Education in every sense is one of the fundamental factors of development. No country can achieve sustainable economic development without substantial investment in human capital. Education enriches people’s understanding of themselves and world. It improves the quality of their lives and leads to broad social benefits to individuals and society. Education raises people’s productivity and creativity and promotes entrepreneurship and technological advances. In addition it plays a very crucial role in securing economic and social progress and improving income distribution.
Education being the important determinant of economic well-being of any nation, emphasizes on three mechanisms through which education impact economic growth and development,
- It increase human capital inherent in labor force. A well-educated labor force is always critical for a nation to compete in an increasingly globalized world which rewards knowledge & skills which definitely enhance labor productivity through which Transitional growth towards a higher equilibrium level of productivity.
- Education enhance innovative capacity of any country, and the learning of new emerging knowledge, technology and emerging trends enable a nation to achieve desired growth.
- It accelerate diffusion and transmission of knowledge required to understand and process new information towards successful implementation which obviously promotes growth and development.
Before nineteenth century, planned investment in human capital was not considered important in any country. Expenditures on schooling, on-the-job training, and other similar forms of investment were quite small. This began to change radically during this century with the application of science to the development of new goods and more efficient methods of production, first in Great Britain, and then gradually in other countries. During the twentieth century, education, skills, and the acquisition of knowledge have become crucial determinants of a person’s and a nation’s productivity and there is no doubt in the fact that the twentieth century is 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 utilizing the skills and knowledge, and furthering the health and educating the majority of its population.
It is an evident fact that provision of education within any given country represent one of the main determinants of the composition and growth of that country’s output and exports and constitute as an important ingredient in a system’s capacity to borrow foreign technology effectively as education is also an important contributor in technological transformation of industries but obviously, education alone cannot transform an economy. It requires quantity and quality of investment, in the sector along with the overall policy environment. It is mandatory that, the quality of policy making and of investment decisions is bound to be influenced by the education for both policy makers and followers but the effect of education on growth depends on complementary growth enhancing policies as cognitive skills have a positive significant effect but better outcomes always demand institutional reforms and policies along with the close monitoring of policy implications. As education becomes more broadly based, low-income people are better able to seek out economic opportunities. A study suggested that 1% increase in the labor force with at least secondary education would increase the share of income of the bottom 40 and 60% by between 6 and 15% respectively. Education of the poor helps a nation to improve their food intake not only by raising their incomes and spending on food but also by inducing them to make better and healthier choices available.
Some countries have successfully combined openness and investment in learning and education, forming a virtuous circle: openness creates demand for education, and learning and education make a country’s export sector more competitive. Knowledge accumulation influences a country’s trade performance and competitiveness. If we compare the data of students in developing and developed nations, it is clearly visible that a mean level of achievement in developing nations are much below than that in developed industrial nations and their performance shows a much greater variation. Delays in reforming educational systems to keep pace with economic structures is the need of time. Lags in reform can hinder growth so, timely reform can pay off in terms of economic growth and poverty reduction, as evidenced by the East Asian countries that have generally invested heavily in basic human capital, both male and female.
If we talk about Pakistan, there is a strong need to initiate national education program with a vision to target 2030 education goals. First we need to check the weakness of our past National educational policy and the reasons behind its ineffective implementation in true sense in order to develop some remedial measures. A uniform program will be required to introduce in education sector with a vision to have industry driven programs. All planning will be meaningless if we don’t effectively implement the policies so, we need to realize the fact that, education is indispensable to economic development where no economic development is possible without good education and only a balanced education system promotes economic wellbeing of societies as, “Education is the passport of the Future, for tomorrow belongs to those who prepare for it today” (Malcom X)
[box type=”note” align=”” class=”” width=””]The authors Urooj Aijaz & Commander Qaiser Zaman are in the Faculty Department of H&SS, Bahria University Karachi[/box]