The crucial role of education in economic development

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China hosted the World Conference on Equity and Excellence in Basic Education from May 17 to 19 (a). On this occasion, the World Bank looked at the spectacular results of Shanghai, the host city, in international tests aimed at evaluating the performance of different education systems. The contribution of policies to improving the quality of education in other countries was also discussed.

In all of human history, there have never been as many children in school as there are today. In 1950, the average duration of schooling was two years in Africa; it is now more than five years old. In East Asia/Pacific, it increased from two to seven years between 1950 and 2010, an increase of more than 200%! Worldwide(a), it should reach 10 years by 2050. In a century and a half, the figures for access to education in the world will therefore have more than quintupled.

Education is an investment

From antiquity, Plato knew the importance of knowledge and learning. He said that a man who neglects education “walks through life with a tottering step.”

But the first to have really highlighted education as an investment are two Nobel Prize winners in economics: T. W. Schult that investing in education promotes growth and we owe Gary Becker the theory of capital human

In summary, this theory posits the principle that investment in education allows a better return for an individual. Recent studies have supported this thesis and verified certain empirical estimates, as explained by James Heckman

Education pays off

On average, an additional year of education increases a person’s income by 10% per year (a). There is no other investment as profitable:

Furthermore, the return to education in the labor market is on the rise: it has increased by more than 20% in Africa and by more than 14% in East Asia/Pacific. And it is especially necessary to point out an evolution which constitutes the major change of our time: the rate of return of higher education is today the highest.

The labor market demands new skills

This development is partly due to the race between technology and education, which results from the adaptation of markets to the automation of production. In this new world, the competitiveness of workers suffers from the lack of efficiency of education systems in most developing countries.

Countries can compete, and thrive

To perform well in today’s labor market, you need to invest early and in the right skills (see box below). Above all, countries must invest wisely, focusing on promoting three essential elements(a): autonomy, accountability and evaluation. In addition, it is necessary to pay attention to the teaching staff, to the development of young children and to the culture.

whether through evaluations where the stakes are high (penalties or rewards) or not, pay off. Making schools and teachers accountable through the use of tests is indeed a cost-effective method: “Even if the cost of accountability were ten times higher, it would still only represent 1% of the public education budget”, explains Caroline Hoxby (a).

We must develop opportunities while ensuring equity

Countries must improve the quality of their education system, aim for excellence and develop opportunities by focusing on efficiency and equity so that young people from an underprivileged environment can access studies and obtain diplomas.

While the returns to education are high on average  ( Psacharopoulos and Patrinos, 200 2 [a] ) , they can nevertheless be variable ( Montenegro and Patrinos, 2014 [a]) .It is therefore imperative to improve the information available and strengthen the support networks so that the less successful students can complete a course of higher education. Families and students from disadvantaged backgrounds will also benefit, as they often overestimate the benefits of education and underestimate the costs.

Education is clearly one of the most powerful tools for fighting poverty and inequality, and for laying the foundations for strong economic growth. It is high time to invest more in this sector.