Economic growth and quality of education: Evidence from the national high school exam in Vietnam

Abstract

This study considers the impact of economic growth on the quality of K-12 education in a transitional country over the 2016–2019 period, utilizing sub-national-level data. The study employs two-stage least squares for the panel-data model, confirming that (i) a one percentage point rise in per capita income increases national test scores in Vietnam by around 0.4–1.83%, and (ii) this nexus is influenced by the quality of institutions and by poverty levels. Notably, we find a non-linear relationship between economic growth and education: economic growth exhibits a U-shaped relationship with English scores, while its association with mathematics scores follows an inverse U-shaped pattern. The current study thus adds to the body of evidence supporting the link between educational quality and economic growth. As a result, policymakers in transitional nations can use the forces of economic growth to advance social objectives, rather than concentrating primarily on changing the educational system through increased government spending. In order to maximize the benefits of economic growth for the education system, the government policies should focus on assuring institutional quality improvement and multidimensional poverty reduction.