Role of Education in Economic Development

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Mawut, born in war-torn South Sudan, fled to Kenya as an infant and sacrificed everything simply to go to school. At just 9 years old, Mawut’s father left to fight in the civil war.  He moved to the town of Nakuru, in Kenya, where he could go to primary school. Years later he decided not to go back with his sister and instead found himself at the Kakuma Refugee Camp with his brother to complete the remaining years of the primary education.  Mawut was determined to finish his education, although it meant setting apart himself from his family. His bravery paid off- he is pursuing his career in finance and is determined to assist other children in need like he was before. Education changes lives. It’s a fact. Data indicates that just a single extra year of education can boom an individual’s income via way of means of as much as 10%, and if all students in low-income nations left school with fundamental reading skills, it could pull 171 million people out of poverty.

Education provides a foundation for sustainable economic development. Ben Franklin wrote: “An investment in knowledge always pays the best interest”. A country can never achieve continuous economic development without considering a proper investment in human capital. There are alluring returns to the various forms of human capital accumulation: basic education, research, training, learning by doing, and aptitude building. Skill development and learning can even continue in the early stages, though costs and benefits differ from older persons to the younger ones. 

Two decades ago, and before, the expenditure on schooling, on-the-job training, and other similar forms of investment was quite small, investment in human capital was of no importance in any country. The Gross Domestic Product was considered the only major factor to measure economic development, but gradually with the introduction of new goods, efficient production technologies, and the idea of sustainable development it is realised that the GDP is not the only factor that measures the wellbeing of the population but various dimensions led to social and economic development, such as the health that compares the population’s access to the health care and mortality and morbidity levels, the income equality that compares the level of income disparity among the population, the governance that compares the effectiveness and quality of government institutions, as well as transparency, stability, and freedom and education that compares the access and quality of education.

The Boston Consulting Groups conducted research on the recent progress in education. On comparing it with the change in GDP, no positive correlation was found between the growth in wealth within the countries and the improvement in education, which means that the countries who are not growing in terms of wealth still can improve their education system and hence can improve the human wellbeing. 

The distribution of Education is of great significance. Unequal education can have a negative impact on per capita income in most of the countries. Moreover, controlling for human capital distribution and the use of applicable practical type specifications in keeping with the quality allocation model create a distinction for the results of average education on per capita income, while failure to do so results in insignificant and even negative effects of average education. Human capital investment can have little impact on growth unless people can use education in competitive and open markets. The larger and more competitive these markets are, the greater are the prospects for using education and skills.  

In recent times the return patterns to schooling have been increasing significantly, a major factor contributing to that is the ever-changing technology and the demand for mastery of competencies in the global market. There is a race going on between technology and education and in this new world, the performance of the education system in most of the developing countries has handicapped the ability of workers to compete. 

Ensuring that all citizens are educated, that many own an extensive variety of problem-solving capabilities beyond the fundamental level and that some have world-magnificence professional capabilities will necessitate new curricula, advanced teacher programs, and educational methods that inspire higher-order cognitive capabilities. The quantity and quality of domestic and foreign investment and the overall policy environment also form the important determinants of economic performance. Education is definitely one of the most effective instruments for reducing poverty and inequality, and it sets the inspiration for sustained economic growth. Let’s begin investing in it more.

“The ultimate resource in economic development is people. It is people, not capital or raw materials that develop an economy.” 

-Peter Drucker


References

  1. The Role of Education in Economic Growth. (2009). Retrieved from https://core.ac.uk/reader/193302650
  2. Trines, S. (2018). Education in India. Retrieved from https://wenr.wes.org/2018/09/education-in-india
  3. Why education matters for economic development. (2016). Retrieved from https://blogs.worldbank.org/education/why-education-matters-economic-development
  4. The role of education in economic development. (1970). Retrieved from https://www.ukessays.com/essays/economics/the-role-of-education-in-economic-development-economics-essay.php

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