The coefficients are statistically significant at 1 percent for Botswana, 5 percent for Botswana, Mauritius, and Thailand. The large values of these coefficients indicate the importance of education expenditures in determining growth. These results are consistent with those previously established by Bose, Haque, and Osborn (2007), who also estimated the coefficient of education expenditure as being positive and statistically significant<sup>74</sup> .

Similarly, public expenditures in health have a positive and significant impact on growth in each country except for Indonesia, as can be seen in Table 14. The interactive dummy variable for health expenditure is significant at 1 percent for Botswana, Malaysia, Mauritius, Singapore, and Thailand. As was the case for education, the estimated values of the coefficients are high, indicating the importance of health expenditure on growth at the individual country level.

The last sectoral component of public expenditures included using the interactive dummy variable is public expenditure in transportation. It has also highly significant coefficients and all positive, except for Indonesia<sup>75</sup> .

Table 15 reports the results for public expenditure in the three (education, health, and transport and communications), using 3-year averages. The estimated coefficients of education are much higher under this classification, and are significant at a 1 percent level for Botswana, and at a 5 percent level for Malaysia, Singapore, and Thailand. The reason could be that, compared to other sectors, **it takes a longer time for education expenditures to impact growth** .

The estimated coefficients of public expenditure in health are positive only for Botswana and Malaysia. The negative coefficient for Indonesia was somehow expected due to the exclusion of expenditures at a decentralized level, which (as mentioned earlier) are quite important in Indonesia. But the negative coefficient in Korea was not expected at all. One (econometric) reason might be having lower degrees of freedom due to the small number of observations available and the large number of regressors included in the specification. It could also be possible that in some countries, such as Korea, public expenditures in health have not been able to cope with the emerging needs of a growing population. In any case, these country results are somehow consistent with the findings of the cross-country analysis, which showed that health expenditures do not appear to have a direct effect on GDP growth in the medium-term.

Table 15 also shows that the impact of public expenditure in transport and communication on economic growth appears to be statistically insignificant almost for each country, when using the OLS method with 3-year averages. Botswana has a level of significance at 10 percent. But expenditure on transportation does not have any statistically significant effect on growth in other countries.

> 74 They use data from thirty developing countries during the period 1970-1990.

> 75 For comparison purposes, the estimated value of transportation and communication expenditures by Bose, Haque, and Osborn (2003) is negative in one specification and positive in another specification, but none of them is statistically significant, as it can be seen in Table 3 of their paper.

21