Abstract. The article raises issues of the development of the system of higher education in Ukraine as a factor in building a knowledge economy. Today, the higher education system is experiencing a sharp shortage of financing, and therefore the possibilities of its material and technical development are limited. The problem is to provide effective and sufficient funding for higher education in Ukraine. The solution to the problem of financing the material and technical support of higher educational institutions will be a powerful tool for development, which will, as a result, contribute to ensuring the quality of higher education as a factor in the development of the knowledge economy. The directions of development of the system of higher education in the EU countries are considered and it is determined that the increase of the state financing is inherent in more developed countries with an innovative model of economic development. The increase in public funding for higher education is observed in Germany, Norway, Sweden, Austria, Belgium (Flanders) and Poland. Leading countries have already built an innovative model of economic development. Given the fact that the thesis on the necessity of developing a knowledge economy dominates in the world, higher education becomes one of the most important elements of the economic system. The knowledge economy is such an economic system in which production of goods and services takes place on the basis of high-tech activity, which accelerates technical and scientific progress, and where key intellectual resources are education. For a knowledge society, processes are related to the creation of new knowledge, their transmission through the educational process, the dissemination and use in production. Knowledge economy is defined as an economy in which the source of growth is both specialized (scientific) and everyday knowledge, which, as a result of which, along with natural resources, capital and labour, the processes of accumulation and use of knowledge become the dominant factor, resulting in the constantly growing competitiveness of the economy, as well as an increase in the quality and adequacy of funding for higher education.

Keywords: higher education; knowledge economy; budget financing of higher education; credit funding of higher education.

DOI: https://doi.org/10.32987/2617-8532-2017-1-34-43

JEL classification: H41, H52, І22, І23, І28.