13 May 2010By Salim Salihu Muhammed
In
today’s technologically-based global economy,
considerable emphasis is placed on the contribution
made by people, or what economists refer to as
human
capital, to economic growth. The
theory is that the relative contribution of
individuals to growth depends on their
human capital
– the knowledge, skills, competencies and other
attributes that are relevant to economic activity. As
a consequence, developing the skills and knowledge of
the labour force is regarded as a key strategy for
promoting
national economic growth. Related
to this is the assumption that individuals who
contribute more by way of their human capital should
earn more. Distributional issues are a consideration
as well, since increasing access to education and
training can help to address inequality in employment
and earnings outcomes for more- and less-skilled
individuals.
Advanced economies of the world, at various stages of
their economic odyssey, had admitted the significant
role of education in nation building and governance.
Studies have shown the handsome returns to various
forms of basic education, research, training,
learning-by-doing, and capacity-building; these, no
doubts, has visualized that no country has achieved
sustained economic development without substantially
investing in human capital. The question is, when and
how does education bring high payoffs? Although theory
has suggested a strong causal link between education
and growth, the empirical evidence has not been
unanimous and conclusive; who gets educated matters a
good deal, but the distribution of education is
complex and not much has been written about it. How
education affects growth is greatly affected by the
economic policy environment.
Policies determine what people can do with their
education. Reform of trade, investment, and labour
policies can increase the returns from education. The
distribution of education matters. Unequal
distribution of education tends to have a negative
impact on per capita income in most countries.
Moreover, controlling for
human capital distribution and
the use of appropriate functional form specifications
consistent with the
asset allocation model makes a
difference for the effect of average schooling on per
capita income. Controlling for education distribution
leads to positive and significant effects of average
schooling on per capita income, while failure to do so
leads to insignificant, even negative effects, of
average education. The policy environment matters a
great deal. Studies had indicated that economic
policies that suppress market forces tend to
dramatically reduce the impact of human capital on
economic growth. Investment in human capital can have
little impact on growth unless people can use
education in competitive and open markets. The larger
and more competitive these markets are, the greater
are the prospects for using education and skills.
No
doubt, the recent “earthquake” driven
failure in the last year’s
National Examination Council (NECO)
examinations has proven the falling standard of
education in the country and the near lack of policies
and needed investment, which if not given the urgent
and needed attention, could put it in the same state
as the power sector of the country. This is only a tip
of an iceberg, as nothing could actually be said about
the failures in the tertiary institutions that produce
hundreds of thousands of potential managers for the
economy. Their failures can be easily identified from
result of a failed
economic system, both public and
private sectors; mismanagement of resources leading to
the demise of industries as witnessed in the Micro
Finance sub-sector, Agro-Allied industries, and
several private enterprises; lacking sufficient and
strategic knowledge for the implementation of public
budgets in the Ministries, Departments and Agencies.
Educational policies and curricula are
no longer adhered to; research shows that parents
contributes to the skipping of the school or study
curriculum and aiding a child to pass at all means
both at the elementary and post elementary levels. The
lack of reading culture and believe in passing by all
means is carried on to the tertiary institutions;
supported by parents, students only pass through
school paying lecturers to earn grades.
Nigeria had not actually failed
in its
educational policies;
whether 6-3-3-4 system, Basic and Post Basic. The
failure is in the inability to identify indices that
could make these policies work, one of which is
adequate funding and management of such funds. Even
though the United Nations Education Scientific and
Cultural Organization (UNESCO) recommends, for nations
in striving category in meeting social and economic
development, to commit not less than 25% of budget
provision to education, the 2010 appropriation budget
only provided N249bn, representing just 6% of the
budget. In
Ghana,
since the early 1980s,
Government of Ghana expenditures on education have
risen from 1.5% to nearly 3.5% of GDP. Since 1987, the
share of
basic education
in total education spending has averaged around 67%.
This sharp contrast may mean the country’s
non-readiness to rekindle the lost glory of the
education sector to enhance its dwindling economic
system.
There
is no simple “recipe” for improving quality and
internal and external efficiency in the
public education system
but some general results are found. Firstly, that the
elasticity of the return of the reform is decreasing
with the size of increased budget, making
anti-economical the reliance on a reform consisting in
more resources only to significantly improve the poor
performance of the system. Indeed, very modest target
set to improve the system performance, would require
-without more sophisticated policies- huge increments
in budget with a poor return. In this sense, the
capacity of focused policies should be to improve the
productivity of the education expenditure, in
particular toward
basic education
or the disadvantaged students. Secondly, the timing of
the reform matters: most policies with very different
return in the long term are almost undistinguishable
by their short run merits, and policies that are more
productive in the short term may be less convenient
than competing alternatives in the longer term, so the
actual policy may be influenced by the
time horizon
chosen by the policy makers. Thirdly, effects of the
reform are accumulative, and to evaluate the reform by
modest, in general, short run merits is myopic and may
put the reform at risk of reversion or to deter future
investment in the sector.
