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Policy Decision Impact in Education

Ana Maria Popa
March 03, 2020


Abstract: This article focuses on how does educational policy impact the development and prosperity of a country, especially in the European Union. Hence, the study is interested in depicting a common trend in the educational system within three European countries: Finland, the Czech Republic, and Romania. However, we will try to reach a conclusion based on four indicators, related to the percent of educational expenditure from GDP in each country, the human development index, confidence index, and social justice index. The motivation of this study has also a behavioral aspect, because of the importance it gained in the last years and measurable effects from similar research. The human decision-making process has sizable brunt for the economy and society as a whole, especially when it’s done by political powers. 


In the past centuries, there was a predominant fear upon citizens, which had a profound foundation in the faith that the ones controlling "the purse ultimately entails the control of policy". So there was nevertheless about the fear of being “tyrannically taxed beyond endurance” or not knowing where the public money goes, but it was more related to policy control and what harm might this bring.

Even nowadays, there is a general idea floating in the minds of intellectual communities, saying that if governments and public leaders want to obtain control over a country, that country has to be less educated, less healthy and governed by fear. That is what the quote “Knowledge is power” is saying; give knowledge to the citizens of a country and you cannot control or manipulate them as easy as before. Hence, what this study is trying to achieve is that a country with a stronger educational system and strong policies will continue in a cyclical way towards development and prosperity. The comparison between 3 countries in the EU (Finland, Czech Republic, and Romania) with the different economic, social and historical background will be the focus of our study. 

A policy comparison between EU member states

Education is essential for Europe’s future, an invaluable investment generating benefits for the economy and society:

  • Better skills;
  • Increased employability;
  • Higher innovation capacity;
  • Development of citizenship;
  • Equality and social cohesion;

This is the reason why 5% of the EU’s GDP is spent in this direction for education and training. However, 1 in 10 pupils leave school without a sufficient backpack of information and more important, qualifications, only 4 out of 10 people have completed a cycle of higher education and 2 out of 10 adults suffer from low literacy and numeracy skills. This is why the EU is supporting that education should be a life learning process, being Member States' responsibility. 

European cooperation complements and supports member states' reforms and actions. This cooperation brings Member States, European Commission, and other stakeholders together to learn from each other by sharing experience, evidence, analysis and policy options monitors progress to an agreed benchmark and regular reporting. 

In 2009, under the umbrella of Education and Training 2020 program (ET 2020) the Member States and European Commission agreed to put their focus on :

  • Strengthening lifelong learning and mobility;
  • Improving quality and efficiency in education and training;
  • Promoting equity, social cohesion and active citizenship
  • Fostering Creativity and innovation

Figure 1. Priorities of the EU 2016-2020

After a short but comprehensive view on what are the European Union's major challenges and priorities on education policy in the last decade are, we will focus on 3 key EU countries for a more detailed analysis. 


In this Northern country, the keywords when talking about education policy are: “quality, efficiency, equity, and internationalization”. Every time we think about Finland the idea of high-quality education pops-up in our mind, also providing equal opportunities for all individuals is, from their point of view, a long-term objective of the education policy. At the Constitutional level, education and culture are recorded as basic rights.  Finnish people have built their society and policies on the basis of lifelong learning and free education for everyone in order to achieve this objective. Furthermore, a key to well-being and competitiveness in the EU and the world stands in how well are citizens educated. 

When talking about Finland’s main pillars on education policy we see continuity in actions, commitment in decisions and cooperation; “evolution rather than a revolution”. A unified part of policy-making is represented by a trilateral union between Government, employer organizations and trade unions. A key concept of educational reform is being cored on the discussions, consultation, and participation of an expansive range of stakeholders from the public and private sectors. A serious debate between key representatives as actors fighting for educational development is focused on teachers and the Trade Union of Education. The local level has the responsibility to implement policy changes, however important changes and the main guidelines are developed at the central level, as well as better-shaped objectives.

Injustice in the educational system is another main subject of debate and policy adjustment. Is has been noticed that usually, students with a strong economical background were good performers of education and training programs (PISA). However, through reform and policy changes, this equity and exclusion issue can be tackled and the rising areas of high school exclusion will disappear, leading to employment, housing security, high education levels and quality health.

