Economics

Public Expenditure On Education As a Percent Of GDP

General government expenditures on education are usually expressed in absolute terms. That, however, may fail to tell the whole story.

Defining Relative Educational Expenditures

In order to get a better look at how much importance certain countries place on their education budgets, we look at such expenditures in relative terms, as a percentage of their respective Gross Domestic Products (GDPs). Since GDP is the most commonly used indicator of a national total effective economic production, putting certain budgets in terms relative to GDP shows the actual proportion of monies available within a country’s borders that go towards educating its citizens. Included within these expenditures are educational costs funded by international monies transferred to a government. Every country has its own unique spending needs regarding education, which can vary in conjunction with priorities of a country’s populace, diplomatic involvement of the country on the international scene, and the age structure of the population, among countless other factors. For most of nations around the globe, the largest expenditures from government finances are funneled into education, infrastructure, health care, and military budgets.

Countries Placing a High Emphasis on Educational Investment

According to a recent report by the United States CIA’s World Factbook, the world leaders in terms of financial inputs into public education relative to GDP are those countries spending over 10% of total value of all goods and services produced within their borders on education. These countries include Lesotho, Cuba, Kiribati, the Marshall Islands, and Palau, among others.

According to a UN World Bank report, in 2008 the public spending on education expressed as a percentage of GDP in Lesotho was 12.98%. Public expenditures on education in Lesotho consist of government spending on educational institutions, both private and public, educational administration, and subsidies for private entities involved in pedagogy. The CIA World Factbook report affirmed this, registering Lesotho as having the highest percentage of relative educational expenditures (13% of GDP) which was the highest of all countries. This indicated a slight increase in the government’s relative expenditures on education from recent years.

In 2013, the same report compiled by the UN World Bank indicated that Cuba was a world leader in making education investments as well. With a 13% share of its GDP allocated to education, the Caribbean island was in a dead heat with Lesotho atop the charts in relative education expenditures. Cuba was followed by Denmark and Ghana, with their annual education budgets equaling 8.7% and 8.1% of GDP, respectively. Looking at the 2010 CIA World Factbook report, we see that Denmark and Ghana have maintained their relative expenditures, as relative education budgets have remained unchanged in recent years. Cuba, meanwhile, only increased its expenditures on education by 0.2% despite its GDP growth by 1.3% in 2014, which indicates that education expenditure were not significantly altered and, in relative terms, actually had a slight relative decrement. All in all, large relative education expenditures in these countries indicates prospects for continued economic growth in the future, as GDP growth usually follows closely behind increases in the education level of the general populace. In 2012, public spending on education as a percentage of GDP in New Zealand was measured at 7.38%, according to the World Bank report, a significant increase from 5.3% registered just 4 years earlier. This positive trajectory has made the ‘Kiwi Island’ as one of the few well-developed economies nearing the top of this list. A good chunk of this growth has been allocated to economic development of the Maori and other aboriginal peoples of New Zealand, while also making increased efforts to educate all of the populace about the cultural and significant importance of these people, who have inhabited the land covered by the island nation since well before its absorption into the British Colonial Empire.

UNESCO Educational Expenditures Report

In Namibia, government expenditure on education relative to GDP was 8.5% in 2010. This was the highest value the country has registered over the past 11 years, which indicates that Namibia’s policies on outlaying expenditures for education has been given increased importance. Namibia registered the lowest such value over the last 11 years (6.04% of GDP) in 2006. The Namibian data was sourced from a survey conducted by the United Nations Educational, Scientific and Cultural Organizations (UNESCO), and its results indicated a trend towards continued growth in the near future in the Namibian government’s expenditures on education. According to the same UNESCO Institute of Statistics data, nearby Swaziland’s government expenditure on education relative to GDP were high as well, standing at 7.83% in 2010.

Over the past thirty five years, Swaziland’s highest such value was 8.06% of GDP in 2006, a marked increase over its lowest value of 3.71% in 1996. The country’s expenditures on education in 2011 placed it among the highest globally, and all signals indicate prospective future growth to be likely as well.

Striving for Continued Progress in Education

Government spending on education is a huge investment in human potential that enhances the future of the country. As seen above from all three studies highlighted, most countries are embracing this concept, and have adjusted their budgets accordingly. In fact, relative education budgets of around 10% or more of GDP have been achieved in some countries. Other countries have emerged as big educational spenders as well, increasing their relative budgets markedly over the span of the last 5 years. It is evident that, with time, most nations will continue to increase their relative expenditures on education as this important component of society receives more appreciation worldwide.

Public Expenditure On Education As a Percent Of GDP

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RankCountryPercentage of GDP spent on education
1Lesotho13.00 %
2Cuba12.80 %
3Marshall Islands12.20 %
4Kiribati12.00 %
5Botswana9.50 %
6Sao Tome and Principe9.50 %
7Timor-Leste9.40 %
8Denmark8.70 %
9Namibia8.40 %
10Moldova8.40 %
11Djibouti8.40 %
12Swaziland8.30 %
13Ghana8.10 %
14Iceland7.60 %
15Comoros7.60 %
16New Zealand7.40 %
17Palau7.30 %
18Solomon Islands7.30 %
19Cyprus7.30 %
20Sweden7.00 %
21Norway6.90 %
22Venezuela6.90 %
23Malta6.90 %
24Bolivia6.90 %
25Kyrgyzstan6.80 %

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