Page 5 - Azerbaijan State University of Economics

Rza Mammadov, Erdal Gümüş: Secondary Education, Economic Growth and Finance

of the manpower needed by the economy. It was stated that studies on physical
capital were insufficient during the analysis and estimation of the determinative
factors of economic growth and development, and one of the determining factors of
the role of physical capital in the production process was its knowledge and ability.
It has been argued that the acquisition of this knowledge and ability can be obtained
through education. So, as Adam Smith put it, education was seen as an investment in
human and was considered as the concept of human capital (Woodhall, 1987).

Among the classical economists, R. Malthus, D. Ricardo, W. Feriur and J. S. Mill
emphasized, the relationship between education and economy. However, Russian
economist Strumilin studied a detailed account of the importance of the relationship
between education and the economy. Strumilin (1924: 29) analysed the effect of the
complex functioning of the education system on the productivity of the workforce and
total production. According to his study, the state's spending on vocational education for
one and a half years yields a 73% return to the national economy over the following 35.5
years. On the other hand, Schultz explained the relationship between education and
economic growth and he provided the concept of human capital to the literature. Schultz
(1961) studied that the obstacle of underdeveloped countries in the development process is
the quality of human capital, which is more important than the other factors of production.

The significance of education in the development process of a nation has been focused
in relevant literature. ‘Does education provide highly qualified manpower in the
development process?’. This qualified manpower owes its fast adaptation to the working
environment and innovations in education. Including the concept of human capital in
economic growth theories, education plays a positive and effective role in the
development process by affecting production in terms of process, quality and
component (Saygılı et. al., 2006: 25). Education is the most important factor in the
development of human capital. For this reason, countries want to reach a sustainable
level of economic growth can prioritize education policies. They allocate great shares to
education in public spending. According to Tural (2002: 193), if a large part of a
nation's educational spending is covered by the public, this provides equal opportunities
for income and positive externalities in social life. It also creates a decision-making
mechanism within the framework of knowledge based on the human capital market.
Finally, it provides educational planning application, through economics of scale.

In this study, the relationship between education and economic growth with the data
of 30 countries participating in the PISA 2015 exam has been investigated with three
variables. This research is important in providing empirical evidence. It provides an
international comparison between the variables used in the research and selected
countries. It is especially important in terms of being an econometric study within
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