Investments in Higher Education and Economic Performance: Israel in an international perspective

The research investigates the relationship between investments in higher education and the economic performance of OECD countries through the use of a two-stage regression model and multivariate analysis. The findings suggest that an indirect relationship exists between higher education investments and economic growth. Evidence shows that higher education inputs translate into human capital outputs, and these turn back into inputs, which explain economic growth. The research supports evidence from other studies showing decreasing returns to scale in higher education. The elasticity of GDP per capita with respect to R&D expenditure per student and expenditure on teaching in research universities was found to be fairly large, with constant elasticity measuring 0.78, and point elasticities (when expenditure on teaching is held constant) ranging from 0.04 (Turkey) to 0.84 (Sweden).