Importance of Education to the Economy

The Importance of Education to the Economy has been recognized since the beginning of time.  Plato wrote: “If a man neglects education, he walks lame to the end of his life.”

But it was really the Nobel-winning economists that put the argument of education as an investment. T.W. Schultz argued that investment in education explains growth and Gary Becker gave us the Human Capital Theory. 

In a nutshell, the Human Capital Theory posits that investing in education has a payoff in terms of higher wages.  Moreover, the theory and empirical estimates are backed up by current science, as explained by James Heckman.

Neurogenesis tells us that learning can continue into advanced ages. The relative costs and benefits to investments in older persons compared to younger persons differs. Investments in more able workers at any age generate higher returns than investments in less able workers, and ability is formed at early ages.

Education raises people’s productivity and creativity and promotes entrepreneurship and technological advances. In addition, it plays a very crucial role in securing economic and social progress and improving income distribution.

Here are some of the importance of education to the economy

Drive Innovation:

A key role of educational institutions is to drive innovation, with the aim of finding solutions to global challenges in areas that matter to society, such as healthcare, environmental protection, resource security, international development, and population trends.

Many of the greatest advances of recent years, including augmented reality, self-driving cars, combination therapies for HIV, and cloud computing, were all born from research that took place at universities. Innovations certainly have high economic value, but they also enrich our health, work and impact us socially.

The wider economy benefits from university research and innovation as it drives investment, both locally and globally, promote exports and makes the economy more balanced. An environment that promotes research also allows students to learn transferable skills that will help them succeed in the workplace, further strengthening the knowledge-based economy.

Increase Employability

Applicants are faced with a highly-competitive job market, in which their qualifications might not be enough to secure the kind of work they desire. As the economy moves further toward competency-based recruitment, with its focus on skills and experience over pure academics, graduates and established professionals must be armed with the tools they need to find and succeed at work.

Educational institutions are critically important here. Universities should be proactive in arranging opportunities for current students to develop industry expertise through work experience and internships. In addition, technological and workplace skills training should be taught adjacent to an academic curriculum. Further, it can be beneficial to offer mentoring opportunities to help prepare expectant graduates for a competitive job market and that is why the Importance of Education to the Economy can not be overemphasized.

Create a Quality Workforce

The modern workplace is in a constant state of evolution. Even within the last decade, job roles and the skills required to succeed in them have changed enormously, with technological advancements being a key factor and the Importance of Education to the Economy.

Personnel needs to regularly evaluate their work-related skills and take opportunities for continued learning, which should be supported by their employers.

The education sector is pivotal in delivering training to people at all stages of their careers, from students and recent graduates to senior managers.

Accreditation at every level gives assurance to employers and allows employees to have concrete evidence of their career development. This, in turn, reduces staff turnover and improves job satisfaction leading to higher morale in the workplace.

Conclusion to the Importance of Education to the Economy

The educational sector has a wide-ranging, proven influence on the economy. Its confluence with business provides commercial value to innovation, while academic instruction and skills training help individuals and organizations to have the tools to succeed in a knowledge-based economy and to understand the Importance of Education to the Economy.