Education in States and Nations: 1991

(ESN) Indicator 30: Current public expenditure on education as a percentage of GDP/GSP

Gross domestic product (GDP) is an aggregate measure of the value of goods and services produced in a country. Gross state product (GSP) is the analogous measure for U.S. states. The percentage of GDP/GSP spent on education from public sources corresponds to the share of a country's or a state's wealth that the public sector invests in education. Variations in this measure across countries and states may reflect differences in national and state priorities or preferences. This is not necessarily a measure of total investment in education, however, since in the United States and other countries, there

• In 1991, public expenditure for education at all levels comprised 4.6 percent of GDP in the United States. While this was lower than the percentage of GDP spent on public funding of all levels of education in Canada, it was the same as in France, and higher than in Italy, West Germany, and Japan, the other G-7 countries for which data were available.

• Four U.S. states - Montana, New Mexico, Vermont and West Virginia - and Canada devoted 6 percent or more of their gross products to public funding of education. Every U.S. state spent as much or more of its gross product for public funding of education at all levels than did Japan or West Germany.

• Public expenditure for education in the United States can be separated into 3.4 percent of GDP for primary through secondary education and 1.2 percent for higher education. Of six G-7 countries, only Canada spent larger percentages of its GDP on public funding of education at both levels, 4.0 and 2.1, respectively.

• Among the U.S. states, public primary through secondary spending ranged from 2.5 percent of gross state product in Delaware and Nevada to approximately 5 percent in Vermont and Montana. The range across countries was slightly narrower.

• In 1991, the United States devoted the second highest percentage of GDP to public funding of higher education (1.2 percent) of the G-7 countries represented here. The percentage of GDP devoted to public funding of higher education in the G-7 countries ranged from 0.3 in Japan to 2.1 in Canada.

Notes on interpretation:

This measure of public expenditure for education has the advantage that it does not require conversion of national currencies into dollars. However, it is not as useful for comparing countries that are vastly different in their stage of development or wealth per capita. Furthermore, fiscal effort measures, such as this one, convey little information about the absolute quantity of resources that a country devotes to each student's education. This measure can also be heavily influenced by the proportion of the population of school age and in school. Indicator 33 represents an attempt to control for this problem.

The percent undistributed represents that proportion of educational expenditure whose destination cannot be clearly identified as either primary through secondary or higher education. Administrative overhead at a national education ministry is sometimes classified as an undistributed expenditure, for example. Comparisons among countries on primary through secondary or on higher education expenditures can be made problematic by large undistributed proportions.

Table 29b

Figure 30