Effectiveness of Public Spending in Improving Rural Development: An Application using Seemingly Unrelated Regression

This study investigates the effectiveness of public spending on agriculture and education in analyzing its impact on the quality of life in the Philippines using the methods of seemingly unrelated regression. We used the available macroeconomic data with life expectancy as proxy variable to measure quality of life. Results show that public expenditure on education showed contrasting result on its effect on total factor productivity and literacy rate. Public expenditure on education showed negative impact on total factor productivity while literacy rate improves as public expenditure on education increases. This suggests that expenditure on education has more profound effect in improving quality of life in the Philippines as manifested by the positive and highly significant estimate. Results imply that with proper education, the farmers could easily adopt to new agricultural technologies, which can contribute to enhancing productivity thereby, potentially leading to the overall improvement of quality of life in the Philippines.