Education and Economic

Development
MA 216 Education and the Phi. Socio-Economic Development
INTRODUCTION
 Education
Education has a broad meaning. It is not just
confined to schooling. Education in broad sense
means "Any experience of life that results in
learning is education."
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.
 Economic Development
Economic development, also known as economic growth or advancement, refers to the
generation of wealth that is found in the benefit and advancement of society. It is not
only found in isolated development projects, but in the general advancing of the
economy with respect to factors like education, resource availability, and living
standards. Economic development pertains to the buildout of education systems,
recreational parks, and public safety infrastructure. The importance of economic
development lies in the wellbeing of the population.

Education provides a foundation for development, the groundwork on which much of

our economic and social wellbeing is built. It is the key to increasing economic efficiency
and social consistency. By increasing the value and efficiency of their labor, it helps to
raise the poor from poverty. It increases the overall productivity and intellectual
flexibility of the labor force. It helps to ensure that a country is competitive in world
 History
Prior to the nineteenth century, systematic investment in human capital was not considered
especially 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.

In the earlier neoclassical models, education was not considered a major input for production and
hence was not included in growth models (Harberger, 1998: 1-2). In the 1960s mounting empirical
evidence stimulated the “human investment revolution in economic thought” (Bowman, 1960).
The seminal works of (Schultz, 1961) and (Denison,1962: 67) led to a series of growth accounting
studies pointing to education’s contribution to the unexplained residuals in the economic growth
of western economies. Other studies looked at the impact of education on earnings or estimated
private rate of returns (Becker 1964, Mincer 1974). A 1984 survey of growth accounting studies
covering 29 developing countries found estimates of education’s contribution to economic growth
ranging from less than 1 percent in Mexico to as high as 23 percent in Ghana (Psacharopoulos,
1984).
 Education and Productivity
Clearly the educational provisions within any given country represent one of the main
determinants of the composition and growth of that country’s output and exports and
constitute an important ingredient in a system’s capacity to borrow foreign technology
effectively. For example: health and nutrition, and primary and secondary education all
raise the productivity of workers, rural and urban; secondary education, including
vocational, facilitates the acquisition of skills and managerial capacity; tertiary education
supports the development of basic science, the appropriate selection of technology
imports and the domestic adaptation and development of technologies; secondary and
tertiary education also represent critical elements in the development of key institutions,
of government, the law, and the financial system, among others, all essential for economic
growth. Empirical evidence at both micro and macro levels further illuminates these
relationships. At a micro level, numerous studies indicate that increases in earnings are
associated with additional years of education, with the rate of return varying with high
level of education (Behrman 1990, Psacharopoulos 1994).
 In agriculture, evidence suggests positive effects of education on
productivity among farmers using modern technologies, but less
impact, as might be expected, among those using traditional
methods. In Thailand, farmers with four or more years of
schooling were three times more likely to adopt fertilizer and
other modern inputs than less educated farmers (Birdsall, 1993:
75-79). Similarly, in Nepal, the completion of at least seven years
of schooling increased productivity in wheat by over a quarter,
and in rice by 13% (Jamison and Moock, 1994:13).
Education is also an important contributor to
technological capability and technical change in industry.
Statistical analysis of the clothing and engineering
industries in Sri Lanka, to cite just one example, showed
that the skill and education levels of workers and
entrepreneurs were positively related to the rate of
technical change of the firm (Deraniyagala, 1995)
The Value of Education to Economic Development

According to Lucas (1998), the higher the level of education of the work force
the higher the overall productivity of capital because the more educated are
more likely to innovate, and thus affect everyone’s productivity.
Education significantly impacts economic development as it promotes
economic growth by providing individuals with additional skills and greater
access to resources that foster positive change within communities. In
addition, by investing in education, governments can create a more educated
society that is better equipped for the future. This drives economic growth
and helps reduce inequality by providing people from all backgrounds with
equal opportunities for success in their chosen profession or field of study.
 How to Improve Education and Literacy Levels
To strengthen the education system and advance literacy, a number of
measures must be taken. To start, increased funding should be allocated
to ensure that educators are equipped with the necessary resources to
provide quality instruction to students.
Further, technology should be utilized to enhance the learning experience,
and early childhood education should be a priority to set children on a
path to prosperity. Furthermore, cultivating a culture of lifelong learning is
essential for individuals to better their skills over time.
Providing access to literacy programs and resources can improve the
overall literacy level of a community. Education must be made more
accessible for all individuals, regardless of income or background, to
reduce educational disparities.
Thank You!