A relationship between education and economic growth for specific OECD countries: an econometric analysis for 2002 - 2012

Economic growth is an important policy objective. Many of economists pay attention to determinants of economic growth and diverse performance of economies in recent years. Human capital is one of the most important determinants in economic growth. Human capital involves education spends in order to increase knowledge, skills and abilities of individuals. These education expenditures are also investments on human capital. Main mission of Organization for Economic Cooperation and Development (OECD) is to maintain financial stability of countries in addition to achieve sustainable economic growth, employment, and higher living standards. In this sense, OECD gives a significant attention to human capital in order to achieve its mission. OECD countries are directed to increase their human capitals by concentrating on higher education in recent years. The main purpose of this dissertation is to analyze relationship between education and economic growth for OECD countries between 2002 and 2012. Education expenditures and schooling rates in higher education are primary variables for OECD countries. This study employ a panel data analysis in order to present the effects of education expenditures and schooling rates on the economic performance of OECD countries. GDP per capita levels are taken as dependent variable to measure influences of education expenditures and schooling rates. Thus, there is a positive relationship between education and economic growth for OECD countries. In other words, increases in education expenditures and schooling rates in higher education provide higher GDP per capita in OECD countries between 2002 and 2012. On the other hand, there is a negative relation between GDP per capita and schooling rates in primary and secondary education. Finally, the effect of education expenditure on GDP per capita is higher than schooling rate in higher education. In consequence, education expenditures are important for achieving sustainable development in OECD countries.