Public Education Spending and Primary-Level Exclusion in ASEAN: Policy Insights from a Two-Way Fixed Effects Panel Analysis

Abstract

This study examines the relationship between public education spending intensity and primary-level educational exclusion across ASEAN member states. Using an unbalanced country–year panel drawn from the World Development Indicators (2000–2024), we estimate a two-way fixed effects model to analyze whether lagged government education expenditure (% of GDP) is associated with reductions in children out of school, primary (% of primary school age), while controlling for system-capacity factors and macroeconomic conditions. Results from the baseline model (N = 150 observations) indicate that lagged spending shows a negative but statistically non-significant association with out-of-school rates (β = −0.340, p > 0.10). In contrast, a restricted sensitivity model incorporating capacity indicators reveals that the proportion of trained teachers is strongly and negatively associated with exclusion (β = −1.0468, p < 0.001). Descriptive analysis confirms substantial and persistent cross-country heterogeneity, with mean out-of-school rates ranging from 0.28% (Singapore) to 12.38% (Lao PDR). The findings suggest that aggregate spending intensity alone is an imprecise predictor of short-run changes in primary-level exclusion within the ASEAN context. Instead, instructional capacity—proxied by teacher training—emerges as a more consistently relevant correlate. The study underscores the importance of moving beyond top-line expenditure ratios toward context-sensitive strategies that strengthen resource-to-service translation, prioritize teacher capacity, and address the pronounced heterogeneity in educational access across ASEAN systems.