The impact of education expenditures on economic growth: empirical estimation

Viktoriia D. Chekina, Olena A. Vorhach


The article analyzes and evaluates the dependence of population qualifications upgrading on the amount of higher education expenditure in Ukraine and certain foreign countries, and the impact of higher education on the economic growth is also grounded.

It is determined that the share of the population with higher education in Ukraine which is reflected in official statistics is growing every year. At the same time, over the past 5 years (2015-2019) the total cost on higher education in real terms were decreased by almost 50%, and to a greater extent it was made by the state, resulting in a reduction in the number of institutions and teachers of higher education. Against this background, a certain inertial increase in the share of highly qualified staff is still observed. This situation clearly contradicts the economic theory and practice of many European countries, where in connection with the Fourth Industrial Revolution the increase in financing of higher education in order to solve the problem of the shortage of STEM- specialists is recognized as highly relevant.

The analysis results of the impact of higher education financing on GDP growth in a number of foreign countries showed that there is a general trend with the higher expenditure on education corresponds to higher population qualification and larger size of GDP. However, no strong dependence of the populations' skills upgrading on education expenditure and no strong dependence of GDP growth on the population qualification upgrading in interstate comparisons has been established which is explained by the historical features of the development of individual economies, the specifics of national labour markets, etc. This conclusion is also confirmed by statistical analysis of individual EU member states, including those that had a planned economy in the past (Poland, Estonia, Czech Republic, Slovakia, Latvia, Lithuania, Slovenia). In many of them strong linear relationships were found between the population qualification level and higher education expenditures, and between GDP growth and the population qualification level.

On the basis of the analysis, taking into account the need for the accelerated development of national industry on an innovative basis, it is proposed to reconsider approaches to public financing of higher education in Ukraine and to stimulating the development of private financing in order to avoid irreversible deterioration in the quality of human capital.


4.0, smart industry, STEM staff, highly qualified staff, higher education, higher education expenditure, human capital, economic growth, GDP

Full Text:



Analytical Center CEDOS (2019). Analysis of Education budget for the 2013-2019 biennium. The initiative for the development of analytical centers in Ukraine. CEDOS. Retrieved from: [in Ukrainian].

Vyshnevskyi, V.Р., Vіitska, O.V., Vіitskiy, O.A., Vorhach, O.A., Harkushenko, O.M., Dasiv, A.F., Zanizdra, M.Yu., Zbarazska, L.O., Kniaziev, S.I., Kravchenko, S.I., Lypnytskyi, D. V., Madykh, A.A., Mazur, Yu.O., Nikiforova, V.A., Okhten, O.O., Sokolovska, O.V., Turlakova, S. S., Chekina, V.D., Shevtsova, H.Z., & Shchetilova, T.V. (2019). Smart industry: direct formation, problems and solutions. In V. P. Vyshnevskyi (Ed.). Kiev: Kyiv: Institute of Industrial Economics of NAS of Ukraine, 470 p. [in Ukrainian].

Vyshnevskyi, O. (2020). Impact of digitalization on industry: problems of definitionin EU countries. Econ. promisl., 1(89), рр. 31-44. doi: [in Ukrainian].

Verkhovna Rada of Ukraine (2017). Law of Ukraine: On education of September 5, № 2145-VIII. Verkhovna Rada of Ukraine. Retrieved from: [in Ukrainian].

World Economic Forum (2019). Fourth Industrial Revolution Beacons of Technology and Innovation in Manufacturing. White Paper. In collaboration with McKinsey & Company. World Economic Forum, 48 p. Retrieved from: (accessed: 10.07.2020) [in Russian].

State Statistics Service of Ukraine (2020). Retrieved from: [in Ukrainian].

The Cabinet of Ministers of Ukraine (2019). Resolution: On the distribution of state budget expenditures between higher education institutions on the basis of indicators of their educational, scientific and international activities of December 24, № 1146. The Cabinet of Ministers of Ukraine. Retrieved from: [in Ukrainian].

The Cabinet of Ministers of Ukraine (2020). Resolution: Some issues of introducing indicative cost on March 3, № 191. The Cabinet of Ministers of Ukraine. Retrieved from: [in Ukrainian].

NAQA (2020). Annual report of the National Agency for Higher Education Quality Assurance for 2019. In Sergey Kvit (Ed.). Kyiv: the National Agency for Higher Education Quality Assurance. 2020. 244 p. URL: [in Ukrainian].

Osvita (2015). The burden on university teachers will decrease. Higher education reform. Retrieved from: [in Ukrainian].

Osvita (2019). Minister of Education: we have too many universities. Higher education reform. Retrieved from: [in Ukrainian].

Pankova, O., Ishchenko, O., & Kasperovich, O. (2020). Labour and employment in a digital transformation: priorities for Ukraine in the context of global trends and formation of Industry 4.0. Econ. promisl., 2(90), рр. 133-160. doi: [in Ukrainian].

Ford, M. (2016). Rise of the Robots: Technology and the Threat of a Jobless Future. Moskow: Alpina non-fiction, 430 p. [in Russian].

