FACTORS OF HUMAN DEVELOPMENT INDEX IN ASEAN: PANEL COINTEGRATION ANALYSIS

In this paper, the author tried to relate HDI (Human Development Index) with GDP (Gross Domestic Product), education expenditure, health expenditure and unemployment rate in ASEAN-9 during 1990-2016 with fixed effect panel regression model, Fisher-Johansen cointegration and panel VECM (Vector Error Correction Model) respectively. The author found that one percent increase in GDP, education expenditure, and unemployment rate per year led to 0.105% increase, 0.028% increase and 0.027% decrease in HDI per year significantly and one percent increase in health expenditure led to 0.0124% increase in HDI insignificantly in ASEAN (Association of Southeast Asian Nations) during 1990-2016. Panel cointegration suggested that there are three cointegrating equations in which two are moving towards equilibrium. In panel VECM, it was found that- There is significant long run causality from health expenditure percentage of GDP and unemployment rate to the Human Development Index (HDI) of the ASEAN during 1990-2016. There is significant long run causality from health expenditure percentage of GDP and unemployment rate to the educational expenditure % of GDP of the ASEAN during 1990-2016. There is also a significant short run causality from education expenditure to GDP, from HDI to education expenditure and from GDP to unemployment rate of ASEAN during 1990-2016