THE INFLUENCE OF CORRUPTION ON THE EFFECT OF PUBLIC SPENDING ON EDUCATION EFFICIENCY

Abstract

Human capital theory gives a lot of weight to education because it is seen as the most important way to gain skills and knowledge. The paper aims to find out the effect of corruption on education outcomes in Asia-Pacific countries. We employed the Stochastic Panel Frontier model to analyze the technical efficiency of education. A proxy for corruption is the corruption perception index developed by Transparency International. Our result showed that countries with high level of corruption have less efficiency of education. In other words, in poor governance nations, increasing public spending on education is unlikely to lead to improved outcomes.