Page 12 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.77, # 1, 2020, pp. 4-18

According to the findings of countries with higher scores than the OECD average on the
PISA exam, the increase in the number of students enrolled in secondary education
negatively affects education financing, and the increase in education financing affects
secondary education negatively. This effect is on the average -0.46 level of secondary
education in education finance. From financing to secondary education, it is -0.24.
When looking at the relationship between finance and growth, both variables affect each
other positively. While the 1 % increase in financing with 1% significance increases the
growth at an average level of 0.12. 1% increase in growth increases education finance
0.65 according to the DOLS method and 0.95 according to the FMOLS method. Even
though the effect of growth on education is positive, it is not statistically significant.
However, according to FMOLS method, the effect of education on economic growth of
0.18 and positive. In countries with lower scores than the OECD average, the impact of
financing of education is the same as in the other country group. However, it has a lower
coefficient. The effect of education on financing is only negative at -0.41% at 10%
significance level according to the DOLS method. The relationship between finance and
growth affects each other positively. However, it is at a lower level compared to the
situation in top performing countries.

Considering the situation before and after the crisis, financing in the pre-crisis
situation affects education at the level of 1% in the DOLS method -0.20, and -0.21
in the FMOLS method negatively. In both periods, growth has a positive effect on
finance. In the pre-crisis DOLS method and 5% significance, this effect is 0.63. In
FMOLS method and 10% significance level, the effect was found to be 0.61. Post-
crisis growth is seen as 1,17 in the DOLS method and 1,32 in the FMOLS method,
with a 5% significance level of financing. Education before the crisis has a negative
impact on growth. In the DOLS method, this effect is not statistically significant.
However, according to the FMOLS method, it is -0.09 at a 10% significance level.
Financing does not affect growth statistically. While the impact of education on
growth in the post-crisis situation is not statistically significant, financing has a
positive effect on economic growth. This effect is 0.12% in DOLS method and 0.13
in FMOLS method. Besides the above-mentioned coefficient estimation, education,
financing and growth relationship have been handled separately for 30 countries.
The situation on a country basis is given in Table 6.

12