The relationship between economic growth, development and education: 1990-2020 era

Economic development and growth are among the primary objectives of economic policies across all countries, regardless of their level of development. These elements are considered complementary for creating a sustainable economic system. Economic growth provides the necessary financing for development, while economic development ensures the sustainability of growth. Among the numerous factors influencing economic activities, the human factor is recognized as the most significant. In this context, the relationship between education, which enhances the productivity of the human factor, and economic development and growth is undeniable. Education improves labor skills, fosters entrepreneurship, and increases social welfare. This thesis aims to analyze the effects of education and its indicators on economic development and growth, and to propose potential solutions. The study utilizes annual data from 1990 to 2020 for Turkey. Six variables were employed, and three models were constructed. The Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) Unit Root tests were applied to determine the stationarity of the variables. The Fourier Engle-Granger Cointegration test was used to analyze the existence of a long-run relationship between the variables. Upon confirming cointegration, the Fully Modified Ordinary Least Squares (FMOLS) method was employed to analyze the long-run relationships. The data analysis revealed a long-term relationship between education and education indicators and economic development and growth. The findings indicate that economic factors such as capital investments, labor force participation, and school enrollment rates positively affect the Human Development Index (HDI), while the effect of education expenditures on the HDI is insignificant. Consequently, education indicators and investments should be evaluated separately according to the level of education.