One
identifiable source of poor educational standard is
the attitudinal demand by employers of labour; showing
interests on
B.sc
graduates against their HND counterparts, or insisting
on first class grades candidates for employment. This
notion had led undergraduates and some parents, mostly
the wealthy in the society, to ensure a “successful”
graduation with pecuniary certificates, and higher
class grades. This goes ahead to affect the manner
with which these “graduates” handles strategic
decision making positions, both in public and private
sectors; letting loose the bags of damage and casualty
in our economy. What’s more, vocational education is
still seen by Nigeria as “second class” education, and
fell out of favour with donors and governments
following a policy shift in the mid 1980s. But in a
globalising world, the importance of vocational skills
to economic development is increasingly being
recognised.
Fundamental economic theory alludes to first
understanding an economy's competitive strengths and
weaknesses of education thereby fashioning policy in
line with sustainable development in the scheme of
global economics.
Malaysia will never transcend its
competitive hurdles until it first realizes this point
as a nation to trust on its reform of the education
sector in order to stimulate the economy. Malaysia’s
government spends over 20% of its budget on education,
and the outcome has been tremendous technological
advancement. Nobody expects Malaysia’s schools to
improve overnight, but proper teacher-training and
instruction in schools was a good start. The Nigeria’s
6% provision for education in the 2010 budget left one
in awe as to how it plan to improve teacher-training,
learning and study environment, educational
infrastructure and policies, welfare, and above all,
the eradication of discrepancies that exist in
employment bracket for graduates.
That education is an essential ingredient of
prosperity is at once obvious and contentious. Obvious
because any person able to read this feature knows
what a difference it makes in their lives to have gone
to school, to have learned to read, write and
calculate. Contentious because when social scientists
try to “prove” that education is a cause of economic
growth it turns out to be quite difficult to decide
which came first, the chicken or the egg. What is
more, even the basic terms such as “what is education”
and “what is prosperity” become vast and cloudy
terrains for the technical experts like economists,
sociologists,
education specialists and policy
analysts.
There is strong evidence
from the recent past that economic growth has been
accompanied by growth in both spending and
participation in education. Economists have examined
this association quite carefully and come to the
conclusion that, through a variety of different
avenues and in a number of different ways, investment
in education systems does have a strong economic
pay-off. This is an important conclusion that is
highly relevant to individual, corporate and
government decisions regarding investment. The main
components of this relationship—educations and income
growth—are both very specific, even narrow ways of
looking at two broader questions: learning and
well-being. Indeed neither GDP nor education emerged
full-blown on to the stage of history. It may seem
like a long-forgotten historical story, but measures
of national income like GDP are the result of
protracted economic and intellectual processes. In the
same way that
universal compulsory
education did not always exist nor did
it become a fixture of social life over night. GDP and
education, each in its time, was a radical idea,
perhaps more radical than any of the policy
initiatives that are commonly debated today.
Obviously one of the underlying assumptions behind
this way of looking at the relationship between
education and
GDP
growth is that societies change
over time. For the arguments presented here a further
assumption has been made, that the industrial
economies that have had the highest rates of GDP
growth over the last two centuries exhibit a
compositional form of change. This is a form of change
where leading sectors, with leading skills (for
example recently IT) attract investment and generate
jobs, while declining sectors with failing markets
become not only less important in the overall share of
output but also lose influence over the expectations
and behaviour of economy.
Understanding the factors that contribute to a
country’s economic growth has been a long-time
objective of economists. In part, this is because a
growing economy is one that has the potential to
generate prosperity and wellbeing for its citizens
while at the same time
laying the foundation
for a more equitable distribution of the benefits of
growth. If more education leads to faster economic
growth, then investments in education could pay for
themselves in the long run, and could also play a role
in reducing poverty. Such reasoning could be crucial
in bolstering political support for education
investments and ensuring their sustainability. It
would be a worthy thought if the Nigerian leaders
considers the evidence for an education-growth link,
and explores some of the issues that governments and
donors face in making investments which will best take
advantage of the potential for education to contribute
to economic development. If great economies of the
world see education as an investment in
human capital
that had impacted positively on growth and economic
development, what then is Nigeria waiting for?
Salim Salihu Muhammed salimmed16@yahoo.com
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EsinIslam.Com
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