Higher Education Funding and Economic Growth: Empirical Evidence from Croatia

Abstract

Deprived of investment in education, no country can expect sustainable economic growth and development. Higher education is particularly a priceless tool in today's era of globalization that requires continuous education to keep up with new knowledge. According to UNESCO (2014), higher education is no longer a luxury; it is essential to national, social and economic development. The impact of education on economic growth is possible to observe within the so-called ‘education led growth hypothesis’. The main aim of this paper it to analyse the higher education size and structure, model and financing sources in Croatia and to test the ‘education led growth hypothesis’ on the example of Croatia. The study will apply the Granger causality test to evaluate if there is any causal relationship between investment in higher education and economic growth in Croatia.