Education as a Determinant of the Economic Growth. The Case of Romania

Education is one of the most important factors of the economic growth in every country. In this paper we investigate the causality relationship between education, especially higher education, and economic growth in Romania for 1980-2013 time period. We used a vector error correction model to analyse the long run relationship between education and economic growth. As a measure for the economic growth we used GDP per capita and for education we used the number of students enrolled in higher education institutions and the public expenditures on education. We used data series for these variables available from World Bank, Eurostat and National Statistics Institute of Romania. In our econometric approach we checked the stationarity of the data series using ADF and Phillips-Perron tests and we tested if there is a cointegration relationship between the analysed variables using Johansen Juselius method. Our results showed that higher education have an important positive effect on economic growth.