LEGAL AND THEORETICAL FRAMEWORK OF THE IQMS
4.14 Global investment in education
The provision of sufficient funding of any educational system is critical to ensuring that the aims and policies have the wherewithal to carry out the mandate of quality education.
The opinions of three different international commentators regarding the investment governments make in education are presented in this section. These are: President Obama (USA), (ranked 2nd in the World Economic Forums’ Global Competitiveness Index 2009-2010 Report), who addressed the joint session of Congress in February 2009, the second is the comment on the World Banks’ report on the state of affairs of Indian education (India is ranked 49th in the World Economic Forums’ Global Competitiveness Index 2009-2010 Report) and thirdly, a report submitted by the then opposition (presently ruling) Australian political party (Australia is ranked 15th in the World Economic Forums’
Global Competitiveness Index 2009-2010 Report).
United States of America
As leader of the world’s leading economy, the United States of America, President Barack Obama said in his address to Congress, that education is "absolutely critical to our economic future" and challenged the citizens of the USA to ensure that the country had the highest number of college graduates in the world by 2020. He emphatically stated that dropping out of high school was "no longer an option".
Those priorities were reflected in the $3.6 trillion budget his administration released two days later, and the $115bn for schools included in the recently passed stimulus package. While some question whether education, traditionally a state and local issue, merits the attention it has been given on the American national agenda, the opinion of this study is that Obama is on the right path by prioritising education because school improvement can be an important factor in addressing most economic and social woes.
An increase in educational attainment, in the long term, will grow America's GDP while saving taxpayers money. There are the social ramifications as well. People with higher levels of education are less likely to commit violent crime, be on medical aid or welfare, or be admitted to prison. Researchers project that if one third of all Americans without a high school diploma were to get more education, the savings to taxpayers would be huge: ranging from $3.8bn to $6.7bn for family assistance, $3.7bn for food stamps and $400m for housing assistance.
Chapter Four: Education and Economic Development 172
Studies show that a high school dropout earns about $260,000 less over a lifetime than a high school graduate and pays about $60,000 less in taxes. This earning differential means that America misses out on $192bn (1.6% of its GDP) with each cohort of 18-year-olds who fail to earn a high school diploma, let alone a college degree.
But while investing in education is good economics, it's not an immediate solution to the financial crisis at hand. The priorities Obama laid out in his budget are costly, and will take time to be accepted by the education establishment – even if reforms are implemented immediately, they take many years to move through the system to yield results.
Current state of the educational system in India
Joe Qian in an article titled “Universalising Opportunities through investing in Education in India”
(September 2009) stated that a World Bank report about the current state of educational system in India highlighted the increased investment and improved performance at the primary and secondary educational level, “ a rather considerable gap in access, distribution and achievement at secondary level”.
The point that is made here is that as India has continued to develop and entrench itself as a major player in the global knowledge economy, the majority of growth has been in the skilled services and manufacturing sectors. The result of this growth has placed a demand on the education sector as it means that that the twelve million young people who join the labour force annually, have to obtain the necessary skills to access the more rewarding jobs to compete successfully in the global economy, especially as the IT sector has become an essential driver of the Indian economy.
This extremely competitive environment places an obligation on education to ensure that the youth entering the job market are adequately prepared to do so. In the abovementioned article, Qian quotes education specialist Sam Carlson who claims that: “Evidence from around the world suggests secondary education is critical to breaking the inter-generational transmission of poverty — it enables youth to break out of the poverty trap”.
Qian also raises the point of the importance of a country’s gross enrolment rate (GER) and indicates that at the secondary level the GER in India is at 52% which is lower than countries such as China and
Chapter Four: Education and Economic Development 173
Sri Lanka whose GERs are 91% and 83% respectively. India has a higher GDP per capita than both Vietnam and Bangladesh yet both these economies can boast a higher GER than India’s at 72% and 57% respectively.
