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  • 1 University of Split, Faculty of Economics, Croatia
  • 2 University of Split, Croatia
  • 3 University of Split, Croatia
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This paper analyses spatial impact of government expenditures on education on economic growth in the EU28 countries during the period 2004–2013. Employing a novel econometric technique that allows for the estimation of spatial spillovers, our results indicate that government expenditures on education significantly and positively infl uence GDP growth. Moreover, the indirect i.e. the spillover effects are quite large suggesting that the growth models should account for spatial interdependencies. Precisely, we find that education expenditures in one country affect GDP growth in the neighbouring countries, meaning that these spillovers are geographical in nature. Moreover, we find that the degree of interdependence among countries varies according to the average GDP per capita even if their geographical distances are identical. Additionally, immigration is found to be an important channel of spatial transmission.

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