Is Education Economically Productive?

It depends.  In many low-income countries, learning assessments show that many young children and youth lack the most basic literacy and numeracy skills even after attending school.  And employers in many countries complain that workers lack technical and soft skills.  Therefore, for education to contribute to growth, other policies must be conducive to making education economically productive.

Progress and Pitfalls

India has shown extraordinary progress (Johnson, 2010). The economy grew at an average annual rate of 7.26 percent over the past five years. Between 2014 and 2015, the manufacturing sector grew by 8.4 percent, up from 4.4 percent a year ago. Between 2014 and 2015, the Indian manufacturing sector grew by a substantial 8.4 percent, up from 4.4 percent a year ago. India has also firmly established itself as a lucrative foreign investment destination, with foreign capital inflows of over US$ 31 billion in 2015 – surpassing the US and China. India’s dynamic services sector, second only to China in terms of growth rate, clocked an impressive double-digit growth rate of 10.6 percent in 2015, up from 9.1 percent in 2014 (UNDP, 2015).

However, a half-century after independence India still remains one of the world’s most inegalitarian societies (Weiner, 2001).  Even as the world’s largest democracy remained resilient in face of the global economic crisis, the country faces a critical challenge similar to several other BRICS counterparts – high growth has been accompanied by persistent inequality, reflected in the low human development attainments of the country’s most marginalized groups including scheduled castes, tribal and rural populations, women, transgenders, people living with HIV and migrants.  Gender inequality in India persists despite high rates of economic growth, and is particularly apparent among marginalized groups. Women participate in employment and decision making much less, than men (UNDP, 2015).

Indeed, the country’s Human Development Index value when adjusted for inequality loses 28 percent of its value (UNDP, 2015).

What India can do about this?

Before turning to the question of the distribution of public goods, it is first necessary to note that the persistence of poverty in India and elsewhere, is in large part a consequence of other issues.  Yes, poor economic performance, but also health outcomes, human security, environmental sustainability, and perceptions of well-being.  Indeed,  though rising per capita income is no guarantee that poverty will be eliminated or, for that matter, significantly reduced, a low per capita income assuredly means massive poverty and the persistence of other problems (Weiner, 2001).

The World Bank’s Chief Economist, Kaushik Basu this week announced plans to address one aspect of this wide debate.  According to Basu, the World Development Report (WDR) 2018— Realizing the Promise of Education for Development, will  take stock of what the development community has learned, and how it can strengthen the many economic challenges and expand education systems to drive significantly more development and growth.  India, along with most countries, is concerned with the future of the labor market and employability.  However, WDR will for the first time examine these issues at all levels of education, from early childhood to higher education, and will explore the roles of public, private, and civil society actors.

The report will focus on what countries can do and present evidence on how to improve learning with lessons on effective interventions—in areas like pedagogy, teacher training, and accountability, as well as the many benefits to early childhood development (ECD), and on the promise of new technologies.

Going to Scale

Significant changes have occurred over the past fifty years, and educational achievement has risen enormously, particularly over the past twenty-five years.  However, improving economic productivity  will require attention to many things, including emphasizing skill development in order to make school education more practically relevant.

Primary school enrollment in India has been a success story, largely due to various programs and drives to increase enrollment even in remote areas.  With enrollment reaching at least 96 percent since 2009, and girls making up 56 percent of new students between 2007 and 2013, it is clear that many problems of access to schooling have been addressed.  Improvements to infrastructure have been a priority to achieve this and India now has 1.4 million schools and 7.7 million teachers so that 98 percent of habitations have a primary schools within one kilometer, and 92 percent have an upper primary school within a three-kilometer walking distance (Brookings, 2015).

Despite these improvements, the quality of learning is a major issue and reports show that children are not achieving class-appropriate learning levels (Brookings, 2015).  According to Pratham’s Annual Status of Education 2013 report, close to 78 percent of children in Standard III and about 50 percent of children in Standard V cannot yet read Standard II texts.  Arithmetic is also a cause for concern as only 26 percent students in Standard V can do a division problem. Without immediate and urgent help, these children cannot effectively progress in the education system, and so improving the quality of learning in schools is the next big challenge for both the state and central governments.

India faces many economic challenges that could be tackled through the education system.  However, experience shows that going to scale is not as simple as taking a pilot intervention and implementing it widely.  The WDR will address part of the economic productivity issue in diagnosing the hurdles to implementation and the political economy forces that block system-wide improvements.  It will not highlight how to overcome all challenges, nor how to align all key stakeholders and institutions in the system toward work and employment, and economic productivity.  One of the most radical changes must be in the manner in which government seeks policy inputs –  from ensuring that the system innovates and draws lessons from experience to taking account of the social and political roles that education plays – rather than just the economic and technocratic roles in formulation and implementation.


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