*Corresponding Author: Farideh Mohammadkhani Orouji (firstname.lastname@example.org)
n the eighteenth century, Adam Smith, the world's great economist, pioneered a debate on the relationship between education and human capital that took more than 200 years to find its true place as a collection of scientific research and in the form of science. Awareness of the relationship between education and economic growth has led many people to seek their own advancement and the well-being of society, and a huge movement has emerged to gain more knowledge, insight, skills, and information. Thus, developed and developing countries owe much to the economists who promoted this vision in the development process. The mission of educating the people is not over for social scientists and economists. The dramatic and competitive changes in the world in achieving economic development and social welfare as soon as possible and the impact of these developments on various social contexts in the last three decades in Iran have led to more attention to the role and functions of public and higher education. Increasing the role of the education system in the dynamics of social life, the need to pay attention to economic functions and its "cost-benefit analysis" has doubled for the government and the people because increasing social demand for education has increased the amount of education spending in government and household budgets. In addition, the expansion of various courses and the increase in the population covered, and especially the strong desire of people to achieve higher degrees and degrees, has provided a platform that provides knowledge of the economic aspects of the education system for parents, teachers, administrators, and educational planners, which is inevitable. Therefore, all those who deal with the Iranian education system and from the perspective of educators, teachers, principals, and educational agents in education and higher education are recommended to study it, to analyze the economics of education [1-10].
Present issues and problems
One of the most important issues facing Iranian higher education is not responding to the real needs of society in the field of scientific production as well as education efficiently and effectively. The main examples of this issue are visible in the large gap between industry and university (as a symbol of the university relationship and the scientific needs of society) as well as the basic problem of entrance exams and long queues to enter the university. In particular, the issue of entrance exams, which completes the selection of students, requires a lot of resources; in addition, the phenomenon of unemployment of university graduates has made things even more confusing! In a sense, the problem of entrance exams is due to the lack of educational capacity in universities, which is itself due to factors such as lack of financial resources for university development, inefficient use of existing capacity. There is a false demand for higher education, so it can be seen that solving the entrance exam problem affects different categories and therefore, relying on traditional solutions, it cannot be easily eliminated. Low competitiveness compared with other prestigious universities in the world is another issue with higher education; this is especially the case in the current situation where with e-learning, the geographical boundaries are being blurred and all applicants can meet their higher education needs from the best universities via the Internet. It is highly destructive for higher education units with low competitiveness [11-15].
Globalization and joining the World Trade Organization (WTO) is one of the main challenges for Iran's higher education. Globalization has dimensions that can be deepened with new technologies, along with serious developments in institutional areas and international cooperation. In the meantime, the Information and Communication Technology (ICT) Revolution and the World Trade Organization are having a significant impact on the higher education activities of communities [16-19]. As mentioned above, information and communication technology blurs geographical boundaries so that applicants for higher education in their own country can obtain the higher education services they need and interest from reputable universities located in another part of the world. Undoubtedly, this process will be intensified with several important changes: The first is the implementation of WTO regulations that severely limit the control and supervision of national and local governments, and the second is the solution of the foreign language problem for applicants, which can be easily done by presenting curricula in the languages of the destination countries. For example, "it is not too far-fetched for prestigious universities to offer their curricula in Farsi to Persian speakers via the Internet shortly." [20-23]. Intensifying the shifting of factors of production (especially manpower), both real and virtual, and the combination of these factors is a serious alarm for higher education institutions that are highly inefficient, and globalization will only be an opportunity if countries can deal with inefficiencies. Otherwise, the flood of globalization will attract both applicants for educational services of inefficient educational units (i.e. students) and productive and efficient production factors, especially professors and scientific elites. [24-26]. In this case, not only can they have a greater share and role in meeting domestic needs, but also, they expand the scope of their activities worldwide in areas such as Persian language and culture education, Islamic sciences, and some new and prominent scientific fields [27-29]. The main condition for achieving this is the development of e-learning, which itself is a serious challenge to the advancement of higher education in Iran. In Iran, in terms of infrastructure and hardware aspects, many changes and developments have taken place. But in the field of software and the production of distance education and e-learning curricula, serious measures must be taken. Otherwise, we will not be successful in the field of e-learning and virtual education and, consequently, in the development of higher education in the modern era. Autonomy of higher education units, as another challenge, has long been considered by university officials and staff [30-33]. Despite many efforts in this direction, there is still a long way to go. Of course, part of the challenges in this area is due to the administrative structure and the nature of centralism in countries such as Iran. However, achieving adequate independence of higher education units as well as the independence of internal and affiliated units (such as colleges and departments) is one of the basic conditions for the development of higher education, and therefore it should be done as soon as possible [34-36].