Czech Republic

For Czechs in the process of policymaking the focus stays on equity, quality, and effectiveness as being the three key points in “Education Policy Strategy of the Czech Republic for 2020” (2014). 

This strategy aims at decreasing inequality, increasing accessibility for early childcare and preschool education, and making compulsory the introduction of some subjects (mathematics) in secondary school and ensuring personal social circumstances do not affect the access to education. Furthermore, in order to have quality, they support teachers and encourage quality teaching, by the modernization of training for teachers. Also, priorities are set on implementation of a strong career system for future educators. Moreover, achieving effectiveness is related to educational management and is working on the availability and quality of information for all categories of individuals, trying to avoid asymmetric information and developing a long-term plan for the educational institutions. 

Students who are at risk of low performance are being supported by the government by a various number of policies introduced for their benefit. As part of the “Inclusive Education Support Centres” (2009-10) it is included the support for a school in better targeting individual learning. The aim is also set on determining the “conditions for inclusive education in compulsory education”. Career paths followed by students is also of major importance, and counseling has been introduced as a part of the “Education for Competitiveness Operational Programme” (2007-13), where centers have been expanded to help the young generation in making better and confident choices and also deciding what to follow not only in life but also in early stages of school.


In this eastern European country, the government strategy towards education aims a set of objectives such as performance, social equity, innovation, and autonomy.

Unfortunately today, the educational system from Romania, according to a diagnosis made by Mircea Miclea, the President of the Presidential Commission for analysis and elaboration of policies in education and research, there is a danger of losing the competitiveness and prosperity of the system due to some major shortcomings such as ineffectiveness, irrelevance, inequity and poor quality. 

"In education, structural changes take time and commitments must be going beyond the horizon of an election cycle or the life of a government. If we really want a profound change, it is essential to achieve a memorandum for a national pact for education and research commitment signed by all responsible forces of the civic and political society” (Miclea, M., 2007, p. 10).

 Some other important targets of policy-makers in Romania are the following: 

  • Continue collaboration at international level;
  • Promoting public policies based on societal needs;
  • Promoting vocational schools and programs;
  • Integrating young adults on the labor force through the development of strong policies which should ensure a high level of growth and durable occupation of the workforce, primarily based on knowledge;
  • Increasing the financial resources allocated for education, by also attracting private funding;
  • Respecting the principle of social dialogue;
  • Increasing Romania’s international visibility through results obtained in education;
  • Coordinating policies from the educational system with policies and initiatives from other sectors;
  1. Case study: Studying the relationship between educational policy and two behavioral and non-behavioral indicators.

3.1 Methodology

To run our case study, a broader and more comprehensive view of these countries had to be done. This was the comparison and introduction realized above. We have divided the indicators into two categories: behavioral and non-behavioral. 

The study for the non-behavioral indicators: Educational expenditure as % of GDP and the HDI ( Human Development Index) have been made using the correlation coefficient. “In statistics, the correlation coefficient r measures the strength and direction of a linear relationship between two variables on a scatterplot. The value of r is always between +1 and –1.” The below formula has been used. 

In order to examine the behavioral indicators: confidence index and social justice index data from trading economics website and the book Animal Spirits have been used, respectively Social Justice Index Report 2015.

2.1 Educational policy and GDP

“Education is a leading determinant of economic growth, employment, and earnings in modern knowledge-based economies. Ignoring the economic dimension of education would endanger the prosperity of future generations, with widespread repercussions for poverty, social exclusion, and sustainability of social security systems. Policy-makers interested in advancing future prosperity should particularly focus on educational outcomes, rather than inputs or attainment.” (Ludger Woessmann, p.1)

Having in mind that in order to boost the economy and the country’s GDP, one must invest in education, which is also a general viewed thought of policymakers in the EU. 75% of recent economic development, has been put on the shoulders of students' outcomes, due to a study done by Woessmann. He also emphasizes, that in order to have long-run economic growth we need to strengthen our educational system, because the difference in the working force is done through better-skilled individuals and the level of knowledge they have. However, he points out that going to school is not automatically resulting in being skilled, but rather the achievements you have.

