Impact of public funding of education on economic growth in Macedonia

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This study investigates the relationship between public spending on education and economic growth in Macedonia, a low-income state, following decentralization. It does not aim to evaluate the education system's functionality or accessibility but focuses on measuring public education expenditure as a determinant of economic growth, whether positive or negative. The central question posed is whether all forms of public spending on education foster economic growth. Due to limited data in developing countries like Macedonia, establishing empirical models to test the causal effects of education spending on growth remains challenging, leaving the pathways through which education expenditure influences economic growth poorly understood. It is essential to consider the interplay between government spending and education quality when crafting policies aimed at promoting growth. The study employs a Logarithmic Multiple Regression Model to explore the link between public spending on education and economic growth in Macedonia, concluding that the model is significant. The findings indicate a negative effect of public education expenditure on economic growth. Additionally, the results prompt further inquiry into the activities of highly educated workers and their impact on marginal changes. The study concludes with key recommendations for identifying alternative channels to enhance education quality and skilled labor, ultimately boosting p