DOI: https://doi.org/10.36347/sjahss.2025.v13i10.002

Pages: 368-382

The study examined how public spending affected the Human Development Index using fixed effects and system GMM. Using Fixed Effects estimators from 1991 to 2020 for 65 countries, the results indicate that government expenditure on education, healthcare, and final consumption significantly enhances the Human Development Index, while investment growth consistently contributes more to the HDI than economic growth. To address the potential endogeneity issue, we employ System-GMM for 61 countries from 2003 to 2020. The result aligns with the fixed effect model, indicating that public spending on education, health, and final consumption expenditure is consistently a strong and persistent predictor of HDI at a 1% significance level. Additionally, women's empowerment and access to ICTs are positively and significantly influenced by HDI, demonstrating the importance of digital inclusion and women’s empowerment. Income inequality significantly reduces HDI. These results demonstrate the importance of productive government expenditure in various sectors, redistribution, and human capital investment as tools for policymaking in promoting equitable and sustainable human development.