Ýêîíîìè÷åñêèå
íàóêè/3.Ôèíàíñîâûå îòíîøåíèÿ
PhD (Economics), Ass. Prof. Konstantiuk N. I.
PhD (Pedagogics),
Ass. Prof. Babiak J. V.
Ternopil Ivan Pul’uj
National Technical University,
Return
from investment in higher education
The importance of investments in the national higher education system
today is not fully appreciated by government officials at the state and
regional levels. Unfortunately, in most cases it is seen as expenses of the
state or local budgets, which can be viewed annually downward. However, according
to the calculation of European countries the correlation of the expenses for
education and resulted economic effectiveness is 1:4, the labour
efficiency of the professional with higher education exceeding in 10-11 times
the expenses for his training.
Interest in the role of higher education in the development of national
and regional economies is not new, but it has increased in recent years. This
is due to technological revolutions and the expansion of the knowledge economy
that creates and transforms knowledge into innovation. Economic efficiency,
social and individual benefits of investment in higher education were proved.
The role of higher education in the development of the economy of the country
and certain regions was considered. Also, short-term benefits of investments in
higher education in the form of growth of population employment and benefits in
long-term prospects, manifested in increasing professionalism and competence
and consequently, an increase of workers’ income were considered. Moreover,
steady investment in higher education can generate more tax revenue, increase
savings and investments and can lead to a civil society of higher quality. In
addition, higher education can also improve the nation’s health and help to reduce
the criminal situation in the society.
Higher education is the key to state competitiveness and a strong
economy, and continued investment in education is needed in order to support
improvements in student achievement and put economy on the path to sustained
growth. We must continue to invest in education in order to create a system
that is more equitable and that produces students who are more competitive in
the global marketplace.
In the short-term prospects, investments in higher education generate
population employment growth, manifested in the creation of new jobs in those
sectors of economy that are intended to ensure the normal functioning of a
student life. That is, investments in higher education leads to a revival of
economic activity in such areas as purchase and rent of real estate, sale of
food and industrial goods, servicing (cooking, transport, communications,
consumer services), banking services and so on. Rising of population employment
and creation of new jobs results in recycling of revenue from these jobs. This
stimulating effect on the economy of the state and certain region is similar to
what can often be achieved through private investments, but the differences are
significant, especially in terms of how such investments can benefit the
greatest number of citizens and society in general.
In the long-term prospects, investments in higher education allow to
form a highly qualified workforce that is able to produce competitive products
and provide qualitative services, thus ensuring economic growth. Employees who
have received good education are trying to find a better and well-paid job. As
a result we have growth in population earnings, which leads to growth of taxes
at the local and national levels. High population earnings are the basis for
growth in consumption, which are indirect investments to the real economy
sector.
A significant advantage to the state and its welfare is also a fact that
the unemployment rate is much lower among people with high levels of education,
and it saves public funds for the payment of various assistances due to
unemployment and other social programs.
Nowadays the Organization of Economic Cooperation and Development has
determined the profit rate, when the person gains the university degree.
According to these estimates, investments in education give a return from 6% to
24% depending on the country and the age of people who get a higher education.
It should be noted that the profit rate of the investments in education is
rather high for both the state and the individual. In some cases it exceeds the
average profit rate of industrial enterprises. Such type of investments is
reasonable in all respects as they always result in economic and social
advantages.
Higher levels of educational attainment tends to translate into higher
income, on average. In this sense, investments in education generate public
returns as tertiary-educated adults pay higher income taxes and social
insurance payments and require fewer social transfers.
Higher education is a critical mechanism for individual socioeconomic
advancement and an important driver of economic mobility. Moreover, a
well-educated workforce is vital to nation’s future economic growth. Companies
and businesses require a highly skilled workforce to meet the demands of
today’s increasingly competitive, global economy.
About 25% of
tertiary-educated individuals earn more than twice the median. They are
substantially less likely to be in the low-earnings category than those with
below upper secondary education. About 10% of tertiary-educated workers earn at
or below half the median, compared with about 25% of workers with below upper
secondary education. Only 3% of those workers earn more than twice the median.
Higher levels of education also correspond to improved health and lower
rates of mortality, and lower rates of crime. Research has also shown that
greater parent education correlates positively with children’s health,
cognitive abilities, and academic achievement. The children of more highly paid
workers are also less likely to grow up in poverty, less likely to be poor as
adults, and more likely to be better educated and paid as adults, and therefore
less likely to rely on public
assistance. The benefits of a more educated population accrue not just to the
more educated workers, but to future generations and to the broader society.
References:
1.
Nataliia Konstantiuk. Higher Education as a Determinant of
Sustainable Economic Development of
2.
OECD (2015), Education at a Glance
2015: OECD Indicators, OECD Publishing. – 568p.