Investment In Education Public Investment On Education Economics Essay


Today investment in education is one of the most important factors of the development in any modern country. Our paper finds out of the points of human capital and analyses the proceeds of investment in education. Investment in education is a necessary investment that certifies higher productivity in the economy. To measure the proceeds on the educational investment, the cost-benefit analysis is usually used including the calculation and assessment of all the relevant costs and benefits. Estimations show that the return on the investment in education is higher than that on the investment in physical capital. Investment on education has both private and public returns-individual and social. Individuals with more human capital manage to be very efficient at their employment search, and less suffer from unemployment. Most educated people have high labor productivity that effects on the profit of the firm and its market evaluation. Due to investment in education the profit recently, the macro-economic situation in most EU countries has changed significantly. At the EU level, in 2004 the main components of public spending were social protection, general public services and health, and education. It can change the priority set by an economy. It can reflect country-specific objectives in spending spheres. In 2005 nearly 90% of investment in education at European level was covered by public sources. All these transactions are included in the indicator on public investment as a percentage of Gross Domestic Product. There are many variations between European countries in this point. In 2005 percentage of GDP was higher than the EU average in 2004. Public investment on education can suggest a complementary outline on the public effort made by a country to support its educational system. Many European countries are trying to increase the public investment on education lately. In some countries (Romania, Hungary or Cyprus) the public sources allocated to education shown in comparative PPS have witnesses significant increases between 2000 and 2005 (over 10% annually). High standard annual increases in the absolute figures of public investment on education between 2000 and 2005 were noted as well in Ireland and Greece and in more than half of the Members States the standard increase was at least 5% annually.

1.2.Private investment on education

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Private investment on education is becoming important in Europe. Between 2000 and 2005 in almost all countries the private sources of funding for all compound levels of education have increased. In some countries (Finland Sweden) educational structures continue to be mostly financed from public sources and less than 5% is covered from private sources for another group of countries ( France, Italy, Lithuania, Poland) private sources of investment accounted for about 10% of total investment on educational institutions. In four member states (the UK, Germany, Cyprus, Slovakia) the investment in education from private sources was 16-20%. The evolution which is available at country level clearly describes the role of the indicators used in the model, thus other variations across countries can play a role in explanations of the results. Productivity of investment in education can be affected by different specific factors. More often these factors are beyond the control of public authorities but they are important in the analysis and neglecting them may lead to angled measures of efficiency. For example, the educational competence of adult population could influence the educational outcomes. Investment in education is beneficial in a variety of ways, both for individuals and for society as a whole. Secondary education has been displayed to contribute to individual returns and economic development. It is associated with advanced health, equity and social conditions. And the quality of secondary education affects the levels above and below it primary and terrier education. Education in enhances individual productivity, as measures by the well-known link between educational competence and personal income. At the national level education plays an important role in cherishing economic development.

2. The importance of investing in secondary education.

Secondary education and growth

Modern economies depend on the creation, acquisition, distribution, and use of knowledge and this demands an educated and skilled population. Besides there is growing affirmation that perhaps half or even more aggregate economic development is driven by increases in factor productivity rather than by factor increase in either capital or labor in this regard. In many countries the demand for workers with secondary schooling has been associated with skill- based technological change. Barro (1999) reducing a panel of about 100 countries observed between 1960 and 1995, finds that economic development is positively concerned to the starting level of overage years of adult male school attainment at secondary and higher levels. His explanation is that there is a strong effect of secondary and higher schooling on the loosing of technology, developing countries may be able to achieve increases in factor productivity through technology transfer from global "leaders". It may happen through trade, foreign direct investment, and learning through international supportive chairs. Much of the technology developed in the leader countries is very skills-intensive. Secondary education is a basic part of a virtuous circle of economic development within the context of a world-wide knowledge economy. Many studies have pointed that a large pool of workers with secondary education is essential for knowledge spillover to take place and for captivating imports of technologically advanced goods and foreign direct investment. In a study on education and technology gaps in Latin Americade Ferranti found that the amplitude of the difference in computer penetration between Latin America and the East Asian "tigers" can be explained not only by differences in the share of trade with OECD but also, and most important by the proportion of the workforce with secondary schooling. This explains why the demand for educated and skilled workers has not increased in Brazil, because it has lower schooling levels compared with other countries in Latin America. Historically, the countries that have experienced the most rapid increases in educational achievement as well as outstanding economic. Performance, have pursued balanced upgrade. Investments in secondary school can also be upholder on the basis of divisional arguments, although the case here is somewhat abstractive. Further research is important to establish the distributional conclusion of secondary school expansion. Children who receive more education now may have higher income in the future, and investments in schooling can change the future distribution of per capital income or of consumption. "Simple" simulations of the effect of educational expansion on the Gini coefficient are feasible. Such simulations essentially compare the present distribution of income with the distribution of income if sm additional number of workers in the future are more educated. Unfortunately, these simulations allow only very rough measures of the impact of school expansion on distributional parameters. Expounding the coverage of secondary school, other things being equal will depress the income of workers with secondary education. The extent of changes of educations depends on the degree to which workers with secondary educations are substitutes in production education for those with primary or university education.