Given the above considerations, we find that Iranian higher education is surrounded by serious issues and challenges. Of course, these issues and challenges have been discussed many times in different places and situations [37-39]. What forms the main purpose of the present article is to address practical solutions, and of course with a fresh perspective, to deal with these issues and challenges. In this regard, only one important approach taken from the basics of educational economics is examined, which has two basic features:
The first feature is that its design and implementation is well possible and therefore, in practice, quite "possible" The second feature is that its implementation will solve the main problems of higher education and turn the basic challenges into opportunities; in fact, successful countries have been able to achieve this by relying on such strategies [40-43].
Solution to Deal with Issues and Challenges
To address the issues and challenges, of course, different solutions can be considered. In this analysis, the solution relies on the mechanisms of allocation of financial resources. In the current situation, the allocation of financial resources to educational units, lacks the nature of the policy. The budget of educational units is mainly based on the past trend, i.e. taking into account the growth equivalent to the probable inflation rate and taking into account specific physical development programs [44-47]. There are affiliated units of universities such as colleges and departments. The current mechanism does not allow for independence, does not force training units to directly "meet the real needs of society", does not involve all actors in the decision-making process, and therefore mobilizes to improve efficiency, does not provide sufficient opportunity and motivation to take advantage of all opportunities and provides educational and research capacities, thus, the continuation of the current mechanism of resource allocation is the biggest obstacle to the development of higher education in the country [48-51].
Therefore, the fundamental solution must be sought in changing the mechanism of allocation of financial resources. The mechanism for allocating financial resources will be effective when the benefit of educational units from financial resources and budgets depends on their performance, i.e. the outputs they produce. The mechanism in question consists of three levels: a) The level of the whole society; at this level, the government, as the main custodian of society, must decide how much resources should be allocated to higher education. This share can be defined as a percentage of the government budget or GDP; Of course, the amount of this share depends on the role of higher education in solving society's problems, as well as in achieving the country's development [52-55].
In any case, the government, especially the Management and Planning Organization, as well as the Islamic Consultative Assembly have a decisive role to play in this regard; b) the second level refers to the Ministries in charge of higher education, i.e., the Ministries of Science, Research and Technology, and Health, Treatment and Medical Education that must allocate the share of resources specified in the first level for higher education efficiently among the affiliated educational units [56-58]; c) the third level includes training units that must allocate the number of dedicated resources to carry out their missions to their subdivisions, i.e. staff and administrative areas, colleges, departments, and affiliated institutions, to achieve maximum educational outcomes and achieve goals. What is certain is the fact that in addition to designing and implementing such a mechanism, the issue of monitoring and evaluation must also be taken seriously [59-61]. Achieving this will provide favorable conditions for reforming and making the new resource allocation mechanism more efficient. With the implementation of the mechanism of allocation of output-oriented financial resources, it is expected that sufficient independence will be granted to higher education units, in areas such as type, amount, and manner of production of educational services and even hiring or employing required educational agents [62-65]. Thus, the participation of all active elements in educational units will be seriously expanded to promote or develop the quantitative and qualitative educational outcomes, and the orientations will be corrected towards meeting the real needs of society; the efficiency and effectiveness of the units will increase; proper use of existing educational capacities has been made and through this, the problem of entrance exams will be gradually eliminated; the competitiveness of educational units will be increased and it will be possible to be present on the world stage to provide virtual and electronic training; efficient units will be separated from inefficient units and inefficient units will have to be fundamentally revised to remove obstacles to their efficiency [66-69].
