Empirical Evaluation of the Education Expenditure Impact on Economic Growth

Abstract

This study expounds empirical evaluation of (a) the interrelation between higher education expenditure and the share of highly qualified employed population of Ukraine, (b) the dependence of the population qualification level on the higher education expenditure in foreign countries and (c) the dependence of these countries’ GDP on the qualification of people. It has been hypothesized that an increase in funding for higher education contributes to the growth of the share of highly qualified population and the GDP volume per capita. The regression analysis results indicate inverse dependence of the population's qualification on real expenditure on higher education in Ukraine, that is, as the expenditure decreases, the share of population with high qualification increases, while the number of higher school teachers goes down. This situation is inconsistent with economic theory and is fraught with long-term adverse consequences for the national economy. The analysis of the average figures in 24 foreign countries has not revealed a pronounced dependence of the population qualification on expenditure on higher education and that of GDP on qualification. Nevertheless, the general trend is observed, i.e., in the countries with heavier expenditure on higher education there is a higher percentage of qualified population and higher GDP. The same trend, but in a more explicit form, has been established based on the results of regression analysis for the individual EU countries, confirming the research hypothesis.