The impact of government expenditure on human development index in ASEAN countries from 2009 to 2022

Abstract

To analyze the correlation between Government Expenditure and the Human Development Index in ASEAN countries from 2009 to 2022, this research utilized the Feasible Generalized Least Squares model (FGLS), including the statistics collected from reliable secondary sources such as World Bank, ADB, IMF, ASEAN Statistics. The research data encompasses government expenditures on health, education, and defense across 09 Southeast Asian nations over a twelve years period with 126 observations, consisting of the explanatory variables that represent the Government Expenditure Ratio compared to the GDP in Healthcare (Ghc), Education (Ge) and Defense (Gd). Besides, the Macroeconomic factors such as Foreign Direct Investment (lnFDI), Inflation Rate (Inf), and Labor Force (lnLab) are also employed as the controlled variables. The result indicates that Education Expenditure Ratio and Defense Expenditure Ratio positively affect on the Human Development Index. On the other hand, the Healthcare Expenditure Ratio has a negative impact on HDI. In addition, it is also implied that the Foreign Trade Investment is a beneficial factor in human life enhancement. At the same time, the inflation rate does not have a remarkable influence and the Labor Force has an adverse impact on HDI. Accordingly, this report presents policy recommendations to enhance living standards in Southeast Asia and Vietnam. Additionally, the research identifies shortcomings of the analysis and proposes new research directions to deepen our comprehension of the nexus between public expenditure and human development.