Thus, it can be said that focusing on an important mechanism, i.e., the output-oriented resource allocation mechanism, can address a large number of higher education issues and turn many challenges into opportunities. Therefore, achieving an efficient and creative higher education is "possible". In recent years, countries that have faced many changes in all aspects of political, economic, cultural, and educational, have seen the education system as a necessary capital to achieve development goals [70-72]. Now, in this rapid change, the main question is how the educational system, which is the cornerstone of the transformation of all systems, can be removed from this revival and innovation. Who is responsible for the changes in this productive system? Can the system lead to development and excellence? What is the economic role of the education system? Is the education system a cost to the government or an investment? This article takes a look at microeconomics in education areas, although the implementation of this brief can have a dramatic impact on the economy, given the vastness of education across the country [73-75].
Education or Training: Cost or Investment?
Undoubtedly, development in the education system, like any other institution, requires a special environment with the provision of its special conditions, especially its financial and economic situation. Education cannot be called the most important pillar of societies but it is the largest introduced cost-effective device with a lot of power. The education system needs to be cost-effective, but if we examine the costs of education in terms of "cost-benefit" methods with the amount of return on investment, then we will reach the profitability of this investment, for example, comparing the productivity of individuals with Dinson's study showed that an increase in labor and physical capital could not explain the increase in GDP, and concluded that an increase in labor force education caused a 23 percent increase in the annual rate of GDP growth in the United States from 1930 to 1960 [76-78].
Dinson applied the same study to European countries and came to the same conclusion. Education is a form of investment in all societies, because education plays a central role in the process of modernization and rationalization [79-81]. It keeps cultural heritage alive, and establishes social values. Primary education instills basic values and social customs in school children. Education can be the secret of countries' independence. The first cause and precondition, empowerment and independence of Iran against Europe, is the defense of science and insight, and on the contrary, can be the path of dependence of countries [82-84]. 1117 Notes General Garden in Iran, when he was commissioned to invite several young people from Iran and Egypt to study in France. Napoleon wrote in his letter: "These people will be fascinated by our greatness after their stay among us, and after they accept our culture, they will be the strongest supporters of our ideals when they return to Egypt." Is the idea of planners the position of the education system, capital, or cost? How is the law of the education system, especially its economy, defined?
Economics of Education
According to government policies and the amount of education budget in the annual budgeting system, the economy of education can be defined from two perspectives. The first view is the view that word is the language of many citizens and even planners that the implementation of the goals of education, a major part of government spending. This view does not see the productivity of today's citizens as a result of their schooling. Therefore, he considers the education system as a cost system that should try to reduce this cost. This view does not believe that in a society with higher education, both economic development and social, cultural, and political development take place, which is the most important challenge for governments. While literate people can support an efficient government, uniform business laws, and personal property security that will lead to investment. This view does not accept that education in any society is a long-term investment and that education is based on scientific principles and meaningful and practical learning has the most positive effect on the rate of return on human capital. Training builds knowledge and skills in the workforce that increase its production capacity. The educational system of any country, with its cultural-political development, educates responsible and participatory citizens, which is a success and victory for the rulers, and perhaps sums up the productivity of the educational system only in the higher education system [85-87].
The second view considers all the economic activities that are created in the course of the education process and includes all the manufacturing and commercial industries related to the education system. If we eliminate the flow of education, the economic efficiency, and sometimes the existence of these industries will be greatly reduced or eliminated. When a school is built in an area, a lot of labor is employed, a lot of money is spent on buying and selling building materials, etc., but to what extent does this sector owe itself to education? Every year, the economic sector of the country gains huge profits from the purchase and sale of textiles and sewing of students' clothes, but no share of this lucrative market is gained by the education system. Banks, on the other hand, charge a fee for cashing their branch checks or receiving a bill, or water, electricity, and gas departments charge a fee for services such as connecting or changing addresses, and calculate it as revenue. The welfare of their employees’ costs money and they are never questioned that providing these services is one of their existential duties. Sada-e Somayya uses the national budget, but receives production and broadcasting costs for broadcasting news programs. However, education has to provide all its services for free and even perform the duties of other institutions. According to the constitution, the main reliance of our education resources is on government resources, the official budget of education is close to seven thousand billion Tomans, and the performance of our budgets is close to 13 thousand billion Tomans, i.e. the result of the education system is double. It is a task entrusted to it based on the official budget, and this result is not seen in any institution, while this increased activity has resulted in six thousand billion historical budget deficits for education. On the other hand, these limited resources, which are not distributed in time, cause problems for the education system, and as a result, we suffer from a decrease in productivity. Therefore, the budget of the education system should be estimated with the function it performs in society.