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The exact value of it in developing countries is largely unknown.. There has also been an alteration in the composition of government funding, as more states began to invest in pre-k education for 3-an-4 year olds. Now states provide 15 percent of the total and the federal government provides 25 percent. States have become creative more and more independent in choosing educational mode. However, due to some important changes in the whole, states are in a budget squeeze, and this has limited financing for early care and education(they are low income parents, stay off welfare and care for their children)

Conversely, the less-well qualified are facing deteriorating job prospects. Across OECD countries, 42% are not employed because of a lack of the upper secondary education. If the demands for education and qualifications continues to rise as labor market prospects weaken. Our research also shows that the reality is that participation among people with strong proficiency is significantly higher than among the least qualified, such that these opportunities often do not reach those who need them most.

The current attention on efficiency and productivity of school education is important and necessary, especially to parents, but it can not be mentioned for adequate government funding of schooling goals Governments are responsible for demonstration of the value for money in public spending. Outgoings on schooling should be viewed as an investment in the future not a drain on the public purse.

Demonstrating value for money in public spending can not be the means or the ends of schooling.

Building human capital through educational development, advancing technology, and improved capital facilities to foster professional skills is important but hard to measure.

2.2. The soaring demand for quality in secondary education.

Developing accenting on technologies, pathways and vocational education in secondary schools demands additional funding. Schools can practice investment shortages particularly if required to comply with TAFE facility standards. If distinct accountability existed the whole community would have a greater appreciation of schooling cost and could see the need for greater investment of public funds for school.

Education is a fundamental right for every man and a key to the future of a modern country. It has its price, everywhere and at any time. But the only thing more valuable than investing in education is not it. Inadequate education produces high costs for society, e.g. in the spheres of public spending, crime, health and economic growth. Any country must help its children to achieve the competencies needed for a self-fulfilled life in economic independence. However, the general challenges in the field of education differ among continents and countries. The changing in industrial situation faces the impact of demographic change as a lack of skilled labor and ageing societies. Emerging countries need to come up with a solution for a growing demand in education. In some countries it is still not a given that every child has the right to go to Scholl or other kind of education institutions and get most part of their population can not read or write.

But in spite of it there are also common demands. The accession of educational status is a global problem; it depends on socio-economic database and on the education status of one's parents. It remains a great demand for people all over the world to improve the chances of those children lost to incompetent education. But education budgets are limited-especially in times of economic difficulties. Where must we invest most in the field of education. Firstly, investing in early education has the highest comeback. Early investment intensify equal opportunities and higher achievement at the same time as shown by Nobel Prize winner James Heckman.

More effort is necessary to decrease inadequate education and more money should be put into programs for the share of children lacking behind. Research shows that inadequate education is a problem of the whole society-even the elites-and that the whole society benefits from minimizing the share of low-educated people. But is this argument convincing enough to re-allocate resources away from privileged to disadvantaged parts of society? How can we invest in more quality in education? Education is and remains one of the most important duties of any government. It is a public responsibility to provide access to high quality education for everyone. Therefore, governmental investments need to assure a good educational infrastructure for lifelong learning. However, it should be discussed how private organizations, companies and non-profit organizations can offer an additional supply. Can they become substitutes or should they rather function as supplements to public institutions? Intelligent financing concepts should be based on needs and specific background rather than distributing untargeted subsidies. New concepts of resource distribution require a greater transparency. But what should this transparency look like? Will external accountability enhance quality or should we focus more on capacity building and self-assessment to improve the education system?

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