The Effects of Public and Higher Education on the Economic Growth in Iran

The Effects of Public and Higher Education on the Economic Growth in Iran A. Naaderi, Ph.D. Assessing the effects of educational investments on economic growth is of special interest to both scholars and policy makers, yet the research findings in this area, especially in countries like Iran, do not provide the necessary platform for decision making. The present study not only assesses the effects of public education, as compared to higher education, on economic growth, but identifies the reasons by which the research findings are rendered useless. The statistical data provided by the Central Bank of Iran and the Iran Statistics Center indicate that any assessment of the impact of the relevant factors on economic growth is very sensitive to elements such as the structure of the model and the type of variables used; education brings about economic growth with positive external signs; different levels of education has different effect on economic growth; and from among all models fitted to the data only one renders itself as the most suitable wherein physical investment, educational investment, the rate of population increase, technological advancement and wear out are among the main factors affecting economic growth in Iran. Furthermore, the findings indicate that public education has a more significant effect on growth compared to higher education. Hence, further investment in this area would be wise. JEL: C22, E22, E23, J24, O41 Key words: economic growth in Iran, endogenous growth models, educational investment, sources of economic growth, external signs of human capital