Tleppae , A. M.; Zejnolla, C. Ž.; Tyulyubaye a, Dina a; Aben, Assel
A icle
Educa ion, ins i u ions, and in es men as de e minan s
o economic g ow h in Cen al Asia and he Caucasus: A
panel da a analysis
Economies
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Sugges ed Ci a ion: Tleppae , A. M.; Zejnolla, C. Ž.; Tyulyubaye a, Dina a; Aben, Assel (2025) :
Educa ion, ins i u ions, and in es men as de e minan s o economic g ow h in Cen al Asia and he
Caucasus: A panel da a analysis, Economies, ISSN 2227-7099, MDPI, Basel, Vol. 13, Iss. 3, pp. 1-19,
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Ci a ion: Tleppaye , A., Zeinolla, S.,
Tyulyubaye a, D., & Aben, A. (2025).
Educa ion, Ins i u ions, and
In es men as De e minan s o
Economic G ow h in Cen al Asia and
he Caucasus: A Panel Da a Analysis.
Economies,13(3), 78. h ps://doi.o g/
10.3390/economies13030078
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A icle
Educa ion, Ins i u ions, and In es men as De e minan s o
Economic G ow h in Cen al Asia and he Caucasus: A Panel
Da a Analysis
A sen Tleppaye 1,* , Saule Zeinolla 1,*, Dina a Tyulyubaye a 1and Assel Aben 2
1Facul y o Economics and En ep eneu ship, Kazakh-Ge man Uni e si y, Alma y 050010, Kazakhs an;
[email p o ec ed]
2Economic Resea ch Depa men , The Kazakhs an Ins i u e o S a egic S udies Unde he P esiden o he
Republic o Kazakhs an, As ana 020000, Kazakhs an; [email p o ec ed]
*Co espondence: [email p o ec ed] (A.T.); [email p o ec ed] (S.Z.)
Abs ac : Economic g ow h and de elopmen a e key o socie al well-being, ye eme ging
economies in Cen al Asia and he Caucasus ace challenges such as labo ma ke ine -
iciencies, une en capi al dis ibu ion, and weak ins i u ions. This s udy examines he
impac o educa ion, ins i u ional quali y, capi al in es men , and labo o ce dynamics on
economic g ow h in he egion om 2010 o 2023. Using panel da a analysis, including
uni oo es s, coin eg a ion es s (Ped oni and Kao), and FMOLS/DOLS es ima ion, he
indings e eal ha while educa ion and capi al in es men d i e g ow h, ins i u ional
ac o s show mixed e ec s. Highe e ia y educa ion en ollmen co ela es wi h long- e m
economic expansion, whe eas weak go e nance and co up ion hinde p og ess. This s udy
con ibu es o he li e a u e by p o iding empi ical e idence on educa ion and ins i u ional
oles in economic pe o mance, o e ing policy insigh s o sus ainable g ow h. The esul s
highligh he need o go e nance e o ms, educa ion quali y imp o emen s, and labo
ma ke adap abili y o enhance economic po en ial.
Keywo ds: human capi al; e ia y educa ion en ollmen ; panel da a analysis; FMOLS
and DOLS es ima ion; ins i u ional amewo ks; labo ma ke dynamics; capi al o ma ion;
highe educa ion policy; sus ainable economic g ow h
1. In oduc ion
Highe educa ion is a c i ical ac o o economic de elopmen , especially in egions
wi h dynamic economies such as Cen al Asia and he Caucasus. In he con ex o global
compe i ion and echnological p og ess, in es men s in educa ion a e becoming an in eg al
pa o a long- e m g ow h s a egy. They help o build human capi al, inc ease labo
p oduc i i y and c ea e an inno a i e economy. Howe e , he e ec i eness o such in es -
men s depends no only on hei olume bu also on he quali y o educa ional p og ams,
he le el o eache aining, and he ins i u ional en i onmen .
Resea ch con i ms ha public in es men in highe educa ion can ha e a signi ican
impac on economic de elopmen , bu i s impac is de e mined by many ac o s. Fo
example, Solmon and Fagnano (1993) highligh ha human capi al g ow h is a key d i e
o economic mode niza ion and has a s onge impac on economic g ow h han physical
capi al accumula ion. The analysis o A man e al. (2020) shows ha egions wi h high
le els o skilled labo show highe a es o economic de elopmen . Howe e , simply
inc easing he numbe o uni e si ies does no lead o signi ican economic g ow h unless
accompanied by an inc ease in eache aining and imp o ed educa ional s anda ds.
Economies 2025,13, 78 h ps://doi.o g/10.3390/economies13030078
Economies 2025,13, 78 2 o 19
Global expe ience also shows ha he mechanisms o highe educa ion’s impac
on he economy may di e depending on he le el o a coun y’s de elopmen and i s
educa ion policy. Fo example, Wang (2021), in his s udy o he Chinese economy, iden i ies
h ee key mechanisms h ough which highe educa ion con ibu es o economic g ow h:
de elopmen o science and echnology, op imiza ion o human esou ces, and di ec
con ibu ion o GDP. In u n, Lobo (2015) analyses he impac o highe educa ion on
India’s economic de elopmen and concludes ha low highe educa ion en olmen a es
(GERs) and inadequa e eaching quali y a e impedimen s o economic g ow h. Unlike in
China, whe e go e nmen suppo ensu ed apid de elopmen o uni e si ies, in India, he
inc ease in he numbe o highe educa ion ins i u ions was accompanied by a de e io a ion
in educa ional s anda ds, which had a nega i e impac on aining.
Thus, he s udy o he impac o in es men in highe educa ion on economic de elop-
men in Cen al Asia and he Caucasus equi es a comp ehensi e app oach. This pape
makes a signi ican con ibu ion by in oducing a new pe spec i e on he ela ionship
be ween educa ion, ins i u ional quali y, and economic g ow h. Unlike p e ious s udies, i
highligh s he c i ical ole o go e nance in de e mining he e ec i eness o educa ional
in es men s. Using ad anced econome ic echniques (FMOLS/DOLS), his s udy p o ides
new empi ical e idence on he long- e m impac o educa ion and ins i u ions, o e ing p e-
iously unexplo ed insigh s o op imizing educa ion policy and s eng hening economic
compe i i eness.
