Role of education in economic development

In a knowledge-based era of economic development, education which is the fountainhead of knowledge, has assumed an added importance. In fact, education works as a driving force in the development process of a country and brings much-needed intellectual capital and technological changes, which make the economy more competitive and innovative by developing human capital with better skill and expertise.
However, in our country, education has never been a priority. It has rather been one of the most neglected sectors, both in terms of its composition as well as resource-allocation. Pakistan, like many developing countries, has yet to decide the priority investment in education. Is education a pre-requisite for all socio-economic progress or the cause of education could be served well, after developing a reasonable economic base. Economic development is considered as the investment of present resources for future increased production. The investment of savings for growth. Education is both a form of consumption and a kind of investment.
Like bread, it is something we consume, but like a canal or dam, in which we invest to produce for the future. This difference has given rise to two schools of thoughts. Those who think education as a consumer service, keep the role of education in development at the backburner. If education is a consumer service, then it becomes something on which we must save for necessary investment.
The exponents of education argue that man does not live by bread alone. The nourishment of the mind is equally important. The studies made by Theodore Schultz among others in the USA in the 50s have shown that outlays for education bring large increases in production.
To rescue farmers and workers from illiteracy may certainly be a good goal in itself, but it is also a first indispensable step to any form of agricultural progress. Nowhere in the world is there an illiterate peasantry that is progressive. Nowhere is there a literate peasantry that is not. Education so viewed becomes a highly productive form of investment. Machines are no more important than the men who make them, maintain them or improve them.
The importance of scientists and engineers for being economic specialists is very high. Studies have shown that the suppression of a disease, say, malaria brings great increases in energy and output. Scientists, engineers and doctors are, therefore, good educational investment. The low productivity of our industrial workers could to a great extent, be attributed to their being illiterate and unskilled.
The fact is that education is of high importance both as an object of immediate consumption and as a form of investment for economic development. To look at education as merely a form of consumption results in assigning it low priority in resource-allocation. The lesson of the 20th century is that education or education abetted by honest and efficient government comes first. Education does have a multi-dimensional impact as a form of development investment.
Knowledge/technology, being the intrinsic component of education, has emerged to be an integral part of the economic system of developed economies. The major developed economies of today, including the US, China, Japan, Russia and other emerging economies owe a great deal to the high levels of skills and education. The key driver of growth is human capital, which taking advantage of the information revolution, in the wake of fast and efficient electronic communication, has accelerated the process of production manifold and raised the volume of global trade beyond expectation. It is due to this reason that 50% of the GDP in the developed countries is now based on the production and distribution of knowledge.
It must be realised that it is the accumulation of knowledge, which contributes to sustained economic growth. Information and knowledge can be shared and actually grow through application unlike other resources that deplete when used. Technology thus can raise the return of education. Getting a large number of PhDs through sophisticated educational models and systems, currently in vogue in the US and the UK and other developed countries, is not a remedy to the malady.
The problem of investment is always to obtain the kind of capital, most appropriate to the requirement at the lowest cost. Does the economics being taught in our universities, meet the peculiar requirement of our agrarian economy. A technology used in USA and Japan may not be effective in our country. So there is a pressing need to reframe our syllabus/curriculum and develop indigenous technology appropriate to our needs.
The scale and quality of education in general and quality of scientific/technical education in particular is an area of serious concern. The neglect of education can be gauged from the fact that public expenditure on education is around 2% of the GDP, which is less than 4.10% spent in India and 7.9% in Malaysia. The rate of literacy is on an average 57%, while in India, it is 80%.
Science/technology (S&T) and research and development (R&D) are main contributors to knowledge and innovation generation and must be given the importance, they deserve. The proportion of R&D expenditure to the GDP is as low as 0.4%. Resultantly we have around 100 scientists and engineers per million population, as compared to 500 in Malaysia.
While the education sector, especially higher education, is in financial distress, growing population and increase in primary/secondary education has raised demand not only for higher education, but also better quality of deliverables. The enrolment in public institutions continues to be biased towards the humanities and social sciences. While the importance of these areas cannot be minimised, it is necessary to create a critical mass of manpower in scientific technology. Besides, the number of those taking up vocational and technical education after leaving school is very low and must be raised through a deliberate policy. Progress is indeed linked to adapted machinery and indigenous technology and calls for effective measures to accomplish the objective. The private sector will continue to be the engine of growth, the public sector must provide the enabling and supporting environment in knowledge-based economy. While adequately raising the resource-allocation for education, the wide gap between policy framework and its implementation must be narrowed down through effective and efficient management.
(The writer is former KCCI secretary)