Do Education Levels Matter on Indonesian Economic Growth?

Abstract

Arising from the questions "Would all types of human capital affect economic growth identically? And which type of schooling-primary, secondary, or tertiary-should public policy promote?", this study examines the nexus between different educational levels and Indonesia's economic growth over a reference period 1984-2014. During this period, education expansion took place at all three levels of education reflecting structural changes tied within the policies under the Millennium Development Goals (MDG's) as the key and powerful factor for sustainable economic development. The study applies the augmented Lucas endogenous growth model and employs the autoregressive distributed lag model. The empirical analysis reveals a long-run relation between education and economic growth. The estimated long-run and short-run elasticity of different education levels reveal that, overall, human capital structure in Indonesia is still at the stage of promoting economic growth and identifies tertiary education as the main level for development. The findings reveal that education level matters to economic growth. Further, the empirical evidence helps shed light on why empirical studies have failed to find a significant relationship between schooling and economic growth.

An Analysis of Intellecutal Potential and its Impact on the Social and Economic Development of European Countries

“…Furthermore, a close link to the educational component of human capital is most evident in the countries where intellectual potential has not yet fully developed, such as is the case in European countries (Haseeb et al, 2019). Based on case studies of the dynamics and factors affecting the development of individual countries, Benos & Karagiannis (2016), Kasri (2011), Mendy & Widodo (2018) have confirmed that education level is a significant factor for economic growth. At the same time, complex studies into the impact of the intellectual component of human capital on social and economic development in the form of multifactorial productivity require a multidisciplinary approach in which the links among these objects are emphasised in evaluations.…”

“…By analysing the impact of sectoral employment differences and accumulated capital at different levels (Formánek, 2019), it is also possible to acquire an understanding of the impact of factors affecting intellectual potential, including educational influences, on the macroeconomic performance indicator GDP per capita (Androniceanu et al, 2019). Mendy & Widodo (2018) also exemplify such possibilities in their study into the impact of different levels of education population. Even more pertinent to our study, Volchik et al (2018) focus specifically on tertiary education.…”

Circular economy as a strategic option to promote sustainable economic growth and effective human development

“…An important influence on economic growth has indirect factors, with immediate action: the size of aggregate demand, respectively, the absorption capacity of the internal market; the efficiency of the banking financial system; savings rate and investment rate; the international environment; labor and capital migration; state budgetary and fiscal policy. Among factors of economic growth intellectual potential has increasing influence on social and economic development (Androniceanu et al, 2020;Bilan et al, 2020;Kinnunen et al, 2019;Mendy & Widodo, 2018). Several authors consider that small and medium-sized enterprises are the main contributor to the economic growth (Krisnaresanti et al, 2020;Dvorský et al, 2020;Bilas et al, 2020).…”

Analysis of key university leadership factors based on their international rankings (QS World University Rankings and Times Higher Education)

“…The global trend of recent decades has been not only the increasing influence of universities on economic growth, but also the increase in their number, which has been observed in different countries and, of course, due to the growing need to generate new knowledge, innovate, and build human capital (Valero & Van Reenen, 2019). An assessment of the direct and indirect positive effects of this, which manifested itself in the economy, showed the need to consider the revival of universities as one of the main mechanisms for ensuring economic growth (Mendy & Widodo, 2018). From the perspective of countries and regions, this has drawn attention to ensuring leadership and competitiveness of universities in an increasingly open and competitive global educational services market.…”