Just around one week ago, former Prime Minister of India, Manmohan Singh said that a well-educated population is a prerequisite for healthy economic growth (PTI, 2016). Since I was a little kid, my parents already told me that if I don’t want to be poor in the future, I need to study hard, get into good university. Then I can find a job with a decent salary and get rich. But when I look at the unemployment and underemployment rate of university students nowadays, I doubt if what m parents said is true. In this blog, I will try to explore the relationship between education (especially tertiary education) and economic growth.Blog3_2.jpeg
To being with, Let’s do some historical reviews to see if there is really a direct relationship between education level and wealth.

When we look back to 1960, the literary rate of Taiwan and Philippines were 54% and 72 % respectively (Chang, 2011). The general education level of Taiwan is apparently lower than the Philippines. But when we look at the per capita income of them in 2012, we would found that the per capita income of Taiwan is TEN TIMES of the Philippines. Another example is Korea and Argentina. In 1960, the literacy rate of Korea and Argentina were 71% and 91% respectively. Korea’s per capita income 2012 is triple of Argentina (Chang, 2011). One more interesting case is that the literacy rates in Sub-Saharan African countries rose from 40 to 61 % (Samoff, 2007) between 1980 and 2004, however, along with this increase is not the increase in per capita income. Instead, it was found that the income fell 0.3% every year during that period of time.

Through these examples, we can easily understand that education is not a decisive factor of a country’s economic growth. If you think my argument not convincing enough because I only compared a few countries, then let’s see how do experts analyze this issue.

Lant Pritchett, a Harvard economist who has long working experience in World Bank worked on a research during 1960 to 1987 of both developed and developing countries to explore if education has positive impacts on economic growth (Pritchett, 2001). And the answer is obviously  “NO”!
After reviewing the history, realizing that there is not strong relevancy between education and wealth, we should ask “why?’. In my point of view, there are at least three reasons which can explain this phenomenon.

First and foremost, because not all education can teach students professional knowledge. For example, studying impractical subjects such as philosophy,  history, art, etc. are not gaining our professional knowledge at all. Some economists would even claim that from a strictly economic point of view, teaching these subject is a waste of time (Chang, 2011).

Secondly, even some subjects seem to be practical, such as Chemistry, Biology, Mathematics, etc., in fact, they are not really raising the productivity of students directly and irrelevant to most of the jobs. Just imagine if you are a Pilot or a Clerk, does your knowledge of Biology acquired in University help you to do your job better?

Thirdly, there is a problem of diploma inflation. Which means more and more people are getting higher education qualification, however, the world we live in doesn’t need that amount of degree holder. When supply is high, demand is low, everyone with basic economic knowledge will know that the price will goes down. Yes, the price of university students for employers is going down. Also, educated people will be underemployed by getting jobs that don’t require high qualification. Cite U.S. as an example, according to the statistic of U.S. Bureau of Labor Statistics, around 15% of the taxi drivers have a university degree.

At this point, I have been criticising the prevalence of education. But, I have to clarify that I’m not criticising the nature of education and asserting that education can’t helps people to be rich. My view of the nature of education is rather philosophical — to enrich our life and enjoy the process of pursuing knowledge — but not economical — to enhance our competitiveness. And my point is that by analysing statistic and history, we should no more believe that higher education is the key to wealth and study without thinking if you really love to study or if it is really going to help your future career. Believe me, believe economists, believe statistic: There is no direct relationship!
Road sign to  education and future
So, what should we do after getting know that education doesn’t have a direct relationship with wealth? Should we all give up studying? Not really, the points I wanna make here is very simple and I hope target group I mention below and pay attention.

For parents, please don’t force your children to get into university blindly, instead, ask if they love to study. If yes, of course you should support them. If not, help them to find out what they love because forcing them to study doesn’t guarantee that they will get a bright future.

For governments, please better use the resource. Instead of subsidizing numerous universities, treasure the money from your citizen. Perhaps the resources can be used to provide a better quality of education, provide vocational training to students who are not interested in studying to help them to be competitive in the job market in the future.

For us, university students, please pause and ponder if we really want to study the subject we are studying and think about the role of education in today’s economy.



Chang, Ha- Joon (2011). 23 things they don’t tell you about capitalism. New York: Bloomsbury Press.

J. Samoff (2007), ‘Education for all in Africa: Still a distant dream’ in R. Arnove and C. Torres (eds.), Comparative Education — The Dialectic of the Global and the Local. Rowan and Littlefield Publishers Inc., Lanham, Maryland.

L. Pritchett (2001), ‘Where has all the education gone?’, The World Bank Economic Review, 2001, vol. 13, no.3.

PTI (2016), ‘Education precondition for economic growth: Manmohan Singh’. The Indian EXPRESS  [Online] Available at: http://indianexpress.com/article/education/education-precondition-for-economic-growth-manmohan-singh/

U.S. Bureau of Labor Statistics [Online] Available at: https://www.bls.gov/

By: Chandan RAI (M00601271)


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