Economic prosperity through education | Sunday Observer

Economic prosperity through education

25 April, 2021

“Economic growth without investment in human development is unsustainable and unethical” – Amartya Sen

Economies of countries around the world have become more productive and have shown significant improvements as the education level of their citizens increases. Economic systems and their developments are essentially connected with the educational systems since knowledge is the basis of every other contributory factor to the economy. Nobel Prize winning economist Gary Becker dedicated his time researching the economic aspects of various social issues such as education, crime and punishment and family relations.

Improving human capital

He introduced the concept of ‘human capital’ in 1964 with his book by the same name where he viewed education not as a form of consumption that represents a costly expenditure for the Government but as an investment that improves the economic worth of individuals (e.g., human capital) and thereby raises a country’s overall productivity and global competitiveness. Systematic investment in human capital was not considered as an important factor contributing to the economy until the latter part of the nineteenth century. Expenditures on schooling, on-the-job training, and other similar forms of investment were quite small. This began to change radically during the twentieth century with the application of science and information technology to the development of goods and more efficient methods of production in developed countries.

Since then education, skills, and the acquisition of knowledge have become crucial determinants of a person’s and a nation’s productivity. One can even call the twentieth century the ‘Age of Human Capital’ in the sense that the primary determinant of a country’s standard of living is how well it succeeds in developing and utilising the skills and knowledge, and furthering the health and education of the majority of its population.

It is easy to see that no country has achieved constant economic development without making a considerable investment in its human capital. Accumulation of human capital is promoted through basic education, research, training and aptitude building through higher education. Providing equal opportunity to access education also matters in the process of equal distribution of human capital through different communities of a country.

As the ancient Chinese proverb attributed to Lao Tzu says: “Give a man a fish he will have food for one day. Teach a man to fish he will have food for a lifetime.” knowing how to fish will sustain life through a longer period than that of survival by eating just one fish and then waiting for the next with a lot of uncertainties and anxieties. The man who knows how to fish may keep some for his food and then trade the rest for any other good and or service he needs. The man who knows how to fish brings more value to the human capital of that society than the one who just awaits someone else’s contribution for his survival.

Strengthening the family economy

Families are the major promoters of values in a society. Economics is often defined as the subject that studies the way humans make or perhaps ought to make choices in consuming limited resources available on the planet to fulfill their unlimited needs and wants. These decisions, more often than not, are made as families than as individuals. Even the decisions made by individuals are mainly based on the value system and the upbringing one has been subjected to within one’s family structure. Parents are concerned about their children and try with whatever resources they have to promote their children’s education. In addition to the formal education a child is exposed to the ethical and moral value system, in which he or she would base the decisions, that is also heavily influenced by the family and the society in which that individual grows up in.

Families make plethora of decisions starting from the number of children they should have to the level of education to acquire. Studies show that the economic and educational status of the parents make a major contribution to such decisions.

Some countries have shown that on average educated families, particularly educated women, have 1.4 children and uneducated families have 5.1 children. Some underdeveloped economies have recognised that it is helpful to reduce the rate of population growth in order to improve their economy and also education is one of the main ingredients to achieve that. More educated parents tend to invest more in their own health and the health of their children.

Education may be the single most important determinant of a person’s health and life expectancy. Though each country in the Union is responsible for its education and training systems the European Union (EU) plays a key supporting role by encouraging cooperation and the exchange of good practices between member states.

That certainly is an important support system to supplement national efforts and reforms. According to the Organisation for Economic Co-operation and Development (OECD) 20% of the EU workforce displays serious lack of skills, including low literacy and low numeracy skills and 25% of adults cannot make efficient use of information and communication technologies.

Understanding that developing necessary skills to succeed in the global labor market is one of the key factors in improving economic growth and employment in EU as they set two main targets for member states to achieve by 2020. 1. Reduce early school leaving below 10%. 2. Ensure that at least 40% of 30 – 34 year olds have completed tertiary level education. Education was found to be the main factor in preventing poverty and social exclusion.

After experiencing a couple of terrorist attacks in member nations, the EU agreed on the need to: ensure children and young people acquire civic and intercultural competences, enhance critical thinking and media literacy, foster education of disadvantaged children and promote intercultural dialog. The best example of the impact that education can have on development of economies is, that of South Korea where 78% of citizens were illiterate when the Korean war ended in 1950s. World Bank considered that country as a high risk borrower in 1960s. Per capita income was less than US$ 200 in the 70s. The country focused on overhauling schools and became commited to educating its children well. With smart innovative Government policies and a vibrant private sector, the country has become a model for others to emulate with a 98% literacy rate and a US$ 17,788 per capita income by 2020.

Education is not only important for economic growth and prosperity but also for promoting peace and social cohesion. As the twelweth century philosopher IbnRushd has said: “ Ignorance leads to fear, fear leads to hatred and hatred leads to violence”. Any kind of violence in a society not only would destroy the economy but also would slow down the progress of that society in all aspects.

The writer has served in higher education sector as an academic over twenty years in the USA and fourteen years in Sri Lanka and he can be contacted at [email protected]