Two-Year and Four-Year Tertiary Education: Measuring Human Capital Effects on Economic Growth in Developing and Developed Countries with the Uzawa-Lucas Model

Tertiary education is believed to be a driver of economic development through the relationship between human capital development and economic output. Global massification efforts of tertiary education have led to increased global demand. Countries with limited tertiary education systems, like developing countries, have employed policies to increase domestic tertiary education opportunities instead of sending students abroad. Many tertiary education policies have focused on importing tertiary education from countries with established tertiary education systems. Import efforts first emphasized university models, but limited success prompted the import of more flexible short-cycle education modeled after the United States’ community college system. Limited empirical research has studied the relationship between tertiary education and economic growth. Currently, there has been no research on the effect of importing U.S. four-year and two-year tertiary education models in other countries and the effect on economic growth. The purpose of this study was to examine differences between two- and four-year U.S. university models implemented in developing countries by examining changes in economic growth. Utilizing country level economic and tertiary education data spanning 1970 to 2013 from The World Bank and the United National Education, Scientific, and Cultural Organization Institute for Statistics in the Uzawa-Lucas model with a General Method of Moments (GMM) estimation of an autoregressive distribution lag model to take into account the lagged effect of tertiary education on economic indicators.