This empirical investigation examines the causal relationship between public libraries, literacy level, and economic productivity measured by gross domestic product per capita using path analysis. It is hypothesized that public libraries along with school libraries contribute to countries' literacy levels which in turn contribute to economic productivity. Cross‐country data were gathered from a number of sources including the Statistical Abstract of the World and Unesco's Statistical Yearbook. The results show that the path coefficients of public libraries and literacy levels are statistically significant at the 0.05 and 0.0001 levels respectively, strongly confirming the hypothesis. This study demonstrates that public libraries contribute to economic productivity through their various literacy programs and argues that cutting financial support for public libraries as practiced by many municipal governments is a short‐sighted policy and will adversely affect economic productivity of countries in the long run.
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