Education, jobs, and economic growth

Among the purposes of education, jobs, and economic growth are at the top. The higher the education, the more the job prospects, the better the salary. Yes, this correlation has been true in advanced countries. Hence, less developed countries' individuals, families, and governments opted to invest in education for economic prosperity. To augment it further, development institutions, lenders, and international consultancies offered advice and loans for crafting a path of prosperity through borrowing and investing in education. Besides, the academic community and intelligentsia also strongly favoured increasing enrollment, establishing higher educational institutions, and allocating a growing budget for education. Hence, over the last couple of decades, there has been a steady growth in the number of universities and enrollment in higher education in most less developed countries. Unfortunately, before enjoying economic prosperity and consequentially reaching high-income status, enrollment in a highly populous, less-developed country has shown signs of decline. Such a reality has been raising a few critical questions. Why are the best practices not replicable? Are less developed countries misguided? What are the underlying reasons, consequential effects, and remedies?

NO NATURAL CORRELATION: There were no formal educational institutions like we know today during the preindustrial age. In those days, there was no necessity of spending time in academic institutions to acquire degrees to qualify for jobs. The knowledge and skill sharing used to take place through association with seniors at work. Hence, upon crossing infancy, children used to join the work. However, the situation started to change at the dawn of the first industrial revolution.

Regarding jobs and economic growth, the importance of formal education started in the 18th century. Initially, it began in Europe, followed by the USA. The underlying reason had been the success of UK-led Europe in codifying and generating knowledge and leveraging it to create economic value through innovation, skill enhancement, management insight, and engineering competence. Such development opened the path of linking education, research, higher-paying jobs, and economic growth. Hence, the UK-led Europe initiated formalising and scaling up higher education. Soon after, the United States of America followed it. Subsequently, the rest of the world did the same. However, although followers like the USA, Japan, South Korea, and Taiwan succeeded in creating wealth from knowledge and ideas, less developed countries did not pay attention to how it happened. Instead, they kept increasing the budget for higher education and enrollment, believing there was a natural correlation between education, jobs, and economic growth.

Education begins the journey as a spending account. We invest money and time in getting educated. However, jobs and economic growth do not take place unless we succeed in converting the knowledge and skills acquired through schooling into economic value. Our education-earned knowledge and skills must improve products and processes so that producers can profitably trade the output of education. Unfortunately, this fundamental truth has not got due importance in strategy and policy in development programmes in most less developed countries. Industry-academia linkage does not occur without the meticulous understanding and subsequent steps to profit from acquired knowledge and skills.

UNDERLYING REASONS: The underlying cause of signs of drop in higher education appears to be vivid-lack of acceptably paying jobs. Against the backdrop of the increasing cost of education, the scarcity of jobs has been growing, and the salary growth has been failing to keep space. Hence, it has been a growing return-on-investment issue at the individual, family, and economic levels.

It is being cited that due to a lack of industry-academia linkage, there has been a mismatch between supply and demand. This argument has merit. The question is how to establish the bridge. If industry cannot profit from the education delivered by the universities, how can they create jobs for the graduates? On the other hand, if universities focus on providing the education that the industry needs, will less developed countries succeed in crafting a path of sustained growth and reaching high-income status?

Less developed countries have historically developed the industry to profit from natural resources and labour. Hence, these countries have been following knowledge and idea import-driven economy. On the other hand, universities are after following the curricula and teaching methodologies of advanced countries to share knowledge and ideas. Besides, the quality of education has been an issue. Even if it is addressed upon following the universities of advanced countries, will the local industry find the competence of graduates relevant to increasing profit?

CONSEQUENTIAL EFFECTS: To address growing unemployment among university graduates, reducing intake could be suggested. In reality, it has already started to happen. What could be the consequential effect if such a reality sustains? As explained, it has been happening due to the failure to turn education into profitable revenue, resulting in a lack of quality jobs and inadequate contribution to economic growth. If less developed countries fail to reverse it, how will they keep driving economic growth? After exhausting natural resources and low-cost labor advantage, creating economic value from knowledge and ideas is the only option left for them to drive economic prosperity.

RISK OF MISGUIDANCE IN THE FOLLOWING: To solve crucial problems, less developed countries tend to rely on following advanced countries and borrowing from external lenders as per their advice. Hence, lenders show up with loans and advice to follow. Unfortunately, such an approach has been making the problem worse. For example, by following US and European universities, a less developed country would not find employment solutions for their graduates unless economic, industrial, governance, and development strategies are changed.

SUGGESTED REMEDIES: The process of finding remedies should begin with a stop on following and believing in conventional indicators. There has been no natural correlation between number of graduates, quality of education, and economic growth. Quality of education alone cannot create high-paying jobs unless the industry can convert the higher quality into more profit. The next step is to go back to basics-- what it takes to turn knowledge and ideas into profitable revenue in this globally connected competitive market. Pursuing a painful transformation must occur after all the exercises of knowing cause-effect relations.

Education is an investment. We must find a way to turn the output of education into high paying jobs and economic growth. Unfortunately, regardless of the quality of education, it does not naturally happen. Hence, we must focus on the basics of wealth creation dynamics out of education earned knowledge, skill, and ideas. Unfortunately, there is no simple solution. An aspiring less developed country must understand the basics of wealth creation in a globally connected competitive market and undertake transformation based on merits instead of following others, citing as the best example.

M. Rokonuzzaman, Ph.D is academic and researcher on technology, innovation and policy. [email protected]