From Classrooms to Economies: Examining the Educational Achievement-Economic Development Nexus

Abstract

Each states play pivotal roles in contributing to the economic performance of the nation. They have their own unique economic strengths, resources, and industries that contribute to the overall economic development. Terengganu, an east coast state in Malaysia has historically faced economic challenges, marked by a lag in development compared to other regions. The fundamental problem addressed is the potential correlation between educational attainment and the region’s economic growth, aiming to understand how advancements in education might serve as a catalyst for economic progress. The objective of this research is to empirically analyze the impact of educational achievement on the economic development in Terengganu. Utilizing secondary data sourced from the Department of Statistics Malaysia and Economy Planning Unit Terengganu spanning from 2006 to 2022, Autoregressive Distributed Lag (ARDL) model has been employed to estimate and understand the relationship between educational attainment and economic development. The findings suggested that educational achievement plays positive impact in heightening the economic development within the region. Education contributes to the development of human capital, fostering a skilled and knowledgeable populace capable of engaging in diverse economic activities. This, in turn, attracts investments and facilitates the emergence of industries and sectors that rely on a knowledgeable and skilled labour force. This study would provide valuable insights for policymakers and academicians to formulate targeted policies and initiatives, ultimately enhancing the economic development of the states, thus contribute to a prosperous Malaysia.