The emainde o his pape is s uc u ed as ollows. Sec ion 2 e iews he ele an
li e a u e on he ela ionship be ween educa ion, ins i u ional quali y, and economic g ow h.
Sec ion 3p esen s an analysis o mac oeconomic indica o s in Cen al Asia and he Cauca-
sus. Sec ion 4ou lines he esea ch me hodology, including he econome ic model and da a
sou ces. Sec ion 5discusses he empi ical indings and hei implica ions. Sec ion 6p o-
ides policy ecommenda ions and u u e esea ch di ec ions. Finally, Sec ion 7concludes
he s udy by summa izing key insigh s and con ibu ions.
2. Li e a u e Re iew
Educa ional In es men and Economic G ow h
Resea ch analysis con i ms ha s a egies aimed a imp o ing he quali y o highe
educa ion should be aligned wi h na ional economic objec i es, as emphasized by
Baidybeko a e al. (2022). Success ul e o ms, including acc edi a ion, digi aliza ion
p og ams, and he in eg a ion o inno a i e educa ional echnologies, demons a e ha
in es men in educa ion di ec ly con ibu es o inc eased p oduc i i y, educed unemploy-
men , and an imp o ed quali y o li e. Highe educa ion plays a c ucial ole in economic
de elopmen by enhancing labo p oduc i i y, os e ing inno a ion, and con ibu ing o
o e all socio-economic pe o mance. Recen esea ch highligh s ha ins i u ional changes
and highe educa ion e o ms a e key d i e s o long- e m economic g ow h (Volchik e al.,
2018).
The ole and impac o in es men in educa ion a e signi ican o bo h de eloped
and de eloping coun ies, bu i s e ec i eness depends on he s uc u e o he educa-
ion ma ke . Ga cia (2014) in es iga es he ela ionship be ween public spending on
highe educa ion and economic g ow h in 50 US s a es o he pe iod 1989–2006. Using a
wo-s age leas squa es (2SLS) model, he au ho showed ha public spending on highe
educa ion has a posi i e impac on economic g ow h only in s a es wi h a small p i a e
sec o o highe educa ion. Aca-ac e al. (2020), Fahim e al (2023) explo e he pe cep ion
o highe educa ion quali y in an eme ging economy by analyzing he pe spec i es o key
s akeholde s—s uden s, educa o s, and employe s. Thei indings highligh ha cu icu-
lum ele ance, g adua e employabili y, and ins i u ional epu a ion play a c i ical ole in
Economies 2025,13, 78 3 o 19
de ining educa ion quali y. These insigh s a e c ucial o unde s anding how in es men
in highe educa ion aligns wi h labo ma ke needs and economic g ow h in de eloping
economies.
Co onel and Díaz-Roldán (2024) in es iga e he impac o public expendi u e on
educa ion on labo p oduc i i y, wages, and economic g ow h in Eu opean Union coun ies
o e he pe iod 2009–2020. The au ho s applied DOLS and FMOLS es ima ion echniques
o panel da a o emo e endogenei y and iden i y long- un ela ionships be ween a iables.
The main indings show ha labo p oduc i i y and he size o he popula ion wi h e ia y
educa ion ha e a posi i e and signi ican impac on economic g ow h. Howe e , he
ela ionship be ween public spending on educa ion and labo p oduc i i y is no di ec ly
iden i ied. The au ho s no e ha his e ec is ound indi ec ly h ough highe le els o
educa ion and echnological skills. These esul s emphasize he impo ance o in es ing in
sec o s wi h a high echnological componen and he need o u he analyze he s uc u e
o educa ional expendi u es.
In addi ion, Ambasz e al. (2023) indica e a nega i e ela ionship be ween public
spending on highe educa ion and educa ional a ainmen . Howe e , his nega i e e ec
is pa ially o se in s a es wi h a mo e de eloped p i a e educa ion sec o . This s udy
emphasizes he complex ole o public expendi u e in a mixed educa ion ma ke and he
need o an in eg a ed app oach o educa ion policy design.
Educa ion spending and labo o ce quali y ha e a signi ican impac on economic
de elopmen . Cla ke e al. (2015) examine he ela ionship be ween public educa ion
spending, educa ional a ainmen , and economic g ow h a he coun y le el in Geo gia o
he pe iod 2006–2008. The esul s show ha he numbe o jobs and economic g ow h de-
pend mo e on he educa ional a ainmen o he wo k o ce han on schooling expendi u es.
The au ho s no e ha ha ing a bachelo ’s deg ee in he popula ion is posi i ely co ela ed
wi h job g ow h, especially in high alue-added sec o s such as bio echnology.
This s udy con i ms ha spending on educa ion alone does no gua an ee economic
g ow h. The mos impo an ac o is he quali y o educa ion and he abili y o egions o
a ac and e ain highly quali ied specialis s (Legˇce i´c,2014). This unde lines he need o
c ea e a balanced educa ion policy aimed a imp o ing he le el o educa ion and adap ing
he labo o ce o he equi emen s o high- ech indus ies (Na mania e al.,2023).
In es men in educa ion has a signi ican impac on economic de elopmen , especially
in eme ging economies. Abu Al oul e al. (2024a) emphasize ha ins i u ional quali y
plays a key ole in ampli ying he e ec o educa ion on economic g ow h. Applying
a panel ARDL model o 18 coun ies in he sub-Saha an A ica egion o e he pe iod
2000–2020, he au ho s ind ha he long- un e ec o educa ion on economic g ow h
is insigni ican wi hou he p esence o ins i u ional suppo . In pa icula , ac o s such
as co up ion con ol and poli ical s abili y ein o ce he posi i e e ec o educa ion on
economic g ow h. Fahim e al. (2023) con i m he posi i e ela ionship be ween in es men
in highe educa ion and economic g ow h, highligh ing ha while educa ion con ibu es
o economic expansion, economic g ow h i sel has played a limi ed ole in p omo ing
u he in es men s in highe educa ion. This unde sco es he need o s a egic policy
in e en ions o ensu e sus ainable educa ional de elopmen .
