The Mediating Role of Human Capital in the Relationship between Education Expenditure and Science and Technology Innovation: Evidence from China

Abstract

In recent years, China’s rapid economic development has been accompanied by an increase in education spending, resulting in the accumulation of human capital. However, there is ongoing debate regarding whether and how education expenditures have fostered innovation in science and technology (S&T). This study uses panel data from 31 Chinese provinces, cities, and autonomous regions from 2006 to 2015 to look at the relationship between education spending, human capital development, and S&T innovation. It seeks to shed light on this problem. Our results reveal that education expenditure has a significant positive impact on S&T innovation, and human capital accumulation plays a mediating role in this relationship. Specifically, an increase in education expenditure can not only enhance the innovation ability of the educated but also strengthen their ability to accept and apply new technologies, leading to the transformation and transmission of knowledge. Furthermore, our study shows that education expenditure has a greater impact on S&T innovation than capital formation. The findings of this study have important policy implications. Given that education expenditure is an effective means of promoting S&T innovation, it is recommended that the Chinese government continue to boost investment in education, enhance the convenience of education consumption, and advance education supply-side reform. Additionally, policymakers should consider the structure of education expenditures and how it affects innovation, as well as the different impacts of household and public expenditures, education consumption, and education investment on the economy. In conclusion, this study provides evidence supporting the important role of education expenditure in fostering S&T innovation in China. By investing in education, China can continue to build its human capital, promote economic development, and advance social progress.

Is increasing a share of R&D expenditure in GDP a factor in strengthening the level of innovation development in Ukraine compared with GII’s top countries?

“…In addition to business expenditures on R&D, scholars separately study the impact of education sector expenditures on R&D (Yu et al, 2023) However, based on the above, it is worth noting that most scientists have studied the role of R&D spending in qualitative or quantitative terms, primarily on economic growth. The impact of R&D expenditures on strengthening innovation development was practically not assessed, especially for Ukraine compared to key countries, according to the Global Innovation Index.…”

Knowledge creation, knowledge impact and knowledge diffusion: how do they connect with higher education?

“…In addition, numerous studies confirm that the level of education is essential in the formation of innovations, the accumulation of human capital and the socio-eco-nomic development of a region or country, the level of its national security (Samusevych et al, 2021;Cammeraat et al, 2021;Chentukov et al, 2021;Safarov et al, 2022;Karabayev et al, 2023). In particular, Yu et al (2023) argue that increased spending on education can increase the innovative capacity of human capital and enhance their ability to perceive and apply new technologies, leading to transformation and knowledge transfer. Here it is important to note that innovations in education have an impact on accelerating the achievement of sustainable development goals (Vorontsova et al, 2020;Dong et al, 2022), in particular, overcoming problems related to population migration (Pudryk et al, 2023), unemployment and labor market imbalance (Oliinyk et al, 2020), excessive consumption of natural resources and environmental pollution, etc.…”

Socio-economic profiles of countries - cybercrime victims

“…Yoshimori & Yoshimor (2022) found the influence of the development of cognitive skills in children on the digital phase of the economy. Some countries, such as China, understand the importance of digital education and are increasing spending on it (Yu et al, 2023). Also, within the framework of EU support, the concept of smart specialization began to be implemented to reform education and scientific research strategies aimed at the active implementation of information and digital technologies (Șavga, 2019;Şavga & Baran, 2022).…”