I21 - Analysis of EducationReturn

Although there is a strong theoretical framework for the economic growth and its relationship with education, the empirical evidence of this relationship is rather scarce. In this paper we investigated the causality and the long-run relationship between economic growth and higher education in the Czech Republic and Romania, using data series for 1980-2013 period. We used a VECM to analyse the long-run relationship between higher education and economic growth and Granger methodology to test the causality between variables. The results showed that higher education has an important positive effect on economic growth, although the impact level of the higher education on economic growth is different in the two countries. We also showed that there is a causality relationship that goes from higher education to economic growth for both countries.

The paper poses the question whether the economics of science could be the key to economic methodology. First, the sociology of science, which tries to put science in social context, is described. Then, the economic approach to science inspired by Bartley, Wible, Tullock, Stigler and Becker is explained. We point out that knowledge originates in the competitive process of scientific criticism in similar way as economic wealth originates in the competitive market process and the competition among many individuals.

This paper examines the effect of schooling on economic growth. It tests the link between schooling and economic growth using the system GMM estimation for a panel of 86 countries in the years 1960-2005. Affirming the results of the previous literature the positive impact of schooling on growth has been confirmed. The paper presents two main findings. First, additional year of schooling contributes positively to per capita output growth. Secondly, high percentage share of population with no formal education results in economic growth slowdown.