Impo an ly, in es men in educa ion is closely linked o sus ainable economic de-
elopmen . She y and Zeai e (2024) in es iga e he impac o In e na ional Mone a y
Fund (IMF) condi ionali ies on public spending on educa ion in he Middle Eas and No h
A ica (MENA). Using panel da a o 1990–2020 and ixed e ec s models, he au ho s show
ha s ic IMF lending condi ions (so-called binding condi ions) boos educa ion spending
by eeing up iscal space and a ac ing in e na ional aid. These esul s highligh he im-
po ance o aligning educa ion p io i ies wi h mac oeconomic s abiliza ion p og ams. The
Economies 2025,13, 78 4 o 19
au ho s emphasize ha , despi e posi i e e ec s, po en ial ade-o s be ween iscal s abili y
and social spending can ha e a dampening e ec on long- e m in es men in human capi al.
Unde condi ions o weak go e nance, he e ec i eness o inc eased educa ional spending
may be limi ed, which equi es a mo e balanced app oach o economic and social policy.
The e a e also s udies ha ha e ound ha in es men in digi al echnology and
educa ion has a signi ican impac on economic de elopmen . Abu Al oul e al. (2024b)
emphasize ha he use o ICT (in o ma ion and communica ion echnology) can ha e
a posi i e impac on economic g ow h, bu his impac depends la gely on he le el o
educa ion o he popula ion. This s udy, co e ing 15 coun ies in he MENA egion o e he
pe iod 2000–2020, inds ha highe educa ion enhances he e ec o ICT on economic de el-
opmen , while insu icien aining and b ain d ain signi ican ly educe he e ec i eness o
digi al ini ia i es. The au ho s also d aw a en ion o he need o mode nize in as uc u e
and c ea e a a o able ins i u ional en i onmen o imp o e he in e ac ion be ween ICTs
and he economy.
I is in e es ing ha he posi i e impac o inc eased spending on educa ion also has
a posi i e e ec on he economic g ow h o he egion, main aining his e ec om he
ansi ion om he mac ole el o he mesole el o he economy. Thus, in es men in
highe educa ion and e ec i e uni e si y budge managemen a e o key impo ance o
egional socio-economic de elopmen . Chinnakum e al. (2024) in es iga ed he impac
o Chiang Mai Uni e si y on he economy o No he n Thailand using Inpu –Ou pu (IO)
and Social Re u n on In es men (SROI) models. The esul s show ha he uni e si y
c ea es abou 700 ag icul u al jobs, 241 se ice jobs, and 113 indus ial jobs annually o e
he 2023–2025 pe iod.
In addi ion, e e y million Thai bah in es ed in he uni e si y gene a es a signi ican
socio-economic impac . The use o he SROI o ecas ing model iden i ied key a eas o
op imizing budge expendi u e and o e ed ecommenda ions o imp o ing he e ec-
i eness o uni e si y inancial managemen . This s udy emphasizes he impo ance o
suppo ing SDG 4 (quali y educa ion) h ough in es men in highe educa ion and egional
economic de elopmen .
Cu en esea ch shows ha quali y educa ion and s a egic in es men in digi al
echnologies can be c ucial o economic g ow h. Howe e , coun ies wi h low-quali y edu-
ca ion and high le els o skilled emig a ion ha e seen diminishing e u ns on in es men
in echnology, highligh ing he impo ance o in eg a ing educa ion policies and digi al
s a egies. In con ex s wi h weak ins i u ions, educa ional e o s a e o en ine ec i e. The
esul s con i m he impo ance o in eg a ing educa ion policy wi h b oade economic
e o ms, including g ea e anspa ency and be e go e nance.
3. Analysis o Mac oeconomic Indica o s
An Empi ical S udy Based on Da a
This sec ion will analyze he impac o educa ional in es men on economic de el-
opmen and o e ecommenda ions o imp o ing he e ec i eness o highe educa ion
de elopmen s a egies in Cen al Asia and he Caucasus. By analyzing GDP g ow h
(annual change in g oss domes ic p oduc ) and he s uc u e o educa ion spending, i is
possible o iden i y he ela ionship be ween he long- e m de elopmen o human cap-
i al and he le el o economic ac i i y. The de elopmen o e ec i e s a egies equi es
a de ailed conside a ion o hese ac o s, aking in o accoun egional speci ics and he
dynamics o economic indica o s.
The Figu e 1p esen s an analysis o he dynamics o g oss domes ic p oduc (GDP)
pe capi a (in cu en US dolla s) ac oss eigh coun ies in he egion—A menia, Aze -
baijan, Geo gia, Kazakhs an, Ky gyzs an, Mongolia, Tajikis an, and Uzbekis an—o e
Economies 2025,13, 78 5 o 19
he pe iod om 2011 o 2023. The da a p o ide insigh s in o he dispa i ies in economic
de elopmen among hese na ions and allow o an assessmen o he sus ainabili y o hei
economic g ow h.
Economies 2025, 13, x FOR PEER REVIEW 5 o 20
Geo gia, Kazakhs an, Ky gyzs an, Mongolia, Tajikis an, and Uzbekis an—o e he pe iod
om 2011 o 2023. The da a p o ide insigh s in o he dispa i ies in economic de elopmen
among hese na ions and allow o an assessmen o he sus ainabili y o hei economic
g ow h.
Figu e 1. Dynamics o GDP pe capi a in he coun ies o Cen al Asia and he Caucasus (p epa ed
by he au ho s using Wo ld Bank da a).
Kazakhs an exhibi s he highes GDP pe capi a among he analyzed coun ies, wi h
a s eady inc ease om 2011, peaking in 2014 a o e USD 14,000 (Figu e 1). Following his
peak, a decline is obse ed, bu om 2018 onwa ds, he end e e ses, leading o a eco -
e y and eaching app oxima ely USD 13,000 by 2023. Aze baijan, which ini ially main-
ained a ela i ely high GDP pe capi a, expe ienced a no able decline a e 2014, likely
due o i s economic dependence on he oil sec o and fluc ua ions in global ene gy p ices.
A eco e y end eme ges in 2021–2023. Geo gia and Mongolia display mode a e and el-
a i ely s able GDP pe capi a g ow h h oughou he pe iod, wi h mino fluc ua ions. Ky -
gyzs an and Tajikis an emain a he lowe end o he spec um in e ms o GDP pe capi a
bu exhibi slow ye consis en g ow h, pa icula ly in ecen yea s. Uzbekis an main ains
a GDP pe capi a below he egional a e age o mos o he pe iod; howe e , a significan
upwa d end is obse ed a e 2020. A menia has demons a ed a g adual inc ease in
GDP pe capi a since 2017, which may be a ibu ed o economic e o ms and he expan-
sion o in e na ional economic coope a ion.