Sustainability of nations and national values
Our country includes different ethnicities and religions, all of which together form the Iranian nation [88-90]. All the feelings that students have about the country they learn from education during their childhood or adolescence. Social, religious, and cultural values are passed on from education to children. Education strengthens nations during education, so much so that modern governments use education to build national unity and national identity. The most important tasks that the school has in the social development of the student are as follows:
Cultivation of social systems
Education forms social systems. From the very first days of entering the school, students select and interact with individuals and groups that in recent years, devices outside the educational system have systematically used the scope of these groups to implement their goals. The Ministry of Health, for example, can develop its own health regulations through schools. The traffic police are implementing a project called police assistant in collaboration with Education, which has resulted in a reduction in many accidents that no program could have achieved so much success in controlling traffic accidents. But now that the cost of police missions has dwindled, should he put that amount into his income or give it to education?
The role of education in the political system of the country
In the name of education for the benefit of others, it has been observed in recent years that families spend their educational expenses outside of school. On the other hand, if this cost is received and managed by schools, it will be much more effective and teachers' job security will be provided more. Families only entrust their children to school, but they think they are looking for quality education in private classrooms. In this case, too, education has not been able to function well, and as a result, the economic conditions of the cultural community are becoming weaker every day. For example, the administrators of the formal education system set 500 Tomans for each hour of remedial classes in schools with several circulars, while in private schools they charge 9000 Tomans for holding only one exam, which is 16 times the price difference, assuming the time and services are fixed. This existence has been widely welcomed by families .
Even the country's education and assessment organization, which is responsible for holding national exams, receives a fee for its work each year, increasing this figure due to annual inflation. As a result, the country's formal education is facing a budget deficit and a decline in quality. We have done this so that economic institutions outside the educational system can make huge profits through this. It goes without saying that the low cost of providing services has led families to assume that education is not of good quality. The people and the government have not believed in the fact that if education is weak and incapable, it will hurt all social systems and systems. Article 30 of the Constitution obliges the government to provide free educational facilities for the entire nation by the end of high school. But under this pretext, two points have been forgotten. The philosophy of the existence of such a principle is to prioritize the growth and development of awareness and capability of future-oriented human resources as the main assets of a country. If the government at the macro level does not think about solving the problem of lack of education funds, the problem will inevitably be transferred to the micro-level in the school and school principals due to lack of appropriate per capita with art. They run the school themselves. It is in this situation that the parents of the students seek refuge and ask for their help. They have no choice but to pay for insurance, textbooks, and health certificates, but everyone - both principals and parents - knows that this directive is valid until registration and then administrators, due to the education budget deficit Education, they have to ask for help to run the school, and the people, although sometimes reluctantly, and with the realization of the bitter reality of the school financial situation, have not always refused to help the schools to the best of their ability, and this has originated in the cost of education. And education should be taken into account by the number of teachers and all the services that the teacher offers to the society at the lowest price should be ignored and the status of the educational system and its staff should decrease every day. In education, there must be policy-making and planning by the government, and the private sector must invest, even if this investment is completely profitable and profitable in proportion to its investment. The same successful experience of establishing distance learning centers, which, except for the first year, not only does not impose any costs on the government, but also earns a certain amount of income by receiving school rent and taxes from these centers, and also creates financial aid for teachers. In the meantime, the provision of teacher salaries and the purchase price of services have been removed from the educational system .
Education Credits in Iran
According to the task assigned to the Ministry of Education by the Constitution, this institution is very comprehensive and important. This year, with a population of about one million manpower and 14 million students, it is appropriate that in proportion to the population, which comprises about 20% of the total country, excluding the families that can be affected by this community, as well as the national public budget. While with a credit of 10 thousand billion Tomans, about 10.6% of the total public budget of the government is related to education. To carry out the missions of the most effective institution that builds the next generation, the cost is, in fact, an investment. According to the Research Center of the Islamic Consultative Assembly, the Ministry of Education has been facing a budget deficit since 1991, and the deep root of this deficit is the small share of education in the eyes of the government. The share of the education budget in GDP is one of the most important comparative indicators of different countries, which in economic analysis of education is referred to as a national effort. In the years of the third program, this index had an almost constant trend with an average of 3.6 percent. In the budget of 1988, education in all its scope was seen under one heading and one line . Whereas in 1987, after the reforms of the Islamic Consultative Assembly, the Educational Research and Planning Organization, the Higher Education Complex of the Holy Prophet (PBUH), and the National Organization for the Development of Talents were mentioned with an independent line and budget. The following can be mentioned about the education budget in 1988 compared to 1987:
A: The share of total education credits from the general budget decreased from 11.2% in 1987 to 10.6% in 1988.
