Higher education and improvement of business environment: a case study of Iran and the selected Asian countries

Investing in higher education, which is considered as the formation of human capital, Increases productivity of production resources and efficiency of enterprises, leading ultimately to economic growth. If sustained growth in macroeconomic level can create job opportunities and decrease transactions cost, reduction in these costs should increase enterprises’ efficiency as well as production growth which improve business environment. On the other hand, a productive interaction between universities and industries should result in improving business environment through enhancing the role of higher education in economic activities. In this study, causality relationship between higher education and business environment was investigated by an empirical model, which has been specified for Iran and the selected Asian countries including China, Malaysia, Philippine, India, Singapore, Thailand and Vietnam. Therefore, a Granger causality approach in panel data was used to investigate causality relations between higher education and business environment indices. The relevant data was published by the World Bank-Doing Business group during 2004-2014. In addition, a regression analysis was applied to investigate the effects of higher education together with other factors such as inflation, income per-capita and entrepreneurship. In general, empirical results showed that higher education had a significant effect on business environment improvement in Iran and the other selected countries which implies a deep relationship between education, training and research with industries and universities.