O e all, he analysis highligh s significan a ia ions in he economic de elopmen
o he coun ies in he egion and diffe ing deg ees o economic g ow h sus ainabili y,
which a e shaped by mac oeconomic ac o s, s uc u al cha ac e is ics o na ional econo-
mies, and ex e nal economic condi ions. The dynamics o GDP pe capi a emphasize he
impo ance o s a egies aimed a di e si ying he economy, inc easing he le el o in es -
men in human capi al and educa ion. In coun ies wi h s able GDP pe capi a g ow h and
consis en in es men in educa ion (e.g., Kazakhs an), economic de elopmen measu es
ha e shown g ea e effec i eness in imp o ing o e all quali y o li e. Howe e , sha p
fluc ua ions in Aze baijan and s abili y a low le els in Ky gyzs an and Tajikis an indica e
0
2000
4000
6000
8000
10000
12000
14000
16000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
A menia Aze baijan Geo gia Kazakhs an
Ky gyz Republic Mongolia Tajikis an Uzbekis an
Figu e 1. Dynamics o GDP pe capi a in he coun ies o Cen al Asia and he Caucasus (p epa ed
by he au ho s using Wo ld Bank da a).
Kazakhs an exhibi s he highes GDP pe capi a among he analyzed coun ies, wi h
a s eady inc ease om 2011, peaking in 2014 a o e USD 14,000 (Figu e 1). Following
his peak, a decline is obse ed, bu om 2018 onwa ds, he end e e ses, leading o
a eco e y and eaching app oxima ely USD 13,000 by 2023. Aze baijan, which ini ially
main ained a ela i ely high GDP pe capi a, expe ienced a no able decline a e 2014, likely
due o i s economic dependence on he oil sec o and luc ua ions in global ene gy p ices.
A eco e y end eme ges in 2021–2023. Geo gia and Mongolia display mode a e and
ela i ely s able GDP pe capi a g ow h h oughou he pe iod, wi h mino luc ua ions.
Ky gyzs an and Tajikis an emain a he lowe end o he spec um in e ms o GDP pe
capi a bu exhibi slow ye consis en g ow h, pa icula ly in ecen yea s. Uzbekis an
main ains a GDP pe capi a below he egional a e age o mos o he pe iod; howe e ,
a signi ican upwa d end is obse ed a e 2020. A menia has demons a ed a g adual
inc ease in GDP pe capi a since 2017, which may be a ibu ed o economic e o ms and
he expansion o in e na ional economic coope a ion.
O e all, he analysis highligh s signi ican a ia ions in he economic de elopmen o
he coun ies in he egion and di e ing deg ees o economic g ow h sus ainabili y, which
a e shaped by mac oeconomic ac o s, s uc u al cha ac e is ics o na ional economies, and
ex e nal economic condi ions. The dynamics o GDP pe capi a emphasize he impo ance
o s a egies aimed a di e si ying he economy, inc easing he le el o in es men in human
capi al and educa ion. In coun ies wi h s able GDP pe capi a g ow h and consis en
in es men in educa ion (e.g., Kazakhs an), economic de elopmen measu es ha e shown
g ea e e ec i eness in imp o ing o e all quali y o li e. Howe e , sha p luc ua ions in
Aze baijan and s abili y a low le els in Ky gyzs an and Tajikis an indica e he need o
de elop long- e m economic s a egies o ien ed owa ds balanced g ow h and imp o ing
he well-being o he popula ion.
The Figu e 2p esen s da a on he sha e o public expendi u e on educa ion as a
pe cen age o GDP ac oss eigh coun ies in he egion—A menia, Aze baijan, Geo gia,
Kazakhs an, Ky gyzs an, Mongolia, Tajikis an, and Uzbekis an—o e he pe iod om
Economies 2025,13, 78 6 o 19
2011 o 2023. The da a e eal signi ican di e ences in how coun ies inance hei ed-
uca ion sys ems and he sus ainabili y o hese expendi u es, meaning hei long- e m
consis ency, eliabili y, and abili y o suppo educa ion wi hou causing iscal imbalances
o budge a y cons ain s.
Economies 2025, 13, x FOR PEER REVIEW 6 o 20
he need o de elop long- e m economic s a egies o ien ed owa ds balanced g ow h and
imp o ing he well-being o he popula ion.
The Figu e 2 p esen s da a on he sha e o public expendi u e on educa ion as a pe -
cen age o GDP ac oss eigh coun ies in he egion—A menia, Aze baijan, Geo gia, Ka-
zakhs an, Ky gyzs an, Mongolia, Tajikis an, and Uzbekis an—o e he pe iod om 2011
o 2023. The da a e eal significan diffe ences in how coun ies finance hei educa ion
sys ems and he sus ainabili y o hese expendi u es, meaning hei long- e m con-
sis ency, eliabili y, and abili y o suppo educa ion wi hou causing fiscal imbalances o
budge a y cons ain s.
Figu e 2. Educa ion expendi u e dynamics (% o GDP) in Cen al Asia and he Caucasus (p epa ed
by he au ho s using Wo ld Bank da a).
Ky gyzs an alloca es he highes sha e o public expendi u e on educa ion, exceeding
7% o GDP a he beginning o he pe iod. Al hough a decline is obse ed by 2023, he
alues emain abo e he egional a e age, indica ing a con inued commi men o educa-
ion unding. Tajikis an and Uzbekis an main ain ela i ely s able expendi u es in he
ange o 5–6% o GDP h oughou he pe iod, eflec ing pe manen go e nmen al suppo
o he educa ion sec o . Mongolia exhibi s fluc ua ions wi hin he 4–5% ange, wi h peaks
in 2015 and 2020, likely a ibu able o shi ing budge a y p io i ies. Kazakhs an main ains
a s able alloca ion o app oxima ely 3–4% o GDP, sugges ing a balanced and consis en
app oach o educa ion expendi u e. In con as , A menia expe iences a sha p decline,
wi h public expendi u e on educa ion d opping below 1% o GDP by 2023, po en ially
signaling a educ ion in unding o a ealloca ion o budge a y p io i ies. Aze baijan and
Geo gia demons a e fluc ua ions be ween 2 and 4%, indica ing a mode a e le el o edu-
ca ion spending ela i e o o he fiscal demands.
