ERG SES E 14, Research in Higher Education
Over the past three decades, traditional economy with manual labour as an important factor of production is being replaced by knowledge-based economy that considers knowledge and information a key factor of economic prosperity (Cader, 2008). Expansion of technology and innovation has become a feature of developed economies. Innovation has become a key competitive advantage in global markets. In such setting higher education is given special attention since colleges and universities are apparent motors of innovation and knowledge generation. Therefore, currently investment in higher education is a widely discussed topic among researchers and policymakers globally. Kazakhstan is not an exception. Despite government’s efforts in building human capital capacity since gaining independence, the Kazakhstani higher education system does not meet modern requirements of the knowledge economy.
Presently, higher education development is one of the core issues in enhancing competitiveness of Kazakhstani economy. According to the recent OECD report (OECD, 2017), public expenditure on tertiary education is about 0.3% of Gross Domestic Product (GDP). Kazakhstan is recommended to increase public investment in tertiary education (OECD, 2017). However, it is difficult to make decisions when the return on investment in higher education has not been estimated for Kazakhstan.
The purpose of this research is to shed light on the return on investment in higher education in Kazakhstan through examining case of educational programs designed for State program of industrial-innovative development (SPIID-2) for 2015-2019 (SPIID, 2014).
Apparently, the amount of money spent on education by government is an important aspect of public funding. Nevertheless, the question of how money spent is even more essential in solving problems of inefficient allocation of public resources (Hummel-Rossi & Ashdown, 2002).
In order to meet the purpose of the research, the following research questions are to be answered:
1) What is the return on investment in (graduate) educational programs of Kazakhstani universities?
2) How the government funds allocated to base universities are being spent?
The human capital theory serves as a ground theoretical framework for this study. Human capital theory holds that investments in people result in economic benefits both to individuals and the society (Schultz, 1961; Becker, 1964). The economic impact of investments into educational system comes to light in a longer term in comparison with physical capital (Hanushek and Woessmann, 2015).
Since the introduction of human capital theory, the expenditures on education, training and health are treated as investments. The studies on economics of education present strong evidence on the relationship between investments in education and the economic growth (Beddies, 1999; Gauri, 2004). The better educated individuals contribute to the economic welfare of the country by being more productive and efficient workers.
It is not possible to embrace the whole higher education system of Kazakhstan in one study. Since the educational programs for SPIID-2 are funded by budget separated from mainstream master programs, it is less complicated to study the costs and benefits of investments into those programs. Therefore, educational programs designed for SPIID-2 were chosen as a case to study within the scope of this research work. The global financial crisis and the recent oil crisis have shown that Kazakhstan’s overreliance on abundance of natural resources has made its economy susceptible to global markets. “State program of forced industrial-innovative development of Kazakhstan for 2010 – 2014” was developed for accelerating the industrial progress and diversification of economy. During its implementation, the problem of human capital scarcity was revealed. The next phase called “State program of industrial-innovative development-2” (SPIID-2) for 2015-2019 acknowledged this issue. Government along with eleven Kazakhstani higher educational institutions established master programs dedicated to preparation of manpower for SPIID-2. To ensure the holistic view of the SPIID-2 educational programs effectiveness, the study will employ both qualitative and quantitative methods. Interviews will be conducted with the administration (rectors or vice-rectors) of five HEIs participating in the program. Survey will be distributed to students and alumni of educational programs developed for SPIID-2 programs in order to acquire information on private benefits from enrolling the educational programs. Since education in the human capital framework is considered an investment, it is reasonable to gauge the input and the output. Cost-benefit analysis (CBA) is a method used to compare the costs incurred during the investment with the generated profit. Although CBA is limited to measure costs and benefits in monetary terms, it has been broadly employed to assess the investments into human capital, including education and health (Woodhall, 2004). Moreover, the objectives analysis of the program will be assessed for achievement.
Importance of human capital has been extensively discussed in the literature and confirmed by various empirical studies. Empirical research shows a positive impact of acquisition of knowledge on personal earnings (Allen, 1998; Stroup and Hargrove, 1969) and employability (Allen, 1998; Asafu-Adjaye, 2012). Therefore, increased wages and higher chance of employment of graduates are expected. Return in investment in education turn out to be context-specific. Thus, it is crucial to research the costs and benefits of investing in higher education in Kazakhstan because there is lack of studies conducted for this country.
Allen, R. (1998). The Employability of University Graduates in the Humanities, Social Sciences, and Education: Recent Statistical Evidence. Asafu-Adjaye, P. (2012). Private returns on education in Ghana: estimating the effects of education on employability in Ghana. African Sociological Review/Revue Africaine de Sociologie, 16(1), 121-139. Becker, G. (1964). Human Capital National Bureau of Economic Research. New York. Beddies, M. C. H. (1999). Investment, Capital Accumulation, and Growth: Some Evidence from the Gambia 1964-1998, (No. 99-117). International Monetary Fund. Cader, H. A. (2008). The evolution of the knowledge economy. Journal of Regional Analysis and Policy, 38(2), 117-129. Gauri, V. (2004). Social rights and economics: Claims to health care and education in developing countries. World development, 32(3), 465-477. Hanushek, E. A., & Woessmann, L. (2015). The knowledge capital of nations: Education and the economics of growth. MIT Press. Hummel-Rossi, B., & Ashdown, J. (2002). The state of cost-benefit and cost-effectiveness analyses in education. Review of Educational Research, 72(1), 1-30. OECD (2017b), Higher Education in Kazakhstan 2017, Reviews of National Policies for Education, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264268531-en Schultz, T. W. (1961). Investment in human capital. The American economic review, 51(1), 1- 17. SPIID-2. (2014). State Program of Industrial-Innovative Development of the Republic of Kazakhstan for 2015-2019. Astana. Stroup, R. H., & Hargrove, M. B. (1969). Earnings and education in rural South Vietnam. Journal of Human Resources, 215-225. Woodhall, M. (2004). Cost-benefit analysis in educational planning. Unesco, International Institute for Educational Planning.
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