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Transforming the Economics of Education in the Context of Expanding Resources

Priority areas of development: economics
The project has been carried out as part of the HSE Program of Fundamental Studies.

This research project's main area of scientific interest aims to explore the social benefits in education at a time when information and communication resources are expanding, using identified effects of the 'cost disease' in Russian education. The research evaluates the consequences of this effect by examining performance indicators of higher education institutions. Special attention is paid to methods and models for analysing expanding resources as well as to the factors affecting the potential to create added value in the education sector.

Research Object

The research object is the system of higher education institutions in Russia. When assessing the spatial analysis of the factors affecting the potential to create added value in education, we examine the structure of the statistical indicators of higher education in the Central Federal District.

Research Purpose and Goals

a)  Research Purpose

To study changes in the basic conceptual approaches to the economics of education in the context of expanding resources (information and communication, intellectual, educational, symbolic, and other types of resources).

b)  Research Goals

- To analyze the existing theories and concepts of the economics of education and their applicability to the situation in Russia, in particular, 'inefficiency disease' (Abbing, 2005), the concept of 'second best' (Rodric, 2008), Baumol’s effect and the concept of patronized goods (Baumol, 2005; Rubinstein, 2012), as well as the effects of the informational asymmetry studied in the works of Gary С. Becker and the works of some Russian researchers in 2008-2011;

- To study how the transition from limited resources to expanding resources impacts the economics of education;

- To study the transformation of ‘market failures’ in education in the context of the new economy;

- To identify the factors shaping the potential to create added value in education and jobs through the production and exploitation of intellectual property.

With regards to the development of a creative economy, educational institutions, particularly universities, are transformed into counterparties of intellectual markets. However, this transformation requires a new institutional environment and a funding mechanism for strategic tasks such as non-commercial franchising, creating opportunities for universities to enter IPO markets, agencies for developing university credit ratings, participation in technology markets, and so on. The space of institutional capacity in the current contemporary Russian situation and the barriers to developing modern institutions of a creative economy must be analysed, and the factors that affect the potential to add value in education must be identified.


The methodological approaches used in the study involve a combination of a spatial analysis of statistical data pertaining to regional economic development in order to identify the factors that determine the potential for creating gross added value in education. Different specifications of the modified Cobb-Douglas function were utilized.

Empirical Base of the Research

To investigate the effects of “cost disease” in the higher education sector, we used a database containing the performance indicators of higher education establishments subordinated to the Russian Ministry of Education, as well as data on the dynamics of the main macroeconomic indicators for 2001-2011.

Research Results

The research results present:

1) An analysis of the current theoretical and conceptual ideas on the economics of education:

-     Defined approaches to studying “cost disease” in education;

-     The hypotheses of “cost disease” in higher education, tested using empirical analysis;

2) Developed grounds for the universities’ role as new economic actors:

-     An examination of a new configuration of resources, using as an example the higher education institutions in the Central Federal District of Russia;

-     An analysis of international practices evidencing universities as being the main sources of basic knowledge and contributors to the development of modern technologies in the regional economy;

3) A study of the effects of the transition from traditional resources to expanding resources reveals the problem of growing contradictions in the economics of higher education related to the expanding market of higher education, lower barriers to accessing educational resources, and their rapid, and virtually unlimited, expansion;

4) Transformations of R. Musgrave’s concept of 'market failures' in relation to public goods in the higher education sector in Russia;

5) Defined factors that form the potential for creating added value in education.


The study reveals the impact of the 'cost disease' phenomenon on higher education's productivity and accessibility. It examines Russian problems in the area of producting ‘patronized goods’, systematizes market failures in the education sector, and outlines measures to regulate these processes using economic mechanisms. It also reveals the growing contradictions in the economics of higher education connected with the expanding market of higher education, lower barriers to accessing educational resources, and their rapid, virtually unlimited, expansion.

Implementation of the Research Results

The main results of the research are presented through publications and thematic papers published in Russian peer-review journals, and presentations at research seminars and conferences.

Research Implications

Using the analysed conceptual approaches to education economics in the context of expanding resources helps to identify probable risks and to assess the influence of these changes on the institutional landscape. The examination of the effects of 'cost disease' in education aims to identify benefits and returns in the education sector. The study of Russian-specific problems in the production of ‘patronized goods’ in the framework of the market failures concept will inform the development of government measures to eliminate possible adverse impacts depending on the particular market failures. Modernizing the regulatory environment in the area of intellectual property could help address the issue of exclusive rights and introduce best practice dissemination mechanisms based on market principles in the education sector. A critical review of the factors influencing the creation of added value in education will help to identify needed adjustments to the specific socio-economic situation in higher education. 


Абанкина И. В., Абанкина Т. В., Деркачев П. В. Исследование «болезни издержек» в российском высшем образовании // Университетское управление: практика и анализ. 2014. № 4-5 (92-93). С. 52-65.
Abankina I., Scherbakova I. Russian Higher Education Reforms and the Bologna Process // Journal of the European Higher Education Area. 2013. No. 3. P. 3 -25.
Филатова Л. М. Ресурсы высшего образования: курс на сохранение приема студентов // Университетское управление: практика и анализ. 2014. № 4. С. 66-76.