THE INVESTMENT EFFECT AS A CRITERION OF EDUCATION SERVICE QUALITY: THE CONTENT AND APPROACHES TO DETERMINING

Author
, associate professor, Kharkiv, Pletnovsky 5

In heading

 Economic theory;

Signed print

 27.05.2020

Issues number

 2020 - № 2 (41)

Page

 48-68

Type of articles

 Scientific article

Code UDK

 330.322.3:[338.46:37]

ISSN print

 2411-5584

Abstract

 Problem setting. The higher education reform, which is currently undertaken in Ukraine, considerably actualizes the research of conceptual and applied aspects of providing quality of training professionals in various areas. Applying a multi-criteria approach to determining and assessing alongside taking into account the investment effect of education services are important steps for substantiating measures for enhancing effectiveness of higher education as a source of forming and accumulating human capital.
Recent research and publication analysis. Education services, their peculiarities, and quality are an acknowledged object of the economic science, particularly in the context of examining their role in forming and accumulating human capital and ensuring human development. Scientific papers of Ukrainian scholars such as V. Bahrushin [1], О. Grishnova [2; 3], O. Marchenko [4; 5], T. Minakova [6], V. Parsyak [7], L. Shevchenko [8, 9], etc. are dedicated to different aspects and components of quality and efficiency of intellectual services in general and educational services in particular. Although the scholars determine multiple criteria of education service quality, the investment effect of education services has not been thoroughly examined.
Paper objective. The article’s objective is to disclose theoretical and applied aspects of the content of the investment effect of education services provided by higher education institutions and to substantiate criteria of the economic evaluation of such effect.
Paper main body. The investment effect of education services is multidimensional. Firstly, education services are an object of investments. Within this context, their investment effect implies transforming expenses of governments, business organizations, candidates for graduate degrees, and other investors for producing, providing, and receiving education services into human capital of a human being, a firm, and a society. The use of human capital as a resource of manufacturing, innovative, and other types of activity ensures the increase of value and income. Secondly, the investment effect is inherent to education services as integrators of knowledge and information. Thirdly, education services are intellectual investments, i.e. inputting intellectual values in human capital of candidates for graduate degrees.
Drawing on the investment approach to evaluating human capital, the author determine the investment effect of education services in this research through comparing educational expenses of different investors to qualitative and quantitative results of an education process.
Conclusions of the research. The analysis of the investment effect of education services provided by higher education institutions (HEIs) in Ukraine has enabled to substantiate the following conclusions:
education services are investment resources of the contemporary economy while their investment effect is a component and factor of education process quality.
results of investments in higher education are divided into: a) initial – knowledge, skills, and capacities acquired by graduates of HEIs in the process of studying, which determine their abilities for efficient professional activity and opportunities to apply abilities, which conform to acquired qualification, in the social practice. Indicators of the initial results encompass the employment (unemployment) rate of graduates by qualification and assessing quality of their level of training by employers; b) current results as revenues of investors, which have funded higher education related to the use of human capital of graduates of HEIs as a resource of their career promotion in public production. Indicators of the current results comprise the dynamics of incomes of individuals (graduates of HEIs), households, and governments as institutional investors in higher education; c) prospective results characterizing savings, the development, and the use of national human capital, which shape indicators of the dynamics of GDP, rate of innovative activity, and rate of human development;
the initial, current, and prospective results of investments in higher education are closely interrelated. However, this interrelation is not linear because the results are impacted by quality of training professionals, as well as various factors of an external environment of their studying and professional activity at regional, national, and international levels. In addition, benefits, which are anticipated by investors at the time of investing funds, transform into real ones over a considerable period of practical implementation of graduate’s human capital;
4) comparison of educational expenses and initial results of investing in training candidates for graduate degrees in Ukraine in 2018–2019, which is based on applying the investment approach to evaluating human capital and the J. J. Phillips model for determining return on investment of business in training employees, affirms a low rate of the investment effect of education services of HEIs. This fact is related to the loss of invested funds due to unemployment of a part of graduates, their employment in a sphere other than their area of qualification, and low quality of education service from the employers’ point of view. Over 2016–2019, Ukraine has dropped from 84th place to 88th place in the Human Development Index Ranking. This change of position is an indicator of the prospective results of investments in higher education, which shows a decrease of the investment effect of education services.
Short Abstract for an article
Abstract. The author has revealed the content of the investment effect of education services and the main approaches to determining this effect. The author has characterized initial, current, and prospective results of investments of human beings, business organizations, and governments in higher education, determined their indicators, and disclosed peculiarities of their interrelation. Having compared expenses and results of investing funds in training professionals by higher education institutions of Ukraine, the author analyses the rate and dynamics of the investment effect of their education services.

Keywords

 education services, investment effect of education services, human capital, investments, educational expenses, initial, current, and prospective results of investing in higher education.

Reviewer

External reviewer

Article in PDF

 48-68

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Code DOI

 10.31359/2411-5584-2020-41-2-48

27.05.2020