How education impacts knowledge economy and improves well-being

If education standards hit an all-time low and our schools churn out quack graduates, our companies would not have quality staff to employ; our hospitals would be staffed by death-dealing doctors; our pharmacists would manufacture toxic drugs, writes Jide Ayegbusi

 

Education is unarguably the most important sector in any economy. It is not only the passport to the future, as opined by Nelson Mandela, but the key to unlock the gems in the economy and improve people’s well-being.

While most developed nations across the globe place premium on the education of its citizens, a lot of developing economies are still largely lagging behind with an untold material and knowledge poverty ravaging young and old.

This, no doubt, informs the UNESCO’s recommendation that education should enjoy at least 26% of the budgetary allocation. Sadly, despite this recommendation, Nigeria has consistently allocated less than 10% to the sector.

This article will dissect how education can significantly impact the knowledge economy and why we must invest heavily in the education sector.

The knowledge economy has been described by Investopedia as a system of consumption and production that is based on intellectual capital.

In a knowledge economy, a significant component of value may consist of intangible assets such as the value of its workers’ knowledge or intellectual property.  From this description, it can be said that knowledge economy is largely driven by the quality of education available in a country.

This is the only sector that empowers the human capital with the intellectual capacity to manage the rest of the factors of production.  It does not only empower citizens with requisite knowledge to be employable but also imbue in them the skills to boost their earning power.

According to a report by the World Bank, another year of schooling raises earnings by 10 percent a year. This shows the significant return on investment on the sector compared to physical assets, savings and treasury bills.

The report goes further to show that “the value of human capital, which is the share of human capital in total wealth, is 62 percent.  That is four times the value of produced capital and 15 times the value of natural capital.”

In the same vein, education is one of the potent tools to eradicate poverty. Recently, the federal government of Nigeria reiterated its commitment to lifting over a hundred million people out of poverty in the next 10 years. This ambition will remain a mere aspiration if access to quality is education remains a nightmare. While the proponents of agriculture as a means to eradicate hunger and poverty may be right, we must realise that without quality education, eradication of hunger and poverty is practically impossible.

The creation and use of technology (in agriculture as well) to make all human endeavours seamless require a degree of education to thrive. Education basically drives the core of human existence regardless of sector of the economy.

Furthermore, the world is gradually moving away from natural resources such as crude oil. Countries that are oil dependent must have a rethink and diversify their economy towards sustainable resources that are knowledge driven. This can only be possible with a commitment to investing heavily in the education of the citizens.

Finland is a good example of a country that has drastically improved its knowledge economy by investing in the education of its citizens. Finland was once poorly ranked educationally because of its “turgid bureaucratic system that produced low-quality education and large inequalities”.

The country is now ranked first among all the OECD nations (Organization for Economic Cooperation and Development) on the PISA (Program for International Student Assessments), an international test for 15-year-olds in language, math, and science literacy.

According to a research by Sahlberg, Finland has changed “its traditional education system into a model of a modern, publicly financed education system with widespread equity, good quality, large participation—all of this at reasonable cost”.

According to an article published by Stanford Graduate School of Education, it is said that “more than 99% of students in Finland now successfully complete compulsory basic education, and about 90% complete upper secondary school. Two-thirds of these graduates enroll in universities or professionally oriented polytechnic schools and more than 50% of the Finnish adult population participates in adult education programs”. Interestingly, “98% of the cost of education at all levels is covered by government rather than by private sources.”

No doubt, we’ve got a leaf to borrow from the Finnish book.

In conclusion, every government that is serious about revamping its education sector to improve its knowledge economy must stop paying a lip service to it. The state of our economy is only a reflection of how strong or otherwise our education system is.

If the standards hit an all-time low and our schools churn out quack graduates, our companies would not have quality staff to employ; our hospitals would be staffed by death-dealing doctors; our pharmacists would manufacture toxic drugs, our engineers would design dysfunctional models; crime rates would be all time high and our economy would be grounded.

This speaks volume to why we should all be concerned as we will all pay for the abysmal state of education in the country and when it gets better, we will all benefit from the ROI.

 

Jide Ayegbusi is the founder of Edusko Africa, an Education Marketing Company based in Lagos, Nigeria.