Trends and Prospects of Socio-Economic and Technological Growth and Role of Knowledge in Supporting Growth across Indian States: A Co-Integration and Causality Approach

Posted: 6 Mar 2011

See all articles by Arindam Banik

Arindam Banik

International Management Institute

Rabia

affiliation not provided to SSRN

Date Written: March 4, 2009

Abstract

This paper uses cointegration and vector error-correction models to analyse the causal relationship between education and development across select Indian states using annual data from 1980-81 to 2008-09. Expenditure on education per capita is used as the proxy for education, while State domestic product per capita is the proxy for development. The empirical results provide some evidence of bi-directional causality in Indian States such as Kerala, Karnataka, Andhra Pradesh, Maharashtra and Tamil Nadu. There is also evidence of causation running from per capita expenditure on education to per capita State domestic product in either the short or long run in states such as Bihar, Arunachal Pradesh, Uttar Pradesh, West Bengal, Punjab, Orissa, Madhya Pradesh, Gujarat, Rajasthan, Haryana and Punjab. Thus, there is some indication that the observed positive correlation across states between expenditure on education and growth reflects primarily the influence of government effective intervention in the education sector.

Keywords: Indian States, Education, Development, Southern States, Conintegration

JEL Classification: JEL, O11, E65, E65, C23

Suggested Citation

Banik, Arindam and Khatun, Rabia, Trends and Prospects of Socio-Economic and Technological Growth and Role of Knowledge in Supporting Growth across Indian States: A Co-Integration and Causality Approach (March 4, 2009). Available at SSRN: https://ssrn.com/abstract=1777237

Arindam Banik

International Management Institute ( email )

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Rabia Khatun (Contact Author)

affiliation not provided to SSRN ( email )

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