Shvab, K. (2016). Fourth industrial revolution. Moskow: Eksmo, 138 p. [in Russian]. Stiglitz, J. (2014). Unemployment and Innovation. Retrieved from:" target="_blank"> (accessed: 23.04.2020).

Agolla, J. E. (2018). Human Capital in the Smart Manufacturing and Industry 4.0 Revolution. Digital Transformation in Smart Manufacturing, pp. 41-58. Retrieved from: (accessed: 10.07.2020).

Becker, G. (1964). Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education. New York: National Bureau of Economic Research, 187 p.

Becker, G. (1975). Investment in Human Capital: Effects on Earnings. Retrieved from: (accessed: 10.07.2020).

Benesovaa, A., Tupa, J. (2017). Requirements for Education and Qualification of People in Industry 4.0. Procedia Manufacturing, No 11, pp. 2195-2202.

Deloitte (2018). Preparing tomorrow's workforce for the Fourth Industrial Revolution. For business: A framework for action. Deloitte, 58 p. Retrieved from: (accessed: 10.07.2020).

Eurostat (2020). Population by educational attainment level, sex and age. Eurostat. Retrieved from: (accessed: 22.05.2020).

Frey, C., & Osborne, M. (2013). The future of employment: How susceptible are jobs to computerisation? Retrieved from: (accessed: 23.04.2020).

Grossman, M. (1972). On the Concept of Health Capital and the Demand for Health. Journal of Political Economy, No 2, pp. 223-255.

Hanushek, E., Jamison, D., & Jamison, E., Woessmann L. (2008). Education and Economic Growth. Education Next, 8(2), 70 p. Retrieved from: (accessed: 18.07. 2020).

IZA (2018). New Education Models for the Workforce of the Future. IZA Policy Paper, No 143, 14 p. Retrieved from: (accessed: 10.07.2020).

Kokotovic, F. (2016). A panel regression analysis of human capital relevance in selected Scandinavian and SE European countries. UTMS Journal of Economics, 7 (1), pp. 13-24. Retrieved from: (accessed: 12.07. 2020).

ManpowerGroup (2019). Humans Wanted: Robots Need You. Skills revolution 4.0. ManpowerGroup. Retrieved from: (accessed: 10.07.2020).

Nordhaug, O. (1993). Human Capital in Organizations: Competence, Training and Learning. Oslo: Scandinavian University Press, 288 p.

OECD (2017a). Education policy outlook: Latvia. OECD Publishing, Paris. 28 p. Retrieved from: (accessed: 20.07.2020).

OECD (2017b). Education in Lithuania. OECD reviews of national policies for education. 28 p. Retrieved from: (accessed: 20.07.2020).

OECD (2019a). Education at a Glance 2019: Latvia. OECD indicators. OECD Publishing, Paris. 10 p. Retrieved from: (accessed: 20.07.2020).

OECD (2019b). Education at a Glance 2019: Lithuania. OECD indicators, OECD Publishing, Paris. 6 p. Retrieved from: (accessed: 20.07.2020).

OECD (2020a). Educational finance indicators. Financial resources invested in education. Education and Training. OECD. Retrieved from: (accessed: 22.05.2020).

OECD (2020b). Productivity. Level of GDP per capita and productivity. OECD. Retrieved from: (accessed: 22.05.2020).

Pelinescu, E. (2015). The impact of human capital on economic growth. Procedia Economics and Finance, 22, pp. 184-190.

Radulescu, M., Fedajev, A., Sinisi, C. I., Popescu, C., Iacob, S. E. (2018). Europe 2020 Implementation as Driver of Economic Performance and Competitiveness. Panel Analysis of CEE Countries.

Sustainability, 10 (3):566, 20 p. Retrieved from: (accessed: 12.07.2020).

Romer, P. (1990). Endogenous Technological Change. Journal of Political Economy, 98(5), pp. 71-102.

Schulz, T. (1960, Dec.). Capital Formation by Education. Journal of Political Economy, 68(6), pp. 571-583.

Schultz, T. (1961). Investment in Human Capital. The American Economic Review, 51 (1), pp. 1-17.

Stiglitz J. (2014). Unemployment and Innovation. URL: (дата звернення: 23.04.2020).

Teixeira, A., Queirosb A. (2016, October) Economic growth, human capital and structural change: A dynamic panel data analysis. Research Policy, 45 (8), pp. 1636-1648. Retrieved from: (accessed: 12.07.2020).

The World Bank (2020). World Development Indicators database. The World Bank. Retrieved from: (accessed: 04.09.2020).

Thurow, L. C. (1970). Investment in Human Capital. Wadsworth Series in Labor Economics and Industrial Relations. Belmont, California, Wadsworth Publishing Company, Inc. 145 p.

UNESCO (2016). Education for people and planet: creating sustainable futures for all. Global education monitoring report. UNESCO Publishing, 595 p. Retrieved from: (accessed: 18.07.2020).



  • There are currently no refbacks.