and attracted international services by focusing on tertiary education and developing highly qualified research academics, teachers, and qualified staff.

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