From what we’ve noticed, this is a strong and important subject, because, in order to have an educational system that focuses on quality and consistency, the teaching methods have to be innovated and adapted to the ongoing changes in our world. So if everyone is following the exact same cycle, there will be hard to make changes. Better to have a Steve or a Mark or an Elon in our class, that quits what’s ordinary and goes extraordinary. He will then make all of us question the status quo of the educational system and think if there is also another way to get these achievements and skills the society needs. Moreover, they will push us towards making changes. 

A great challenge for Finns is being very attentive with educational funding, trying to accommodate all the sectors and levels of schooling. However, looking at the chart below, a higher portion of spending is allocated on primary and lower-secondary school, as used to be done in almost all EU countries, with small exceptions. 

        Expenditure on educational institutions as a percentage of GDP, by level of education, 2010

Between tertiary educated people, in the past decade, higher than 1/2 of GDP growth in OECD countries is related to labor income growth. In the range of 45-50 years-old, workers people are getting twice as much from employers if they have tertiary education than for someone without an upper secondary education.

As for the Czechs, the investment in education is still below the OECD average, even if it has been increased. 4.7% of GDP (2010) - expenditure on educational institutions, while the average is at 6.3%. Funding for educational institutions comes mostly from public sources (87.7%), this is a custom among OECD countries. The share of private expenditure is 12.3%, public funding increased by 58%,  private funding increased by 98% . Still, OECD data doesn’t show a replacement of public funding with private ones.

  Expenditure on educational institutions as a percentage of GDP, by the level of education, 2010

The technological and digital era has come. The skills required are more and more specialized, which makes the demand for these skills to increase, ultimately the price for educated labor has and will continuously increase on the global market. This will also be a determinant of growth, development, and prosperity between countries around the world. So in order to engage and absorb skilled workers, societies must find the right equilibrium between promoting equity and offering strong economic stimulus. Increasing accomplishments in the population, good employment outlook and the higher gains that come with greater educational attainment can provide to growth and prosperity in OECD countries. Having this background, an easy way to see how better skills are impacting economic growth is by labor income growth in GDP by educational categories.

Expenditure on educational institutions as a percentage of GDP, by the level of education, 2010

In Romania, the situation, depicting it from the chart, stays a paradoxically different than in the other two Member States. We can see a higher portion of expenditure set on secondary and tertiary education rather than on primary education, as shown in Finland and Czech Republic. It is probably based on a different culture and psychological studies shown that in Romania, children need more attention and preparation when they enter secondary education. 

Looking forward to the Lifelong learning, Internationalisation and 18-year-old in education indicators in Annex 1, we can see different correlation indexes for the data, related to the portion of expenditure allocated for education. The scatterplots show a strong uphill correlation between Czech lifelong learning values and educational expenditure, while for the other two there is a weak, but the still positive uphill trend, which might be an important clue in the relation between educational expenditure, respectively educational policy. However, data for internationalization show a rather downhill negative relationship for Romania, and stronger for Finland, but still, Czech shows the moderate positive uphill relationship, giving us a slightly important clue about the correlation done for our study. Moreover, data shown in the last indicator’s correlation (18-year-old in education) gives only a weak, but a positive influence in what the relationship between expenditure and policy impact might be.

  • Educational policy and Human Development Index

The HDI is a mirror for 3 dimensions of human development, measuring progress in the first place. The dimensions are the following:

  1. a long and healthy life
  2. access to knowledge 
  3. decent standard of living. 

The first one is expressed in terms of life expectancy at birth, and average years of education at the adult population level (taking into account people at 25 years or older), while the second is measured with the help of children at school-entry age, determining on their base the access to learning and knowledge (total number of years of schooling a child of school-entry age can expect to receive ). 

The third one is determined by GNI per capita expressed in constant 2011 international dollars converted using purchasing power parity (PPP) conversion rates. 

