Beyond School Enrollment? Digitalization, Public Expenditure, and Human Development in South Asian Countries: Evidence from Panel Data, 2000–2024

This study explores the role education, digitalization, public spending and economic development play in human development in South Asian countries between 2000 and 2024. This study looks at whether digitalization can act as a complement to education and improve the Human Development Index (HDI) as well as exploring whether public spending on health and education can independently improve human development. Panel data regression techniques were used to understand the relationship between education, digitalization, public spending and human development. These include first difference regressions, dynamic and distributed lag regressions and two-way fixed effects with Driscoll-Kraay standard errors. Wild cluster bootstrap was also used to account for the small number of clusters. Results show that GDP per capita has a strong positive impact on HDI in the two-way fixed effect models. Digitalization is shown to have a positive short run impact on HDI in the base first difference model and has a borderline significant impact using wild cluster bootstrap. Interactions between education and digitalization are not statistically significant, so there is no evidence to suggest digitalization acts as a complement to education. Diagnostic tests showed that there was significant cross section dependence and first order serial correlation so robust methods were used. The statistically completed panel data shows that many coefficients change substantially so the original observed data should be used. This study shows that digitalization can help improve human development but depends on the model and inference method used. Economic development was found to have the most consistent impact on HDI.