Trends in Educational Expenditure: How Much Do Countries Spend?

Every year, governments around the world make a fundamental decision: how much of their national income to invest in education. This number – expressed as a percentage of GDP – is more than a budget line. It reflects a country’s priorities, its commitment to future generations, and its capacity to build human capital. The data tells a mixed story – one of progress in some regions, stagnation in others, and a growing gap between what is needed and what is being spent.

The global benchmark: what countries are supposed to spend 🔗

International education policy has set a clear target. According to UNESCO’s Education 2030 Framework for Action, governments should allocate between 4% to 6% of GDP and between 15% to 20% of total government expenditure to education. These benchmarks were agreed upon by nations as part of the broader Sustainable Development Goal 4 (SDG 4) commitment to ensure inclusive, quality education for all by 2030.

But how are countries measuring up? According to the Global Partnership for Education, global education spending as a share of GDP has actually declined – from 4.5% in 2010 to 4.3% in 2022. And more starkly, four in ten countries still spend less than 15% of their public expenditure and less than 4% of GDP on education, falling short of both internationally agreed benchmarks.

Global spending trends: a tale of two worlds 🔗

When you look at education spending globally, the divide between high-income and low-income countries is striking. The World Bank’s Education Finance Watch 2024 reports that high-income countries (HICs) accounted for 64% of total global education expenditure in 2022 – amounting to US$3.71 trillion – even though this is down from 72% in 2010. Meanwhile, the spending gap between the richest and poorest nations is staggering: low-income countries spend only $55 per learner annually, compared to $8,543 in high-income countries – a gap of 155 times.

Government contributions also differ sharply by income group. Governments fund 80.4% of total education spending in high-income countries, but only 61.9% in low-income countries, where donor aid plays a far more significant supplementary role. Between 2010 and 2022, government education spending in low-income countries grew from 2.9% to 3.9% of GDP – progress, but still below the 4% floor set by international benchmarks.

How leading economies compare 🔗

Among developed nations, education expenditure levels vary considerably. According to World Bank data, the United States allocated 6% of GDP to education, China 6.13%, and Japan 7.43%, while Germany directed 4.6% toward primary through tertiary education. These figures underscore that high-income nations – particularly those in East Asia – treat education spending as a long-term economic investment rather than a recurring expenditure burden.

The OECD’s Education at a Glance 2025 report notes that OECD governments spend an average of USD $12,438 per student in primary, secondary, and post-secondary non-tertiary education – ranging from below $4,000 in Mexico and Türkiye to over $21,000 in Korea, Luxembourg, and Switzerland. Importantly, government expenditure on education as a share of total government expenditure fell by 6.9% on average across OECD countries between 2015 and 2022, from 10.9% to 10.1% – a signal that even wealthy nations are pulling back their relative commitment.

India’s education expenditure: persistent shortfall 🔗

India’s education finance story is one of ambitious targets and persistent underperformance. The National Education Policy (NEP) 2020 unequivocally commits to raising public investment in education to 6% of GDP – a target that was also recommended by the Kothari Commission back in the 1960s and reiterated in every major education policy since. Yet this goal has never been achieved.

The NEP 2020 document acknowledges the gap clearly, noting that both the Central and state governments together currently spend less than 3% of GDP on education. In the Union Budget 2024-25, the Central government allocated ₹1,25,638 crore to education – which amounts to just 0.38% of India’s projected nominal GDP that year, when only counting the central allocation.

Looking at the combined central and state picture, according to the British Council’s analysis of India’s Economic Survey, total education outlay including both national and state-level expenditure stood at approximately 2.9% of GDP – a proportion that remained unchanged for four consecutive years. This is far below the 6% NEP target.

Trends in India’s education budget over time 🔗

In nominal terms, India’s education budget has increased steadily. The allocation grew from ₹85,010 crore in FY2019 to ₹1.28 lakh crore in FY2026 – a 51.33% increase over five years. However, this headline growth is misleading when placed in context. In real terms, education’s share of the total government budget has actually declined by nearly 40% – from 4.14% of total budget outlay in 2014-15 to just 2.5% in recent years, and as a percentage of GDP, it has fallen from 0.55% to 0.37%.

The Education Expenditure (EE) to GDP ratio has not only stagnated but slightly declined – from 2.8% in 2017-18 to 2.7% in 2023-24 – as noted in India’s Economic Survey 2023-24. The share of education in total social expenditure dropped from 42.4% to 35.3% over the same period – a fall of 7.1 percentage points. These are not signs of a government advancing toward its own declared education investment targets.

Challenges in public education spending 🔗

Budget constraints and competing fiscal priorities 🔗

Governments – especially in developing countries – face severe pressure on their public budgets. Debt servicing, healthcare, infrastructure, and defence often take precedence over education in annual allocations. In Africa, the median share of government spending on education fell from 15.5% in 2012 to the same level in 2021, largely because increased debt-servicing costs and the diversion of resources toward COVID-19 health responses compressed available education budgets.

Coming out of the pandemic, weakening global macroeconomic conditions – high inflation, rising interest rates in G7 nations, and growing indebtedness – have further constrained the capacity of governments to finance education for expanding populations. For many low- and middle-income countries, education budgets are being squeezed from multiple directions simultaneously.

The international aid gap 🔗

For the poorest nations, international donor funding is a crucial supplement to domestic government budgets. Official development assistance (ODA) represents 12.2% of total education spending in low-income countries. However, this aid has been stagnating. For the past 15 years, ODA spending levels among OECD donors have remained at roughly 0.35% of their gross national income – well below the 0.7% target. The result: a widening financing gap precisely where it matters most.