The obse ed diffe ences in he sha e o educa ion expendi u e unde sco e he a i-
abili y in na ional educa ion policies and p io i ies ac oss he egion. The Eu opean T ain-
ing Founda ion (ETF, 2011) and Ape yan (2021) examine he impac o lowe public allo-
ca ions o educa ion in A menia, highligh ing hei long- e m implica ions o economic
g ow h, human capi al de elopmen , and he coun y’s compe i i eness and inno a ion
capaci y. Simila ly, Abaso a (2023) highligh s he ole o inc eased in es men s in ICT
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Pe cen age o GDP (%)
A menia Aze baijan Geo gia Kazakhs an
Ky gyz Republic Mongolia Tajikis an Uzbekis an
Figu e 2. Educa ion expendi u e dynamics (% o GDP) in Cen al Asia and he Caucasus (p epa ed
by he au ho s using Wo ld Bank da a).
Ky gyzs an alloca es he highes sha e o public expendi u e on educa ion, exceeding
7% o GDP a he beginning o he pe iod. Al hough a decline is obse ed by 2023, he
alues emain abo e he egional a e age, indica ing a con inued commi men o educa ion
unding. Tajikis an and Uzbekis an main ain ela i ely s able expendi u es in he ange
o 5–6% o GDP h oughou he pe iod, e lec ing pe manen go e nmen al suppo o
he educa ion sec o . Mongolia exhibi s luc ua ions wi hin he 4–5% ange, wi h peaks in
2015 and 2020, likely a ibu able o shi ing budge a y p io i ies. Kazakhs an main ains
a s able alloca ion o app oxima ely 3–4% o GDP, sugges ing a balanced and consis en
app oach o educa ion expendi u e. In con as , A menia expe iences a sha p decline, wi h
public expendi u e on educa ion d opping below 1% o GDP by 2023, po en ially signaling
a educ ion in unding o a ealloca ion o budge a y p io i ies. Aze baijan and Geo gia
demons a e luc ua ions be ween 2 and 4%, indica ing a mode a e le el o educa ion
spending ela i e o o he iscal demands.
The obse ed di e ences in he sha e o educa ion expendi u e unde sco e he a iabil-
i y in na ional educa ion policies and p io i ies ac oss he egion. The (Eu opean T aining
Founda ion (ETF),2011) and Ape yan (2021) examine he impac o lowe public alloca-
ions o educa ion in A menia, highligh ing hei long- e m implica ions o economic
g ow h, human capi al de elopmen , and he coun y’s compe i i eness and inno a ion
capaci y. Simila ly, Abaso a (2023) highligh s he ole o inc eased in es men s in ICT
echniques in Aze baijan’s highe educa ion sys em du ing he pandemic, emphasizing
bo h oppo uni ies and challenges o sus ainable educa ional de elopmen . Addi ionally,
an analysis o g oss capi al o ma ion as a pe cen age o GDP p o ides u he insigh s
in o he scale and di ec ion o economic policies ac oss hese coun ies. G aphical ends
enable he iden i ica ion o key pa e ns and in o m ecommenda ions aimed a enhancing
he e ec i eness o in es men s a egies, ensu ing ha educa ion inancing con ibu es o
sus ainable economic de elopmen .
The Figu e 3p esen s da a on he sha e o g oss capi al o ma ion in GDP ac oss
eigh coun ies in he egion—A menia, Aze baijan, Geo gia, Kazakhs an, Ky gyzs an,
Economies 2025,13, 78 7 o 19
Mongolia, Tajikis an, and Uzbekis an—o e he pe iod om 2010 o 2023. The da a high-
ligh di e ences in economic s a egies and he sus ainabili y o capi al in es men ac oss
hese na ions.
Economies 2025, 13, x FOR PEER REVIEW 7 o 20
echniques in Aze baijan’s highe educa ion sys em du ing he pandemic, emphasizing
bo h oppo uni ies and challenges o sus ainable educa ional de elopmen . Addi ionally,
an analysis o g oss capi al o ma ion as a pe cen age o GDP p o ides u he insigh s
in o he scale and di ec ion o economic policies ac oss hese coun ies. G aphical ends
enable he iden ifica ion o key pae ns and in o m ecommenda ions aimed a enhancing
he effec i eness o in es men s a egies, ensu ing ha educa ion financing con ibu es
o sus ainable economic de elopmen .
The Figu e 3 p esen s da a on he sha e o g oss capi al o ma ion in GDP ac oss eigh
coun ies in he egion—A menia, Aze baijan, Geo gia, Kazakhs an, Ky gyzs an, Mongolia,
Tajikis an, and Uzbekis an—o e he pe iod om 2010 o 2023. The da a highligh di e -
ences in economic s a egies and he sus ainabili y o capi al in es men ac oss hese na-
ions.
Figu e 3. Dynamics o g oss capi al o ma ion (% o GDP) in he coun ies o Cen al Asia and he
Caucasus (p epa ed by he au ho s using Wo ld Bank da a).
Mongolia ini ially had he highes in es men sha e a 60% in 2011, declining o
a ound 30% by 2015 and s abilizing he ea e . This sugges s a shi in p io i ies a he
han a sha p d op. Kazakhs an and Uzbekis an main ained s able in es men le els o 25–
30%, while Tajikis an fluc ua ed, peaking a 40% in 2015 be o e declining o 33% by 2023,
likely due o policy and economic changes. A menia, Aze baijan, and Geo gia showed
s eady ends wi hin 20–32%, indica ing g adual economic de elopmen .
O e all, some coun ies pu sued agg essi e in es men s a egies, while o he s
main ained s abili y. Economic shi s, policies, and ex e nal ac o s significan ly influ-
enced in es men le els.
The obse ed dynamics o g oss capi al o ma ion emphasize he impo ance o long-
e m in es men planning o sus ainable economic g ow h. Coun ies demons a ing el-
a i ely s able in es men pae ns, such as Kazakhs an and Uzbekis an, appea o ha e
es ablished a balance be ween capi al o ma ion, educa ion, and o he key economic ac-
o s. Mongolia p o ides an example o apid inc eases in capi al in es men , ye such
s a egies necessi a e u he e alua ion o hei long- e m effec i eness. These findings
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Pe cen age o GDP (%)
A menia Aze baijan Geo gia Kazakhs an
Ky gyz Republic Mongolia Tajikis an Uzbekis an
Figu e 3. Dynamics o g oss capi al o ma ion (% o GDP) in he coun ies o Cen al Asia and he
Caucasus (p epa ed by he au ho s using Wo ld Bank da a).
