Page 16 - Azerbaijan State University of Economics

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

According to another result, education finance affects economic growth positively,
while secondary education affects negatively. This result can be explained by the public
policy model of Barro (1990). In the public policy model, public expenditures are
evaluated according to their usage areas. If public benefit is a priority, consumption
expenditure in terms of social benefit has a less positive impact on economic growth.
Public spending has a more positive impact on economic growth when investment
spending for the benefit of the state is a priority. From this perspective, public education
finance is considered as social benefit in countries with a high population growth rate.
Because the demand for education is high in these countries. In this case, public
education policy focuses on inequality of opportunity. Thus, it is aimed to spread the
positive externality of education. In this case, public expenditure is a consumption /
current expenditure. As public education expenditure; current expenditures such as
teacher salaries, teaching materials, and public expenditures of the school building etc.
may have a low level of positive impact on education financing growth. Thus, the cost
of human capital can increase for individuals and the working population can participate
in the production process with lower human capital. As a result, the effect of education
finance on education may turn negative.

Looking at the situation pre and post of the crisis 2008, post-crisis education finance
has a significant positive effect on economic growth. This situation coincides with
Keynes's (1936) economic growth process realized by state intervention. As a matter
of fact, according to the research findings, educational financing affects economic
growth positively and public expenditures increase with the development of
economic growth.

6. CONCLUSION
In the study, the relationship between education and economic growth has been
conducted in the axis of education, finance and growth based on secondary
education data. The data for the years 1998-2015 and exam scores of 30 countries
participating in PISA 2015 were used in the research. In the study designed with
panel econometric model, the variables were first made stationary with a difference
from first degree difference. The relationship among education, finance and growth
have been demonstrated by cointegration methods. DOLS and FMOLS methods
were used to determine the direction and value of the relationship. In the estimation
including the overall panel, the situation of 30 countries was evaluated separately,
whether to be above or below the OECD averages in PISA exam or to be before and
after the 2008 crisis. In general, there is a significant relationship between all three
variables. The fact that education affects growth and finance affects growth
positively reveals the importance of the relationship between education and growth.
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