**Table 5: Average Size and Decomposition of Five-Year Growth Episodes by Income Group, 1999–** **<u>2015</u>**

||Real change|**Decomposi**|**tion into source**|**s of five-year growth:**|
|---|---|---|---|---|
||in public<br>education<br>spending in<br>five- year<br>period|Economic<br>growth|Total public<br>spending as<br>a share of<br>GDP|Education<br>prioritization –<br>education spending as<br>a share of the total<br>government budget|
||(1)|(2)|(3)|(4)|
|**Low income**|**39**|**27**|**5**|**6**|
|Slowest growth quartile|-4|25|-10|-19|
|Fastest growth quartile|92|34|15|44|
|**Lower-middle income**|**24**|**20**|**6**|**-2**|
|Slowest growth quartile|-6|12|-2|-16|
|Fastest growth quartile|57|26|23|8|
|**Upper-middle income**|**18**|**17**|**0**|**1**|
|Slowest growth quartile|-15|12|-12|-14|
|Fastest growth quartile|48|20|10|17|
|**High income**|**13**|**11**|**2**|**0**|
|Slowest growth quartile|-7|6|-5|-8|
|Fastest growth quartile|36|21|7|7|
|**All low- and middle-income**|**26**|**21**|**4**|**1**|
|**countries**|||||
|Slowest growth quartile|-8|15|-8|-16|
|Fastest growth quartile|63|26|17|20|

_Source:_ World Bank calculations based on UIS and IMF data. _Note:_ Slowest and fastest growth quartiles refer to the 25<sup>th</sup> and 75<sup>th</sup> percentile growth rates within an income category. Column 1 shows the total percentage change in education spending. Columns 2 – 4 breakdown the overall change into its component parts (see Box 5). Column 1 is equal to the sum of columns 2 – 4 with small differences due to rounding errors. In Figure 9, we used actual percentage changes in spending, whereas in this table we use the results from the decomposition using logs, which explains the slight differences in some of the variables.

Countries in the top quartile of public education spending growth almost universally derived growth from all three sources:<sup>12</sup> they enjoyed fast-growing economies, their government spending accounted for a growing share of GDP, and they increasingly prioritized education over other components of their government budgets. In contrast, for countries in the slowest growth quartile, reductions in education spending were due to two main factors: a drop in aggregate public education spending as a percentage of GDP and a decrease in the percentage of the national budget allocated to education (Table 5). For example, low-income and middle-income countries in the fastest-growing quartile increased their public education spending by 26 percent due to GDP growth, 17 percent due to increased government spending, and 20 percent due to increased prioritization of education. In contrast, decreases in government spending as a share of GDP and in education spending as a share of total government spending contributed to an 8 and 16 percent decline, respectively, in spending among the slowest growth quartile.

12 We use the same approach, outlined in Box 5, to decompose overall spending changes. In some five-year country growth episodes, there are discrepancies between calculations on the change in total government education spending and those on the change in its three components (GDP, government spending as a percentage of GDP, and education spending as a percentage of government spending). However, the overall magnitude of these discrepancies is small. Overall, the average log change in total government education spending is 20 percent over five years, while the average sum of the log changes in the three component variables is 21 percent over five years.

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