The UNESCO Global Education Monitoring Report 2024 estimates that meeting SDG 4 by 2030 requires an additional $97 billion in annual financing – a gap that continues to grow rather than narrow. Meeting the SDG 4 benchmarks would require low-income and lower-middle-income countries to increase total education spending from all sources by between 4.2% and 6.5% of GDP over the period from 2023 to 2030.

Financial sustainability and private sector burden 🔗

When public spending falls short, households end up bearing more of the cost. Household spending on education in low- and middle-income countries averaged 2.1% of GDP – higher than the 0.8% average in high-income countries. In India specifically, private and public expenditure combined was equivalent to approximately 6.6% of GDP in 2018-19, but the bulk of that is household spending, not government investment. This effectively means that access to quality education is tied to a family’s ability to pay – a deeply inequitable arrangement.

What happens when education spending falls short 🔗

Learning poverty and quality decline 🔗

Reduced or inadequate education spending has direct consequences on the quality of learning. A World Bank analysis finds that in a typical low-income country, expenditure per child per year is between $50 and $80 – far below what is needed to ensure quality education. The result is high “learning poverty” – the proportion of children who cannot read a simple text by age 10. Countries that spend too little, spend inefficiently, or both, consistently show the worst learning outcomes.

The evidence is complex but clear in direction: the World Bank’s World Development Report 2018 found a weak correlation between raw spending and learning outcomes – but this is largely because spending without accountability and efficient delivery fails to reach classrooms. Money matters, but so does how it is spent. Teacher absenteeism, poor infrastructure, and misallocated budgets can absorb large investments with little result.

Impact on access and equity 🔗

When budgets are cut or stagnate, the most vulnerable populations suffer first. Globally, approximately 32 million girls of primary school age and 97 million girls of secondary school age are currently out of school. In conflict-affected countries, girls are 2.5 times more likely to be out of school than boys of the same age. These gaps are not coincidental – they are directly linked to systemic underinvestment in inclusive education infrastructure, female teachers, safe schools, and social protection programs.

During the pandemic, approximately 40% of low- and middle-income countries reduced their education spending – precisely at the moment when children needed support most. The World Bank estimates that pandemic-related education deprivations have put an entire generation at risk of losing up to $21 trillion in potential lifetime earnings.

The economic cost of not investing 🔗

The consequences of underfunding education extend well beyond classrooms. According to UNESCO (2025), out-of-school children and persistent educational gaps cost the global economy $10,000 billion a year. Conversely, if governments increased efforts to ensure every child was in school, future world GDP could rise by more than $6.5 trillion annually. Each additional year of schooling a person completes yields, on average, 10% more income – a return higher than average annual gains in the US stock market. These numbers make a compelling case: underspending on education is not fiscal prudence – it is long-term economic self-harm.

Bridging the gap: what needs to change 🔗

Closing the education financing gap requires action on multiple fronts. Domestically, governments must treat education as a non-negotiable fiscal priority – not an expenditure to be trimmed when budgets tighten. The World Bank recommends three key areas for improving spending efficiency: prioritizing universal foundational learning, improving teacher deployment and accountability, and strengthening budget planning and financial management. Increasing the volume of spending matters – but so does its quality and targeting.

For India, closing the gap between the NEP 2020 target of 6% of GDP and current spending levels of under 3% will require not just political will but a structural rethinking of how education budgets are allocated across central and state governments. Key barriers include limited fiscal space, governance and implementation challenges, and a need for a mindset shift that treats education as an investment rather than a cost. Globally, international donors must also step up – reversing the trend of stagnating ODA for education, particularly in the lowest-income nations where aid is most critical.

What do you think? Given that India’s combined public education spending has remained below 3% of GDP despite decades of policy targets calling for 6% – what structural changes would most effectively move the needle? And at the global level, as high-income countries reduce their share of education in public budgets, should international benchmarks like the UNESCO 4-6% GDP target be made legally binding rather than aspirational?

References

1. https://www.uis.unesco.org/sites/default/files/medias/fichiers/2025/08/EDS-6-Expenditure-Final-WEB.pdf
2. https://www.globalpartnership.org/results/education-data-highlights
3. https://documents1.worldbank.org/curated/en/099102824144527868/pdf/P50097819250a00ce1812018168df2deaa3.pdf
4. https://www.libertify.com/interactive-library/unesco-education-report-2024/
5. https://www.business-standard.com/education/news/union-budget-2025-education-allocation-growth-global-comparison-125020600340_1.html
6. https://www.oecd.org/en/publications/2025/09/education-at-a-glance-2025_c58fc9ae/full-report/key-system-level-indicators-of-education-finance_178e2c40.html
7. https://pib.gov.in/PressReleasePage.aspx?PRID=1946419&reg=3&lang=2
8. https://www.newsclick.in/budget-2024-25-insufficient-allocation-education-thwarts-nep-goals
9. https://opportunities-insight.britishcouncil.org/analysis/indias-national-education-budget-2023-24
10. https://janataweekly.org/union-budgets-2014-to-2024-article-10-the-education-budget/
11. https://www.csis.org/analysis/investing-quality-education-economic-development-peace-and-stability
12. https://blogs.worldbank.org/en/education/quality-education-requires-greater-and-more-efficient-financing
13. https://blogs.worldbank.org/en/impactevaluations/education-spending-and-student-learning-outcomes
14. https://educationforallinindia.com/promoting-education-expenditure-to-6-percent-of-gdp/