Economic factors that impact on the education industry

The discussion on economic factors is a key part of this PESTEL analysis of the
education industry. Higher education can be very costly in some countries. Attending a
private university costs thousands of dollars per year which many students cannot
afford. Even public universities are sometimes very expensive as well. Students need to
take out loans or repayable grants to study there.

Many kids in poor countries cannot go to primary schools because of the cost of
transport, and resources such as books or papers. In many countries, teachers are not
well paid and therefore, do not stay in the jobs long-time. Even in England, teachers
have recently taken part in industrial actions and strikes over pay issues (Clarke, 2023).

Often funds are raised for extra-curricular activities, and this may be disrupted if the
local economy is in poor conditions. Likewise, local, or central governments may cut
funding which affects the operations of educational institutes badly

Global spending on education has been on the rise, with both public and private sector
investments increasing. The private sector, in particular, has been playing a growing
role, as companies invest in corporate training and development programs and venture
capital firms invest in education technology start-ups.

Various economic factors significantly affect different industries. Similarly, factors

related to the country’s economy also impact the education industry.

Private educational institutes have a significant percentage in the entire education

industry. However, private education is always expensive. Hence, people require a lot of
money to attain private education.
GDP per capita is an economic indicator to assess the wealth of individuals in a country.
Countries with higher GDP per capita tend to have a well-established education industry
since people in such countries can afford private education.

Besides GDP per capita, inflation also impacts the education industry. Countries with
high inflation have poor living standards because people’s inflation and disposable
income have an inverse relationship.

As inflation increases, people are left with less money. Hence, in countries where there
is high inflation, fewer people can afford education. As a result, the education industry in
such countries suffers.

Moreover, exchange rates also have an impact on the education industry. For example,
suppose a student from China wants to study in the US, and Yuan depreciates with
respect to the Dollar.

In that case, the cost of studying in the US will increase for the Chinese student. This is
how fluctuations in the exchange rates impact the education industry.