Evaluation of the Impact of Value - Added Education on Economic Growth in Iranian Provinces

اقتصاد و توسعه منطقه ای

Article 8, Volume 30, Issue 26, February 2024, Pages 233-267   

Document Type: Original Article

DOI: 10.22067/erd.2024.80427.1162

Authors

Mobina Zarei^{* 1}; Seyed Parviz Jalili Kamju²; Mahtab Tahmasebi³; Ramin Khochiany²

¹Ph. D Student, Department of Economics, Urmia University, Urmia, Iran

²Assistant Professor in Economics, Ayatollah Boroujerdi University, Boroujerd, Iran

³M. S Student, Department of Economics, Ayatollah Boroujerdi University, Boroujerd, Iran

Abstract

 
1-INTRODUCTION
In the economy, education plays an important role in providing highly skilled human capital needed to create jobs, economic growth, and the welfare of individuals and society. Today, most economists believe that the lack of investment in human capital is the main reason for the low level of economic growth in developing countries, unless these countries use education and knowledge and promote the level of their professional skills. If they do not improve, the productivity and efficiency of labor and capital will remain at a low level and economic growth will be slow and with heavier costs. If the country has the required amount of human capital, it can be said that physical capital will be more productive. Human capital includes education, expertise, skills, and generally the quality of the workforce. Considering that one of the factors influencing the social welfare of countries is achieving a high economic growth rate, the assessment of the causes and factors affecting economic growth is always a special concern of economists, and several growth models have been designed for it.
 
2- THEORETICAL FRAMEWORK
Undoubtly development is necessary in all societies. Developed and developing countries use the same approach that can only be achieved through educational institutions. Therefore, education plays an effective role in improvement of societies to create continuous development in order to promote social and economic progress. Considering the importance of education costs for the development of countries' economies, it can be said that education costs help create wealth. The argument is that the ability to create, adopt, and improve technological and technical progress is associated with investment in human capital and the functioning of the educational system. Therefore, it is useful for countries to invest significantly in these areas in order to train the workforce and develop the necessary skills to increase economic growth and ensure the success of a country.
ncrease economic growth and ensure the success of a country.
3- MATERIALS & METHODS
The purpose of this research is to evaluate the effect of value-added education, high-level educational expenses and educational quality, trained workforce and capital stock on economic growth among urban households in the provinces of Iran in the period of 2006-2019. This research will use random dynamic panel by application of SAR spatial autoregression generalized moments model and with the use of Arellano-Bauer/Bundle-Band two-stage coefficients in order to estimate the econometric model.
In the spatial econometrics department, by forming the proximity matrix and then standardizing this matrix and finally by multiplying the standardized proximity matrix, a new variable is obtained in the dependent variable vector, which is called the spatial lag variable or the spatial lag variable, and thus with the presence of the lag variable spatial. The spatial econometric model is also dynamically estimated. In summary, all spatial models in the form of a spatial random dynamic panel model (SDPD) are as follows:
    
4-RESULTS & DISCUSSION
The results obtained from the model indicate that the independent variable of GMM has a positive and significant effect on economic growth, that is, part of the economic growth in these regions is due to their economic growth in the past years. The first spatial interval in the SAR model also has a positive and significant effect on the economic growth of other provinces. The added value of education has a positive and significant effect on economic growth with a coefficient of 0.12, when the added value of education increases, it means that the level of skill, knowledge and talent of the workforce increases, and the structure of the workforce leads to the use of skilled and capable personnel. The effect of human capital on economic growth will increase. Education expenditure also has a positive and significant effect on economic growth with a coefficient of 0.53. One of the ways to increase economic growth is creating a transformation in labor productivity and technological development. Promotion of the level of education requires investment in education and increasing educational facilities. Skilled and thoughtful manpower causes the development and expansion of the technologies produced and as the foundation of economic progress and development in the society, and thus by raising the level of education in the society, growth, the economy also increases. In Smith's main growth equation, labor force, land and capital stock are the main factors of production. Adam Smith explains growth as an endogenous phenomenon, according his point of view, economic growth depends on the decision and action of economic agents, especially their savings and investment behavior. Therefore, the capital stock has a positive and significant effect on economic growth with a coefficient of 0.0001, and the more the capital stock increases, the economic growth also increases. The labor force also has a positive effect on the economic growth of households by increasing it by a factor of 0.25. بیش ا
 
5- CONCLUSIONS         
Based on the discussions of the theoretical foundations and according to the results obtained from the model, it shows that the workforce and the quality of education have a stronger effect on economic growth than the capital stock. In other words, it can be said that economic growth is strongly influenced by the human capital of workers. Therefore, the government should allocate more funds to the education and training organization. Hence the education and training should improve the quality of its schools in various scientific fields, as well as the higher education should raise the quality level of universities in the regions and provinces, especially the deprived areas, and the graduates, in addition to obtaining a degree from their abilities and skills. It is necessary for them to benefit in their educational fields and be able to move them from traditional methods to advanced and modern methods by entering the industry and agriculture sectors and be able to bring their province to high economic growth and development. According to the first spatial break of SAR, the increase in economic growth and development in one province leads to the spillover of economic growth and development to the neighbors’ provinces.

Keywords

Economic growth; Education; Arellano-Bover / Blundell-Bond Two-Step; SGMM-DPD-SAR

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