Mongolia ini ially had he highes in es men sha e a 60% in 2011, declining o a ound
30% by 2015 and s abilizing he ea e . This sugges s a shi in p io i ies a he han a sha p
d op. Kazakhs an and Uzbekis an main ained s able in es men le els o 25–30%, while
Tajikis an luc ua ed, peaking a 40% in 2015 be o e declining o 33% by 2023, likely due o
policy and economic changes. A menia, Aze baijan, and Geo gia showed s eady ends
wi hin 20–32%, indica ing g adual economic de elopmen .
O e all, some coun ies pu sued agg essi e in es men s a egies, while o he s main-
ained s abili y. Economic shi s, policies, and ex e nal ac o s signi ican ly in luenced
in es men le els.
The obse ed dynamics o g oss capi al o ma ion emphasize he impo ance o long-
e m in es men planning o sus ainable economic g ow h. Coun ies demons a ing
ela i ely s able in es men pa e ns, such as Kazakhs an and Uzbekis an, appea o ha e
es ablished a balance be ween capi al o ma ion, educa ion, and o he key economic ac o s.
Mongolia p o ides an example o apid inc eases in capi al in es men , ye such s a egies
necessi a e u he e alua ion o hei long- e m e ec i eness. These indings unde sco e
he need o a balanced app oach o educa ion unding and capi al in es men o maximize
long- e m bene i s o he egion.
Addi ionally, he Figu e 4below p esen s da a on he o al labo o ce in Cen al Asian
and Caucasus coun ies (A menia, Aze baijan, Geo gia, Kazakhs an, Ky gyzs an, Mongolia,
Tajikis an, and Uzbekis an) o e he pe iod om 2011 o 2023. The da a illus a e a ia ions
in labo o ce size and g ow h pa e ns, o e ing u he insigh s in o egional economic
ends and wo k o ce dynamics.
Uzbekis an has he la ges labo o ce among he analyzed coun ies, exhibi ing s a-
ble and signi ican g ow h h oughou he pe iod. By 2023, he labo o ce will su pass
14 million, e lec ing con inuous demog aphic expansion and wo k o ce pa icipa ion. Kaza-
khs an anks second in e ms o labo o ce size, also demons a ing s eady g ow h, wi h he
numbe exceeding 9 million by he end o he pe iod. Aze baijan and Ky gyzs an exhibi
mode a e labo o ce g ow h cha ac e ized by g adual inc eases o e ime. In con as ,
Economies 2025,13, 78 8 o 19
Geo gia, Mongolia, and Tajikis an display ela i e s abili y wi h minimal changes, which is
likely a ibu ed o hei smalle popula ions and demog aphic cons ain s. A menia has he
smalles labo o ce among he coun ies analyzed, wi h only a ma ginal inc ease by 2023.
Economies 2025, 13, x FOR PEER REVIEW 8 o 20
unde sco e he need o a balanced app oach o educa ion unding and capi al in es men
o maximize long- e m benefi s o he egion.
Addi ionally, he Figu e 4 below p esen s da a on he o al labo o ce in Cen al
Asian and Caucasus coun ies (A menia, Aze baijan, Geo gia, Kazakhs an, Ky gyzs an,
Mongolia, Tajikis an, and Uzbekis an) o e he pe iod om 2011 o 2023. The da a illus-
a e a ia ions in labo o ce size and g ow h pae ns, offe ing u he insigh s in o e-
gional economic ends and wo k o ce dynamics.
Figu e 4. Labo o ce dynamics in he coun ies o Cen al Asia and he Caucasus (p epa ed by he
au ho s using Wo ld Bank da a).
Uzbekis an has he la ges labo o ce among he analyzed coun ies, exhibi ing s a-
ble and significan g ow h h oughou he pe iod. By 2023, he labo o ce will su pass 14
million, eflec ing con inuous demog aphic expansion and wo k o ce pa icipa ion. Ka-
zakhs an anks second in e ms o labo o ce size, also demons a ing s eady g ow h,
wi h he numbe exceeding 9 million by he end o he pe iod. Aze baijan and Ky gyzs an
exhibi mode a e labo o ce g ow h cha ac e ized by g adual inc eases o e ime. In con-
as , Geo gia, Mongolia, and Tajikis an display ela i e s abili y wi h minimal changes,
which is likely a ibu ed o hei smalle popula ions and demog aphic cons ain s. A -
menia has he smalles labo o ce among he coun ies analyzed, wi h only a ma ginal
inc ease by 2023.
The obse ed labo o ce g ow h in Uzbekis an and Kazakhs an may be linked o
a o able demog aphic ends and an inc easing sha e o he wo king-age popula ion. In
con as , he mo e s able figu es in o he coun ies sugges an absence o significan pop-
ula ion shi s o s uc u al changes in labo ma ke dynamics. Acco ding o he Wo ld
Bank (2018), coun ies expe iencing labo o ce expansion, such as Uzbekis an and Ka-
zakhs an, ha e he po en ial o enhance economic p oduc i i y and efficiency by equip-
ping hei wo k o ce wi h he necessa y skills and in es ing in educa ion.
A c ucial de e minan o he impac o educa ional in es men on economic g ow h
is he quali y o highe educa ion. One o he significan indica o s is e ia y educa ion
en ollmen , which measu es pa icipa ion a es in highe educa ion. This me ic p o ides
insigh s in o he accessibili y o educa ion o he popula ion and he ex en o you h en-
gagemen in he educa ional p ocess.
,,
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
1 2 3 4 5 6 7 8 9 10 11 12 13
Labo o ce, o al
A menia Aze baijan Geo gia Kazakhs an
Ky gyz Republic Mongolia Tajikis an Uzbekis an
Figu e 4. Labo o ce dynamics in he coun ies o Cen al Asia and he Caucasus (p epa ed by he
au ho s using Wo ld Bank da a).