B: The share of credits of education expenditures from the total credits of government expenditures decreased from 16.7% to 16.02% C: The share of credits of acquisition of educational assets from the total credits of acquisition of government departments, from 3.6 the percentage decreased to 3.1.
D: While the general budget of the government has increased by about 31.7 percent, but the share of education with the budget reform shows a decrease of 1.9 percent.
E: Education credits in 2009, compared with the approved credits of 87, has decreased by 1.9 percent.
Private Schools and Public Participation
In view of the above, if we think about the dynamism of the education system, there is no choice but to reform the education economy, and at the beginning, a balance must be struck between public and private sector funding sources, which implies both efficiency and justice. In many countries, a significant portion of education expenditures, especially at the primary and secondary levels, is covered by public taxes and other government revenues. In 1992, education accounted for about 5.1 percent of the world's gross domestic product. Developed countries spend 82% of the world's public spending on education. It includes the majority of public participation, which, for example, in 2006 amounted to 61 thousand billion Rials. Although families complain about receiving cash in schools is a recurring story that goes on every year, but schools have been on the board of trustees for several years, seeking the help of families, but what appears they rely just on family help. Financially, it is more prominent in this type of school than in other schools. Because they believe that if the full participation of people and families in the education system is expanded, the quality of education will increase.
Education should be decentralized, i.e., the development of inclusive participation in education should be considered by planners. The existence of participatory schools can make a great contribution to the education economy. However, it seems that the cornerstone of the new education system in the time of Mirza Hassan Rushdieh was based on this. After the opening of the Rushdieh school, Ehteshamat al-Saltanah and Ali Khan Nazim al-Ulum established the seminary in May 1277 in Lalehzar, Tehran, and it has been mentioned about the provision of resources for this school and the like. Upper-class students attended the advanced (three-year high school) section of the school, and lower-class and disadvantaged students formed the primary classes. Parents believed that the school would provide better-qualified teachers by hiring a private tutor. Throughout history, we see that there were people who did not think of personal gain and built schools with spiritual motivation. In addition to the schools that were provided in Tehran following this style, i.e. new educational and participatory system, the inaugural school, which was established by Mirza Mahmoud Khan Moftah-ol-Molk in the Sangalaj district of Tehran in 1277, was one of them. All school expenses, such as teachers' salaries, rent, and school supplies, were paid by the Education Association, and books were donated to the school. But the students also paid one toman a month and bought lunch, books, and essentials. Danesh Elementary School was also funded by Mirza Reza Khan Tabrizi, the Iranian ambassador to St. Petersburg, and Mirza Shokrallah Tafreshi, Al-Dawlah's translator, set up a literature school in the square, or a training school was funded by Zakalmolk Foroughi. Many cases of participation of individuals or charities in the establishment of the school can be achieved. Promoting the tradition of endowment and building schools by charities in today's context, can be considered as one of the sources of education. Parental involvement is not just about financing, but also about providing the opportunity to participate in decision-making and giving their opinion. This type of partnership leads to the optimal use of capital and talent, and in other words, economic activity. Even the use of parental expertise in schools can have significant economic consequences. Large government education programs will only be successful if they are accompanied by small, practical educational programs by private institutions that quickly adapt to life-changing needs. The world education economy in developed countries, which consider basic education as the basis of their development, the education economy is also considered and they try to use all the capacities of this system to develop and improve its quality .
In these countries, they provide all the services that can be provided in the education system in their schools and benefit from it. In most countries of the world, policy-making and planning are the responsibility of the government, but in industrialized countries, to reduce costs, government policy focuses on the development of distance education institutions, educational sites, and the development of technical and vocational education to generate revenue for schools. In most countries, public participation is in various forms, such as the payment of voluntary tuition fees, independent and open schools with an average of 40-50%. While the government has so far seen only the private sector to provide a small number of their financial resources, it has neglected the revenues from the extra-curricular activities of the private sector. The following report is an example of the education economy in different countries of the world with different economic systems that can be considered in our country.