The education system in India therefore seems to be failing in producing the amount of graduates required. Qian quotes some excerpts from recent reports published in the Indian press, where the education system is brought under the spotlight:
“The situation on the ground is appalling, especially in government schools and rural schools. In a metropolis like Mumbai, civic-run schools are in a state of disrepair, barely hanging on with poorly paid teachers and crumbling infrastructure.”
He also quoted a report from The Deccan Herald which referred to graft in the teacher recruitment process and cited from the report that,
“..teacher candidates are frequently required to pay between Rs 100,000-200,000 in order to be selected, usually to the school headmaster. In such a situation, the school headmaster is in a poor position to insist on greater teacher accountability, which reveals the weaknesses of unsupervised local hiring.”
It is suggested that emphasis should be placed on improving monitoring and evaluating teachers to curb issues like absenteeism, as well as putting incentives in place to rewards good performers. Once again the effectiveness of the performance management systems is highlighted.
The World Bank report made a number of recommendations to improve the education system in India.
The challenge for the Government of India is to simultaneously improve access, enrolment and quality of secondary education. Among the number of recommendations made in the report, the four approaches that appear to be the most vital were; improving access, investing in information communications technologies, setting high standards for teacher performance and curriculum, as well as combating location and gender disparities.
These recommendations could easily apply to most developing countries.
Chapter Four: Education and Economic Development 174
Deepening Australia’s human capital
The former opposition, presently the ruling Labour Party in Australia released a publication in January 2007 titled “The Australian economy needs an education revolution”. A number of the points raised in this publication are discussed in the following section.
According to the report, economic research suggests that technological innovations, improving public infrastructure and building human capital are where the greatest opportunities for further productivity grow lie. The Chairman of the Australian Productivity Commission, Gary Banks is quoted in the report as identifying the best opportunities for improving productivity as being:
“…getting the best out of Australia’s ‘social infrastructure’ – health, aged care and other community services”; and “raising the performance and accessibility of our education and training systems – primary, secondary and tertiary – particularly given their importance in deepening Australia’s human capital, on which innovation and economic growth will increasingly depend”.
The majority of governments worldwide have identified these needs as being crucial in education. As is indicated in the above quotations, what countries need is not just a higher level of investment in education, but more importantly making sure that any investment made in education is used efficiently.
Policy formulators agree that investment in human capital is essential in driving productivity growth and participation in the labour market.
They also agree that this investment is central to securing and sustaining a country’s future living standards by boosting economic growth. The Australian report quotes various sources on which they base their premise. There is considerable evidence, they argue, that links education and economic growth:
An international review of the macroeconomic and microeconomic research relating to the link between education, earnings and productivity concluded that the human capital view correctly identifies a strong relationship between these. (Krueger, Alan, and Mikhail Lindahl. (2001)
“Education for Growth: Why and for Whom?” Journal of Economic Literature 39:1101-36).The authors also noted that the relationship is not linear, reflecting the higher return on early education investments.
Chapter Four: Education and Economic Development 175
OECD research shows that if the average level of education of the working-age population was increased by 1 year, the economy would be 3-6 per cent larger, and the growth rate of the economy would be up to 1 per cent higher. International research has shown a close relationship between higher literacy standards and economic growth, with a 1 per cent premium on average literacy scores linked to a 1.5 per cent higher level of per capita GDP. ( OECD Education at a Glance, 2006).
A recent international study found that countries able to attain literacy scores 1 per cent higher than the international average will achieve living standards – measured by GDP per capita – that are 1.5 per cent higher than other countries. (Coulombe, Tremblay and Marchand, (2004) Literacy scores, human capital and growth across 14 OECD countries, Statistics Canada)
Policy formulators need to decide where their priorities lie. However, whether it is through focusing on literacy levels, improving retention rates, or increasing the average number of years spent in education, the evidence suggests that more and better educated economies are wealthier economies.
Countries that invest in education do better in achieving their potential economic growth rate.
Beyond economic goals, educational analysts also highlight that education creates other social benefits.
It helps build social capital – societies with a strong commitment to education can also enjoy higher levels of civic participation in community and religious groups, greater social cohesion and integration, lower levels of crime and social disadvantage, and a more trusting, equitable and just society.