Economic Growth Effects of Health and Education Expenditures: Does Corruption Matter in The MENA Region?

This study analyzes the impact of health and education expenditures on economic growth ‎in the MENA region, focusing particularly on the role of corruption in these outcomes. ‎Using panel data from 2012 to 2023, we assess the impact of public investment in these ‎sectors on GDP under varying levels of corruption. The CPI rankings are used to ‎categorize corruption levels, analyze the impact of differences in these levels, and assess the ‎moderating impact of corruption levels on the effectiveness of health and education ‎spending in promoting GDP growth. Our main findings demonstrate that health and ‎education spending positively impact economic growth ($10.30 billion and $54.25 billion, ‎respectively), but this effect is significantly moderated by the degree of corruption. It shows ‎a much stronger negative impact on education spending ($61.25 billion) than on health ($8.26 billion). While both are affected, the success of education investment is far more ‎sensitive to corruption levels. Additionally, each additional point in the CPI World ranking ‎is associated with a decrease in GDP of $565.44 million. The second level of corruption (25 ≤ CPI ≤ 50) leads to a decrease in GDP of $46.16 billion, while the first level of ‎corruption (CPI < 25) leads to a loss of $107.44 billion. These findings can help ‎policymakers to design and implement targeted reforms that improve governance structures ‎and optimize the allocation of public resources through a rigorous combat against ‎corruption.