HIGHER EDUCATION EXPANSION AND ECONOMIC GROWTH IN JAPAN AND SOUTH KOREA

The concept of linking higher education and economic growth was diffused throughout the world in the 20th century. Responding to the needs of industries during that period, higher education expanded approximately 200 times beyond the enrollment level in 1900 (Schofer & Meyer, 2005). Empirical studies dealing with the individual benefit of higher education have flourished but little was known about the effect of higher education composition on economic growth. This research investigates contributions of higher education composition—institutional sector and major—to the growth of national wealth.\ud This study chose Japan and South Korean cases that exemplify rapid growth in the economies through higher education development. The study collected the panel data about higher education and the economies from 1959 to 2009 for Japan and from 1965 to 2011 for South Korea and applied an ARIMA model regression for time series analysis. The effect of public and private sectors on overall economic growth and of four major groups on GDP per capita and GDP sectors—agriculture, industry, service et al.—were examined.\ud In result, Japanese and South Korean higher education showed a positive effect on their economic growth, and a bidirectional relationship of higher education development and economic growth was examined in both countries’ industrialization periods. The public sector in Japanese higher education contributed to their economic growth. Among four major groups, the Japanese science major group had a positive effect on the increase of their GDP value added by industry and service et al., but the South Korean science major group showed the least effect on their economic growth among four major groups. In South Korea, the social science major group contributed to the economic growth through affecting on the increase of their industrial and service GDP. For deeper understanding about the relationship between higher education composition and economic growth, this study suggests an analysis on the effect of institutional levels as well as major composition in higher education on economic growth