Essays on the determinants and effects of public education expenditure in developing countries

This study investigates the determinants and effects of public education expenditure in developing countries. The author identifies various political variables surrounding budget formulation and execution process in developing countries, and applies an econometrics approach to the panel datasets of developing countries for the period of 1985 to 2005. Empirical results show that political variables, which are characteristic of developing countries, significantly influence the determination of size and composition of public education expenditure and effectiveness of public education expenditure to produce school enrollment rates. First, political variables influence the size and composition of public education expenditure in developing countries. Political regime types---democracy, totalitarian and theocracy---openness to the polity, and political stability increase the size of public education expenditure and increase the percent of primary and secondary education expenditure in total public education expenditure. In addition, socio-economic conditions--- economic inequality, natural resource rent, ethnic fractionalization---influence the size and composition of public education expenditure in developing countries. Secondly, political variables influence the relation between public education expenditure and the school enrollment rate. Political regime types, quality of bureaucracy, decentralization variables have significant impact on the secondary and tertiary school enrollment rates while they do not have significant impact on the primary school enrollment rate. This result is confirmed by causality test between public education expenditure and school enrollment rate and examination of mediating effect of private education expenditure. From a policy point of view, it is recommended that international organizations focus on the political variables and public education expenditure in order to increase education level in developing countries. Variables such as public education expenditure, quality of bureaucracy, decentralization, economic inequality, and ethnic fractionalization, are proposed as candidates.