The obse ed labo o ce g ow h in Uzbekis an and Kazakhs an may be linked o
a o able demog aphic ends and an inc easing sha e o he wo king-age popula ion. In
con as , he mo e s able igu es in o he coun ies sugges an absence o signi ican popu-
la ion shi s o s uc u al changes in labo ma ke dynamics. Acco ding o he Wo ld Bank
(2018), coun ies expe iencing labo o ce expansion, such as Uzbekis an and Kazakhs an,
ha e he po en ial o enhance economic p oduc i i y and e iciency by equipping hei
wo k o ce wi h he necessa y skills and in es ing in educa ion.
A c ucial de e minan o he impac o educa ional in es men on economic g ow h
is he quali y o highe educa ion. One o he signi ican indica o s is e ia y educa ion
en ollmen , which measu es pa icipa ion a es in highe educa ion. This me ic p o ides
insigh s in o he accessibili y o educa ion o he popula ion and he ex en o you h
engagemen in he educa ional p ocess.
The Figu e 5p esen s he dynamics o highe educa ion en ollmen in he coun ies o
Cen al Asia and he Caucasus om 2000 o 2022 demons a e he ollowing ends. The
g ow h leade s a e A menia, whe e he indica o eached 60% by 2022, and Geo gia, which
eached 55%. S eady g ow h is obse ed in Kazakhs an (35% by 2022) and Ky gyzs an (30%).
Despi e he posi i e dynamics, he indica o s in Uzbekis an (20%) and Tajikis an (15%)
emain ela i ely low. O e all, he egion is showing posi i e changes in he de elopmen
o highe educa ion, bu di e ences be ween coun ies emain signi ican .
The e ec i eness o public adminis a ion in educa ion depends on o ganiza ion
and con ol, ensu ing esou ce e iciency, accoun abili y, and sys ema ic managemen .
Co up ion con ol e lec s anspa ency in inancial lows, p e en ing he misuse o unds
and os e ing public us , which is c ucial o sus ainable de elopmen . Poli ical s abili y
c ea es a o able condi ions o educa ional ins i u ions, enabling long- e m planning,
consis en policy implemen a ion, and ins i u ional secu i y. The quali y o egula ion
de e mines how e ec i ely educa ional e o ms a e designed and en o ced, ensu ing
ha policies lead o eal imp o emen s a he han emaining heo e ical. A s ong legal
sys em p o ec s p ope y igh s, en o ces laws, and ensu es ai ness, s abili y, and in eg i y
Economies 2025,13, 78 15 o 19
long e m h ough FMOLS and DOLS, espec i ely. On he o he hand, he imp o emen
o ins i u ional ac o s has a nega i e impac on economic g ow h (by 0.87 and 1%, espec-
i ely), which equi es conside a ion in u u e models. The FMOLS model also shows he
impac o capi al g ow h—economic g ow h inc eases by 0.21%, bu he DOLS model does
no ha e his e ec . The in luence o he go e nmen expendi u e on educa ion a iable,
measu ed as a pe cen age o GDP, is weakly signi ican only in he FMOLS model (i causes
a dec ease in g ow h by 0.87%). The size o he wo k o ce does no a ec he a iables,
equi ing conside a ion in u u e models.
6. Policy Implica ions and Fu u e Di ec ions
Based on he esul s o da a analysis and eg ession model based on FMOLS and
DOLS me hods, i is ecommended o pay a en ion o he ollowing conclusions.
Educa ion p io i y: due o he consis en posi i e impac o educa ion co e age on
economic g ow h, go e nmen policy should be aimed a inc easing he p opo ion o he
educa ed popula ion (Khi a ish ili,2010;Kuma e al.,2020). This may include in es men s
in educa ional in as uc u e, imp o ing he quali y o educa ion a all le els, c ea ing
condi ions o access o educa ion o all segmen s o he popula ion, and de eloping
p o essional e aining and ad anced aining p og ams.
Reassessmen o he ole o ins i u ions and public spending on educa ion: Due o
di e ences in he assessmen o he impac o hese ac o s using FMOLS and DOLS me h-
ods, addi ional analysis is needed o cla i y hei ole. Pe haps ins i u ional ac o s equi e
a e hink o measu emen me hods o a e ela ed o speci ic aspec s o he ins i u ional
en i onmen ha need o be imp o ed. Wi h ega d o expendi u es, i is impo an o
e alua e hei e ec i eness and iden i y p io i y in es men a eas o maximize hei impac
on economic g ow h. The s a e’s spending di ec ions should be analyzed he e bu should
also ake in o accoun hei low sha e o he budge .
Gi en he speci ici y o he sample and he limi ed sample size, i should be bo ne in
mind ha FMOLS and DOLS esul s may di e . In his case, FMOLS may be p e e able o
analyzing long- e m ela ionships, whe eas DOLS may be use ul o s udying sho - e m
dynamics. I is ecommended o check he s abili y o he esul s using al e na i e me hods,
such as FE, RE, o ARDL, and choose he me hod ha bes sui s he p ope ies o he da a
and he objec i es o his s udy.
The nega i e impac o ins i u ional ac o s equi es u he s udy. I is essen ial o
de e mine he speci ic mechanisms h ough which hese ac o s in luence economic g ow h
and o de elop measu es o imp o ing ins i u ional quali y. Addi ionally, he weaknesses
o ins i u ions, he unde de elopmen o ci il socie y, and he impac o co up ion mus be
conside ed. The e ec i eness o educa ional in es men depends no only on he olume
o unding bu also on go e nance quali y, ins i u ional amewo ks, and alignmen wi h
labo ma ke demands. This inding aligns wi h Eu opean s udies on he mode niza ion o
highe educa ion, which emphasize he impo ance o ins i u ional e o ms and academic
mobili y ( an de Hijden,2014).
I is also necessa y o ake in o accoun he limi a ions o his s udy ela ed o he
sample size, he choice o analysis me hods, and possible p oblems wi h measu ing ins i u-
ional ac o s. This will a oid misin e p e a ion o he esul s and highligh he need o
u he esea ch in his a ea.
In gene al, he go e nmen is ecommended o ocus on policies aimed a inc easing
he sha e o educa ion co e age and e hinking he ole o ins i u ions and he quali a i e
alloca ion o public spending, aking in o accoun he speci ics o he sample and analysis
me hods. I is impo an o no e ha his s udy o he coun ies unde conside a ion is
Economies 2025,13, 78 16 o 19
deba able and p ima y in na u e and equi es u he in-dep h s udy in o de o de elop
mo e accu a e and in o med policy ecommenda ions.
