It has always been said that ‘education is the key to success’. However, few people have taken time to reflect on this phrase and on the extent of the success mentioned therein. To most people, the successes of education are associated with the immediate phenomenon surrounding them, such as a good house or a car.
The success of a community and the country in general is dependent of how educated its members are. Education is essential for a stable economic growth, competitiveness in the global market and long-term health and success of any country. Hence, it is essential for the prosperity of any nation and the more educated and civilized a nation’s population is, the more prosperous it is.
Education and economic well-being
A skilled labor force is very essential for the prosperity any nation. However, skills are not merely learned through classroom studies and assignments, instead, they are acquired through experience and constant practice.
In a broad sense, we can consider skills as integrating not just communication and analytical abilities but also attributes such as patience and diligence. Therefore, education from this viewpoint is multi-faceted, extending past the classroom to provide the skills and traits required in various professional roles.
These skills, attributes, and values are only achieved through education and are considered as components of what economists refer to as ‘human capital’. Economists have always underlined the importance of human capital to a nation’s growth and prosperity.
Economic prosperity is commonly gauged by the living standards of a nation’s inhabitants, and improvement of living standards is strongly related to an increase in the productivity of the nation’s workforce. In order to improve the living standards, the productivity of the individual members of the country must increase.
Education boosts this productivity in two ways: it supports innovation that generates new technologies and consequently increases the productivity of the workforce, secondly, it improves the skills of the workforce and this allows them to use existing and new technologies effectively (Barrow et al, 2003). Therefore, education is key to improving productivity and greatly influences a country’s achievement of economic prosperity.
Research and Development
Research and development is very important towards the prosperity of any nation as it generates technological advancements and innovations that improve the living standards of any nation. This has been seen in industrialized countries such as Japan and the US, where innovations such as those in the information and communications technology (ICT), have had a profound effect on the living standards of its inhabitants and the economy in general.
Long before advancements in the ICT sector commenced, activities that seem simple in the contemporary society such as instant long-distant conversations through phone or email were unheard of. Letter writing, which was the main form of communication, presented many challenges and limitations.
However, technological advancements and innovation eliminated these and other similar challenges. Great advancements have also been made in the medical field and these have ensured the long-term health of the population (World Bank, 2000). There have also been innovations and productivity improvements in the service industries.
Innovations in the financial sector such as electronic payments and ease of access to credit facilities have altered the way businesses and individuals use and access the common marketplace.
Education plays a crucial role in the development of these technologies and innovations. Institutions of higher learning train many scientists and engineers who come up with the technologies that inspire new products and innovations, besides, education gives learners the skills required to use new technologies efficiently leading to a country’s prosperity (World Bank, 2000). The more the number of educated persons, the more prosperity the country achieves.
A 2001 study of 16 OECD nations examined the link between productivity and research and development (R&D) spending. The study underlined the significance of R&D on productivity and hence economic growth. The researchers concluded that university spending on R&D was vital to productivity (Guellec & de la Potterie, 2001).
The researchers attributed this finding to the fact that universities provide essential knowledge to the industries- knowledge that is used to foster innovation and advancements in technology. Therefore, higher levels of education spur productivity.
Since innovation leads to productivity, it is vital to identify the factors that promote innovation. This question was the subject of a study undertaken by a team of researchers from the Federal Reserve Bank of Philadelphia. The study investigated the link between inventive output (determined by patents per person) and the number of inputs (R&D in various fields) in 280 US cities in the 1990s.
A significant finding of the study was that higher education made the largest contribution towards increasing the number of patents per person in the areas covered (Carlino et al, 2007). Therefore, education is vital not just for individual successes, but also for the prosperity of the nation as a whole.
In order to achieve economic growth in any nation, the first step should be that of developing, attracting and holding onto an educated workforce, secondly, R&D activities should be encouraged and supported within the private sector and among the academic community.
The Direct Returns of Education
The skills acquired in colleges or universities are important not only in encouraging innovation and technological advances, but they also make the persons more productive, and more productive persons earn more (World Bank, 2000). The direct benefits of education are quite plain.
Information from the U.S. Department of Education indicates that in 2009, the average salary for a bachelor’s degree holder was $45,000, $30,000 for a high school diploma holder and $21,000 for those without a high school diploma (National Center for Education Statistics, 2011).
Not only do persons with higher academic credentials earn more, but they are also more likely to get employed as well. Salary disparities among persons with varying levels of education have led to income inequality (Sill, 2002). Therefore, more investments in education also lead to a reduction of income inequality.
A decent salary enables a person to improve his/her living standards and this benefits the country in a number of ways. Social problems such as crime and insecurity become rare and the person is able to support other sectors of the economy such as manufacturing, transport etc. This creates prosperity to a country.
As the demand for a more highly skilled workforce increases, the rewards increase by a similar margin and it is becoming more evident that an investment in education pays off for both the individual person and the society in general (International Labour Office, 1982). Therefore, the government and other stakeholders should increase their spending on education.
Conclusion
An investment in education is important to an individual and the nation in general. It creates economic well being by equipping the learners with the skills, attributes, and values required to bring out one’s excellence.
Education also boosts the productivity of individuals, leads to technological advancements and innovation, promotes research and development, reduces inequalities between members of a population, and increases individual earnings. These benefits of education lead to the prosperity of the nation and hence make education key to the success of any nation.
References
Barrow, C. W. et al. (2003).Globalisation, Trade Liberalisation, and Higher Education in North America. Dordrecht: Kluwer Academic Publishers.
Carlino, G. A., et al. (2007). Urban density and the rate of invention. Journal of Urban Economics, Volume 61, Issue 3, Pages 389-419.
Guellec, D. and de la Potterie, B. v. P. (2001). R&D and productivity growth: panel data analysis of 16 OECD countries. OECD Economic Studies No. 33, 2001/II.
International Labour Office. (1982).Wages, a workers’ education manual. Geneva: ILO.
National Center for Education Statistics. (2011). Fast Facts. Web.
Sill, K. (2002). Widening the Wage Gap: The Skill Premium and Technology, Federal Reserve Bank of Philadelphia, Business Review, Fourth Quarter 2002, pp. 25-32.
World Bank. (2000). Higher education in developing countries: peril and promise, Washington, D.C: World Bank.