467 Prague Economic Papers, 2017, 26(4), 467–486, https://doi.org/10.18267/j.pep.622 HIGHER EDUCATION AND ECONOMIC GROWTH: A COMPARISON BETWEEN THE CZECH REPUBLIC AND ROMANIA Bogdan Oancea, Richard Pospíšil, 1 Raluca Mariana Drăgoescu * Abstract Although there is a strong theoretical framework for the economic growth and its relationship with education, the empirical evidence of this relationship is rather scarce. In this paper we investigated the causality and the long-run relationship between economic growth and higher education in the Czech Republic and Romania, using data series for 1980–2013 period. We used a VECM to analyse the long-run relationship between higher education and economic growth and Granger methodology to test the causality between variables. The results showed that higher education has an important positive effect on economic growth, although the impact level of the higher education on economic growth is different in the two countries. We also showed that there is a causality relationship that goes from higher education to economic growth for both countries. Keywords: higher education, economic growth, cointegration, ADF, unit roots JEL Classification: I21, I23, C32 1. Introduction In the new era of the knowledge society, education in general and particularly higher education is one of the most important determinants of the economic growth. The inves- tigation of the relationship between education and economic growth started in early 1960s, initiated by the human capital school (Schultz, 1961), and has become one the central themes of research in economics in the last decades. The theory of economic growth is based on asset accumulation, including human capital, on the return of these assets and the efficiency with which they are used. Lucas (1988) developed an endogenous growth model that considered the human capital as one of the main determinants of the economic growth. Education was considered a proxy for the human capital accumulation in this model. Most of the present economic growth models build on the endogenous growth model proposed by Lucas emphasizing the role of human capital in technological progress. Romer (1990) also showed that human capital development results in technological progress that influences the accumulation of physical capital and in the end leads to economic growth. Mankiw et al. (1992) showed that the human capital has a significant role in the economic growth. The authors used a Solow- Swan type model and introduced the human capital measured through education as a new variable in the model, showing the importance of the investment in education as a determinant of the economic growth. Greiner et al. (1995) build on the Uzawa-Lucas *1 Bogdan Oancea, University of Bucharest, Bucharest, Romania (bogdan.oancea@faa.unibuc.ro); Richard Pospíšil, Palacký University, Olomouc, Czech Republic (richard.pospisil@upol.cz); Raluca Mariana Dragoescu, National Statistics Institute of Romania, Bucharest, Romania (dragoescuraluca@gmail.com).