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State funding of education as a factor of economic growth

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  • N. Nazukova

Abstract

The main approaches to the analysis of the impact of education on economic growth consist in assessing the connection between economic growth indicators (GDP/GDP growth per capita) and three groups of educational indicators: quantitative ones (educational attainment – coverage of population by an education level), qualitative ones (standardized grades of students) and the amounts of educational funding. At the same time, educational attainment and the quality of knowledge obtained depend on the amount of educational funding. The article proves that there is a significant positive relationship between indicators of state funding of higher and secondary education per student and a country’s total factor productivity. At the same time, there is no unified optimal scheme for the distribution of state funding between the education levels: to accelerate the pace of economic growth, some countries prioritize primary education, others – secondary or higher education. As stated in the article, this depends on the country’s technological level, the existing educational and professional structure of human capital, and such contextual factors, as the quality of institutions in the country. The article discusses practical approaches to financing various levels of education at the expense of public and private funds, where the latter are presented in the context of private funds, and state transfers to families with students – in public to private transfers. The article concludes that the leveling structure of state educational funding – both direct and in the form of public to private transfers – indicates prioritization of the specific educational and professional composition of human capital. The results of the study indicate the need to harmonize approaches to budgetary processes in the field of educational funding with a country’s technological, qualificational, and institutional prerequisites, as well as with strategic forecasts of the socio-economic development of national economies.

Suggested Citation

  • N. Nazukova, 2020. "State funding of education as a factor of economic growth," Economy and Forecasting, Valeriy Heyets, issue 2, pages 97-119.
    • Handle: RePEc:eip:journl:y:2020:i:2:p:97-119
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