Beyond Growth: The Basic Role of Education in Significant Economic Development
When looking at the strongest economies in the world, one will encounter first world countries with all the qualities necessary to maintain and strengthen their economies even further. Such qualities of first world countries go beyond economic develop and include social and political development. Therefore, as third world countries attempt to reach the development found in today’s first world countries, the need to develop in all aspects becomes apparent, in order to develop a first world country. Nonetheless, in today’s world, as all countries seek to strengthen their economies, the attention to such detail does not seem to be given. As poor countries seek development, an immense amount of investment and effort is given to the economy whereas education, the most important resource in society, which deals with all aspects of development, takes a back seat. This inability to invest in education, a resource that cannot be instantly measured, might prove itself to be one of the most crucial investments for countries that seek development. Without education, society’s productivity is restrained and so will be the level of development that a country can reach.
Although the concept is fairly simple, it has become apparent that countries are not taking into consideration the importance of education to the economy. Nonetheless, a simple overall look at the illiteracy rates and gross domestic product per capita will demonstrate the correlation between the two. The illiteracy rates will help determine the level of education of the population whereas the gross domestic product per capita will show the average yearly salary of the population. In today’s modern world, illiteracy has become something that is not common in society and this can be seen clearly by nearly 100% literacy rates of modern countries today. Nonetheless, the rest of the world still has to struggle with this achievement and if the literacy rates are compared to the economic development of each country, it will be clear of the correlation between the two. As Appendix A shows, even among countries such as Lebanon, Singapore, and Seychelles, who have no resources beyond what their neighbors also have, they are all fairly modernized countries and the one factor that unites them is their high literacy rate (Countries of the World). An educated population will lead the economy forward but a growing economy will not educate the population.
Even further, if it is development that a country seeks, it has been proven that education, and the level of education attained by society, allows for a greater economic development. This deeper economic development, which can be found in today’s first world countries, cannot be achieved without education. The effect that higher levels of attainment in education have in the economy are a result of the higher productivity that each person has, due to a greater and more valuable skill developed through education. A person from Asia, who has gone through primary education, provides a return to society of 27% higher than someone without an education. If that same person were to get secondary education, he or she would provide an additional 15% return while a higher education would allow for an additional 13 % (Psacharopoulos 586). This efficiency is consistent for other regions of the world, as it can be seen in Appendix B and it demonstrates the higher level of economic development that can be achieved by a country with a strong education system.
With this in mind, we now turn our attention to today’s country that is experiencing an economic “boom”, China, and whether these factors are being taken in consideration. China who is being seen as the next great economic super power and it’s economic growth is impressive. As the Oxford University Press explains, since the fouding of the People’s Republic of China, an increase in national income has been experienced and while the province of Shanghai experienced an average annual increase rate of 8.3%, the national average from 1953 to 1989 was 7.8%. This is a very high rate compared to most countries, which usually do not exceed 4%. With regards to the development of education, Oxford writes that in April of 1986, the Compulsory Education Law was issued and primary education was popularized. This achieved an enrollment of 97.83% of school-age students in primary schools in 1990. Nonetheless, Oxford further explains that “basic education is relatively weak and the development of vocational and technical education is out of balance; student enrollment and the development of regular higher educational institutions is not fast enough to meet the needs of the economic development of the country”. Today, China has reached even higher growth and its annual growth rate has become 9.7% a year compared the United State’s growth rate of 3.4% (Accounting for Growth). On the other hand, with such a growth, the educational investment as a percentage of the gross national product only increased .32%. While the economy grows 9.7% a year, the investment to education only grows .32% (Luo Jing). In 2001, the government spent 14.31% of the total national budget in education whereas in 2000 it spent 13.8%. This small increase compared to the increase in the economy shows a lack of attention to education.
In a working paper for the National Bureau of Economic Research entitled “Why China is Likely to Achieve its Growth Objectives”, Robert Fogel explains that China is most likely to succeed in growing but at a slower place than commonly believed. He agrees with the concept of education and productivity and believes that a college-educated person is 3.1 times as productive as a someone with just a high-school diploma. And someone with a basic education (high school) is 1.8 times more productive than someone without a diploma. Based on Fogel’s calculations, he estimates that by 2010, 20% of high school students will be going to college in China compared to 70% in the United States. Therefore, when looking at the population of China compared to the United States, it appears as if China has an ability to develop a stronger economy but the productivity of a Chinese worker, in average, is far less than an American. With this in mind, it is also important to take in consideration the fact that a lack of education will also hinder social and political development, which is crucial to further economic development.
These simple facts about the current situation of China do not imply that economic growth will suddenly stop at a certain point. It simply means that the current rate of growth is bound to slow down in the future due to the fixed amount of resources. China, today, is in the process of industrializing further and using manual labor for these industries. The sector in China’s economy with the greatest growth is industry and so far, China is concentrating in getting more workers and making them more efficient. Even with such a large population, China will eventually reach a point where workers will not be as abundant as today and the result will be a slow down in the growth. Therefore, unless China decides to invest in education, then it cannot expect this growth rate to be maintained.
The path that China seems to be taking today is the exact opposite to what is should. Recent numbers have shown a decrease in the literacy rates, ironically due to the economic boom. The New York Time reported that the number of Chinese people who cannot read grew by 30 million over the last five years. The total of illiterates is a staggering 116 million people. This is completely devastating compared to the gains made during the past decades. This was reported by the Education Ministry of the country and the result was explained to be due to the migration of people to cities. This migration in search of work in the industry and service sector, the largest two sectors in China’s economy (Wolf), caused the people to drop out of schools in search of work. Even further, literacy in China is determined to be someone that can read and write 1500 characters. A typical college student knows up to 10,000 characters. Therefore, the productivity of such workers is incredibly low. The result is, as was explained previously, an economy hindered by education.
This recent problem facing China also allows for a connection to be made between the relationship between economic growth and educational development. As it was previously stated and proven, a development in education will result in economic development but, according to the recent problem with China, economic development does not necessarily result in social or political development. In China’s case, the economic development is mainly focused in the sectors that do not require educational development and the result is a step back in education.
Therefore, based on such basic information showing the importance of education and development, it becomes obvious that any sort of development wanted will be restrained by a lack of education. On the other hand, if education is made available and improved then the result will be an improvement in the economy and greater possibilities for growth. When these facts are put together, it becomes astonishing to see governments that are focused on economical development not investing in education. In some instances, as it is happening in China, economic development without educational investment can decrease the chances of a country to develop. This example, of neglect to basic understanding of the importance of education to society, is not exclusive to China and can be seen in many other countries, including India. India currently has an literacy rate of 73%, which is lower than China and its leading sectors of economic development are services and industry (Wolf). Therefore, it would not be a surprise if the same results are seen in India. The result, if this case is not given attention, could be a lack of further economical development in third world countries preventing further human development in today’s prosperous world.
Appendix A
Country
GDP per capita
Literacy rate
Niger
232
15%
Japan
38,201
99%
Norway
40,000
100%
Singapore
24,560
94.2%
Indonesia
1143
85%
Lebanon
5000
87%
Syria
1155
77%
USA
41,800
99%
UK
27,700
99%
Saudi Arabia
10,560
80%
Somalia
100
24%
Haiti
425
51%
Seychelles
7600
88%
Argentina
4000
97%
Acquired from: Countries of the World and their leaders. 2006 Volume 1 and 2. Thomson Gale. Farmington Hills, Michigan.
