Education, Economic Growth, And Efficiency Of Investment In Education In Montenegro

In this paper, following usual practice, we first present sources of groeth analysis for Montenegrin economy - first and second section. In the first section global factor productivity and contribution of engaged labor and capital is analysed. Results are different from that for similar countries in the sense that the influence of global factor productivity is nigligable. In the second section we present analysis and measurement of influence og education as well as influence of applied knowledge on economic growth. Contribution of education is very significant, but it mainly present the influence of those efort that have been made in order to sustain existing level of education of increasing labor force. Contribution of applied knowledge is insignificant and it contradict to relatively high level of labor force education. We explored this and some other paradox of Montenegrin education. In third section we present macroeconomic and microeconomic analysis of efficiency of investment in education. The rate of returns are very high for all levels of education. They are especialy high for university level graduates. We stressed the fact that such high level of rate of return had been possible because of the existence of broader "Yugoslavian" labor market, which was able to absorbe excess production of our University and, in that way, reduce pressure on domestic labor market. Now that Montenegro is independent state, it is higlhly doubtfull that something like that will be possible, even if we assume acces to EU labor market. In the forth section an effort has been made to stress importance of education for development of some other, apart from skill, abilities that are important for the growth of nation. Also we stressed the fact that education has influence on some other sources of welbeing that are not captured by GDP. Finally, in the last section we presents sets of measures that might help education to become driving force of Montenegrin development.