In the United States, schools have a lucrative economic establishment, with students employed in restaurants, hotels, wood workshops, and libraries, or schools with hotels, toilets, food distribution services, and school cooperatives that benefit schools are managed. The Maryland Public Schools Building Economic Association is involved in building homes, educational projects, and bridge-building centers by borrowing from banks, and is using the proceeds to afford education expenses. Of course, in addition to construction, students participate in fishing and literary and artistic activities. 93% of school costs are planned and funded by municipalities and income from the production and provision of student services is provided through local states.
In Australia, 80% of the government budget is allocated to public schools and 20% to free schools. Non-governmental and free schools account for 30% of the country's total students by absorbing 20% of the total government payments to the education sector.
China Schools operate both governmental and non-governmental. According to 1999 figures, 16.8% of children's per capita educational income after food (second place) in expenditures. In the People's Republic of China, parents are required to pay for the textbooks and textbooks needed by students twice a year so that schools can purchase the equipment for them. Schools in the villages are managed and built by the village mayor, about 55% of the renovation costs are covered by families, 45% of the teachers are non-governmental and receive salaries from public expenditures.
Sweden is a free educational and nutrition tool in Swedish schools. The share of the government budget in education is about 8%. The rest is provided by the municipality, provincial councils, and private institutions. Municipalities are required to provide free transportation for students. Municipalities and the government are responsible for financing schools. Municipal assistance was 154 times that of government assistance to schools in 2000.
France Public education covers 80% of the country's students in educational programs. 20% of students study in private schools are funded by tuition fees. The French government is responsible for ensuring the salaries of the teaching staff, the educational supervision, and the educational expenses of the country. In parallel with the increase of the basic (compulsory) academic years in the French education system, major efforts have been made to make educational facilities free. Local authorities in France are responsible for financing the construction of training centers and monitoring performance .
Needless to say, both income and expenditure play a key role in education and cannot be ignored. Therefore, for the education system to flourish, expenditures must be organized and on the other hand, income must be coordinated. If the livelihood of the cultural community is provided by the government at a reasonable price, the first step will be taken to convert manpower into human capital and the necessary basis for the formation of national knowledge will be removed. In this regard, the following can be mentioned:
In the macro sector, the creation, and expansion of appropriate mechanisms can be considered to further systematize public participation and the non-governmental sector in education, including the use of new methods to diversify ways to attract and increase public participation in equipping new financial resources. For example, allocating part of the revenue of municipalities and other organizations with significant revenue to education and providing part of the cost of education by centers and organizations that are trained directly or indirectly from the services of human resources. They use education, construction of schools and educational spaces by industry owners using tax exemption to the extent of participation and entrusting them to education can be mentioned as other practical suggestions for financing the education budget deficit.
Organizing educational activities can be another issue, especially in sparsely populated areas, such as spending government funds in deprived and remote areas of the center and developing the use of public participation and private centers in privileged and central areas.
Institutional and legal basis for the optimal use of existing human and financial capacities and facilities is another consideration. For example, at the micro-level, i.e. the regions and cities, sewing instructors can produce school uniforms with the help of students during the summer, and instead of economic enterprises, create jobs for their students and schools can benefit from the profits. Also, travel agencies, hairdressers and shops, etc can be established from the participation of retired educators, and the provision of services to students can be entrusted instead of the private sector.
Schools can set up extracurricular classes and provide real-time educational services in real-time, with the help of experienced colleagues. Education for services provided outside of their field of work, such as police assistants, a health worker, etc. to receive a fee from the other party.
Procurement and distribution of students' offices and stationery should be done by the regional management. From this source, it can also earn additional income by providing advertising services such as introducing cultural centers, cultural messages on stationery.
The license to establish free educational centers should be available only to the cultural community, while today, many schools are run by people outside the cultural community and for-profit and in the form of an economic enterprise and do not pay attention to the goals and programs approved by the country's education system.
Citation F. Mohammadkhani Orouji, Z. Saeid. Review and Development of New Topics in Education Economics. Int. J. Adv. Stu. Hum. Soc. Sci. 2022, 11(1):21-34.