Looking at the HDI and Lifelong learning correlation index (Annex 2), we can see a strong uphill positive linear relationship in the 3 countries for comparison showing values higher than 0.7. This expresses that there has been a directly proportional increase in both HDI and Lifelong learning. Furthermore, it makes sense for this to happen, because of the increase of all the indicators comprising HDI (life expectancy, years of schooling, GNI per capita) gives strength to quality and efficient education at a broader pie of stages of development.

For Internationalisation and 18-year-old in education the situation is on a broad image the same, showing a strong, almost 1 correlation in Romania and Czech Republic, respectively Romania and Finland, but there is also a negative, respectively close to 0 correlation in Finland for internationalization, respectively Czech for 18 years old in education. 

  • Educational policy and Confidence index

We will now make a comparison on the Consumer’s Confidence Index in the 3 countries which are the pillars of this study, based on data from the trading economics website from March 2017. 

  • Consumer Confidence in Romania has declined to -13.80 in 02.2017.  The average is estimated at -28.26 between 2001-2017, the height being at -10.60 (2007) and the lowest value at -63.30 (2010). The scale on which these data has been established are from -100 (extreme low confidence) and 100 (extreme confidence), while 0 expresses neutrality.
  • Consumer confidence in the Czech Republic has fallen at 108.2 in 02.2017. Even if there was no visible change in unemployment and financial situation, consumers were anxious about the general economic situation. The average is estimated at 90.44 between 1998-2017, the height being at 110 (2016) and the lowest value at 66  (1999). The index is computed as an average of 4 indicators. The indicators are expected savings (for the next 12 months), expected total economic pulse, expected total unemployment and expected consumer’s financial situation. A very important fact is that CCI is low when unemployment is high and consequently GDP growth is low.  
  • Consumer confidence in Finland had a fall at 20.8 in 02.2017, The long-term average is set at 11.81 between 1995-2017, the height being at 22.90 (2010) and the lowest value at -6.50(2008). There was an optimistic approach towards unemployment assessment, due to the positive expectation of Fins about the general financial and economic situation of the country, especially their own financial situation. In the period following the next 12 months, in Finland, people have found the household’s saving possibility a good opportunity. Moreover, they were confident in taking a favorable loan, meanwhile buying or investing in durable goods, was not the first choice for consumers.

Watching the consumer's confidence index (Annex 3) on a period of 7 years might bring us a hint about how people’s decisions are affected by general changes in the economy. Because our study is also seen from a behavioral point of view, we want to emphasize how important it is for individuals to have confidence in times of crisis, successive how important it is for the economy to restore people’s faith and start rebuilding. In Romania and Finland, it can be seen that the lowest confidence index arose in crisis times. Education is a way to establish confidence in times of crisis. When people are well informed and not manipulated, governed by fear, they feel confident and it’s easy for the economy to restore balance. 

  • Educational policy and social justice in EU

Situation: Finland has always been and remains a role model for the European Union in the social justice area. Sitting comfortably in second place in the SJI analysis for 2016 shows the admirable position for equitable education, intergenerational justice, poverty prevention, social cohesion, and nondiscrimination. As a plus, Finland shows low rates of youth at risk of poverty or social exclusion, as well as significant strengths exposed by high quality and equity in education which is the best in the EU.

Barriers: Even is there is soundly performance in the education field, Finland struggles with early school-leavers and lowering its slowly increasing number. On the other hand, the aging population has given difficulties in creating a sustainable pension and fiscal system. However, strong reforms are sitting ahead, raising retirement age at 65, amend the accumulation rate and giving the possibility to flexible retirement. 

An impressive high share of GDP goes to research and development for future investments (public and private expenditure amount 3.2% of GDP), yet there are problems regarding technology transfer to the private sector from universities as well as insufficient development for academic entrepreneurship. High percentages of youth unemployment (22.4%) still remain a serious concern, for the future labor exclusion possibility. Taking into account the position of foreign-born workers on the labor market and their unequal income ratios is also a matter of discussion in Finnish society.

Situation: The Czechs are constant in their social justice index, in 2016 gaining the 4th place among the EU countries in the SJI analysis, showing a modest but progressive improvement since 2008. Strong areas for this country are poverty prevention, health-care, integrational justice, social exclusion and access to education and labor market, due to significant successful policy reforms.