7. Conclusions
This s udy examined he impac o in es men s in highe educa ion on he economic
de elopmen o Cen al Asian and Caucasus coun ies, emphasizing he in e play be ween
educa ion quali y, ins i u ional amewo ks, and mac oeconomic indica o s. The indings
p o ide s ong e idence ha s a egic in es men in educa ion signi ican ly con ibu es o
long- e m economic g ow h by enhancing wo k o ce p oduc i i y and os e ing inno a ion.
Howe e , he e ec i eness o such in es men s is con ingen upon he s eng h o na ional
ins i u ions and go e nance mechanisms.
A key insigh om his analysis is ha while inc eased unding o highe educa-
ion co ela es wi h economic expansion, inancial alloca ion alone is insu icien o d i e
sus ainable g ow h. Ins ead, he quali y o educa ion—measu ed h ough ins i u ional
e ec i eness, go e nance, and accessibili y—plays a decisi e ole in shaping economic
ou comes. Coun ies such as Kazakhs an and Uzbekis an, which ha e main ained ela-
i ely s able in es men pa e ns in educa ion and capi al o ma ion, demons a e s onge
economic pe o mance compa ed o na ions wi h inconsis en o declining educa ion ex-
pendi u es. Con e sely, Tajikis an and Ky gyzs an alloca e a highe pe cen age o GDP
o educa ion, ye hei economic impac emains cons ained due o weake ins i u ional
s uc u es and lowe en ollmen a es in highe educa ion.
This s udy also highligh s con as ing dynamics in he Caucasus egion. A menia
boas s he highes e ia y educa ion en ollmen (~60%), ye economic challenges pe sis due
o poli ical ins abili y and limi ed capi al o ma ion. In con as , Geo gia has success ully
le e aged educa ion in es men s alongside ins i u ional imp o emen s, esul ing in a
mo e dynamic labo ma ke and enhanced inno a ion po en ial. Simila ly, Aze baijan and
Mongolia p esen unique cases whe e luc ua ing educa ion spending—o en in luenced by
ex e nal economic ac o s such as na u al esou ce e enues—a ec s he sus ainabili y o
educa ion-d i en economic bene i s.
Mo eo e , his s udy unde sco es he c i ical ole o ins i u ional ac o s—such as
go e nmen e ec i eness, egula o y quali y, and con ol o co up ion—in ansla ing
educa ional in es men s in o angible economic bene i s. Weak ins i u ional en i onmen s
hinde he e icien u iliza ion o public spending on educa ion, p e en ing p opo ional
imp o emen s in human capi al de elopmen . Add essing hese go e nance challenges
equi es comp ehensi e e o ms o s eng hen educa ion managemen , enhance inancial
anspa ency, and align educa ional policies wi h labo ma ke demands.
Dispa i ies in highe educa ion en ollmen ac oss he egion u he ein o ce he
need o a ge ed policy in e en ions. A menia and Geo gia lead in pa icipa ion a es,
whe eas Uzbekis an and Tajikis an lag behind, limi ing hei abili y o cul i a e a skilled
wo k o ce o echnological ad ancemen and economic di e si ica ion. To b idge his gap,
go e nmen s mus ocus on expanding access o e ia y educa ion, mode nizing cu icula
o mee indus y demands, and in es ing in digi al lea ning in as uc u e.
F om an economic pe spec i e, he indings a i m he necessi y o balancing in es -
men s in educa ion wi h b oade economic policies, pa icula ly in g oss capi al o ma ion
and labo ma ke de elopmen . Coun ies expe iencing labo o ce expansion, such as
Uzbekis an and Kazakhs an, ha e a unique oppo uni y o maximize economic e iciency
by equipping hei wo k o ce wi h ad anced skills and os e ing knowledge-based indus-
ies. Howe e , ealizing his po en ial equi es sus ained in es men s in human capi al,
policies ha incen i ize inno a ion and en ep eneu ship, and a commi men o long- e m
ins i u ional s eng hening.
Economies 2025,13, 78 17 o 19
Ul ima ely, his s udy unde sco es ha highe educa ion is no me ely an expendi u e
bu a s a egic in es men in na ional de elopmen . The economic bene i s o educa ion a e
maximized when coupled wi h e ec i e go e nance, ins i u ional s abili y, and policies
ha os e an inno a i e and skilled wo k o ce. Fu u e esea ch should u he explo e
he in e play be ween educa ion policies, labo ma ke dynamics, and echnological ad-
ancemen s o de elop a comp ehensi e amewo k o sus ainable economic g ow h in
he egion.
Au ho Con ibu ions: Concep ualiza ion, S.Z. and A.T.; me hodology, S.Z.; so wa e, A.T..; ali-
da ion, S.Z., A.T. and D.T.; o mal analysis, S.Z.; in es iga ion, A.A.; esou ces, A.A.; da a cu a ion,
A.T.; w i ing—o iginal d a p epa a ion, A.A.; w i ing— e iew and edi ing, S.Z.; isualiza ion, S.Z.;
supe ision, S.Z.; p ojec adminis a ion, D.T.; unding acquisi ion, A.A. All au ho s ha e ead and
ag eed o he published e sion o he manusc ip .
Funding: This esea ch was unded by Minis y o Science and Highe Educa ion o he Republic
o Kazakhs an g an numbe IRN BR21882434 on he opic “A sys ema ic app oach o moni o ing,
analysis and assessmen o he quali y o highe educa ion in Kazakhs an”.
In o med Consen S a emen : No applicable.
Da a A ailabili y S a emen : Da a epo ed in his wo k a e a ailable a h ps://da abank.wo ldbank
.o g/sou ce/wo ld-de elopmen -indica o s.
Con lic s o In e es : The au ho s decla e no con lic s o in e es . The unde s had no ole in he design
o he s udy; in he collec ion, analysis o in e p e a ion o da a; in he w i ing o he manusc ip o in
he decision o publish he esul s.
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Disclaime /Publishe ’s No e: The s a emen s, opinions and da a con ained in all publica ions a e solely hose o he indi idual
au ho (s) and con ibu o (s) and no o MDPI and/o he edi o (s). MDPI and/o he edi o (s) disclaim esponsibili y o any inju y o
people o p ope y esul ing om any ideas, me hods, ins uc ions o p oduc s e e ed o in he con en .