Barriers: Even if the unemployment rate is above the EU average, an increase with 15% points in temporary employment from 2008 can be seen. This situation encounters Roma minority, low-skilled workers, disabled and parents with children groups, which are highly discriminated on the labor market. The poor public employment services, non-flexible hours schedule and cost affordable child-care services are the main reasons for the low conversion rate from unemployed citizens to employable or employed ones.

Injustice in the educational system is another main subject of debate and policy adjustment. Is has been noticed that usually, students with a strong economical background were good performers of education and training programs (PISA). However, through reform and policy changes, this equity and exclusion issue can be tackled and the rising areas of high school exclusion will disappear, leading to employment, housing security, high education levels, and quality health.

Situation: We can see a huge difference in ranking from the other two countries we are comparing, Finland and the Czech Republic. Romania’s overall performance is still low in 2016, sitting at the bottom of the line, on the 27th place, just before Greece. Terrifying are the ranks obtained in health and poverty prevention, social exclusion and discrimination. As already known in Romania, a third of the population is living on the minimum wage, which is an important signal for authorities, first in terms of poverty prevention and second in terms of corruption and tax avoidance.

Barriers: The health system is a hot topic in Romania. According to Eurostat (2014), above 9% of the population suffered from deprivation of medical care due to hard-to-reach health services, interminable waiting lists for treatments and most importantly, costs. Taking a look at the public spending on increasing demand for health-care, there has been a downturn on expenditures in the 2015 budget (4%) from 2014 (4.2%). Solutions have been searched for, trying to undertake major reforms, however, in 2015 health insurance cards have been officially introduced in the hope of modernizing the healthcare system by performant and synchronized information. Anyway, problems haven’t stopped to appear.

Minority groups are an even more hot topic in Romania. Discrimination against LGBT, Roma, disabled and HIV positive communities is a common but frustrating situation for this country. The situation goes all the way up to the civil code, authorities' behavior and the community mentality as a whole, by restraining these minorities from education, mobility, and economic sufficiency. Measures have been undertaken by the European Commission Against Racism and Intolerance who gave the authorities recommendations such as: applying penalties, doing public awareness campaigns, training for societal individuals (teachers, judges, police officers, etc.)   


This study is only an introduction to the importance and impacts educational policy is generating. We have chosen the above indicators in order to have a broader view of this empirical subject. There is, anyhow, in the comparison developed above, an important clue on how stronger and people-oriented policies can impact the economy and drive into implementing each country’s objectives towards educational policy, increasing quality, performance, efficiency and equity for citizens. It is in the power of the people, that ultimately generate change in a country, to prosper and gain knowledge that circularly will give them power.  

However, the great challenge comes with realizing that the state’s investment in education is not done randomly. The relationship among education and growth is still fragile due to the following aspect: there is a direct proportionality between how rich a country is and its fast growth in economic terms. For richer states, it will be easier to increase spending on education, while poorer ones need to allocate a smaller portion from the GDP on education. Hence, the probability stays in a reverse causality approach between growth and education.


Education Policy: Process, Themes and Impact, By Les Bell, Howard Stevenson, 2006

POLICY EFFECTS OF PISA Oxford University Centre for Educational Assessment Jo-Anne Baird, Talia Isaacs, Sandra Johnson, Gordon Stobart, Guoxing Yu, Terra Sprague & Richard Daugherty May 2011 

The Impact Of Education Policy To Country Economic Development  Daiva Dumciuviene.Procedia - Social and Behavioral Sciences Volume 191, 2 June 2015, Pages 2427-2436

Finnish National Agency for Education - Education policy

Educatie cercetare si cultura - GOV - Strategii-Politici-Programe

ROMANIAN EDUCATION REFORM BETWEEN POLICY AND ACTION -Adriana Nicu „Lucian Blaga” University of Sibiu, Romania




Strategic framework – Education & Training 2020 

Czech Republic - a new strategy for education

17th century British Finance - From 'A History of the British Nation' by AD Innes, 1912

Animal Spirits George A.Akerlof , Robert J. Shiller