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Higher education is key to economic development!

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If you take a human capital view of economic development, it’s fairly straightforward: if you invest in people’s education, then incomes will develop. But that presupposes that people are going to get jobs and that there’s something that’s actually driving the development. So part of the attempt to talk back to that from an innovation approach is to ask: how do jobs get created? How do countries take on new technologies and become effective producers? In this kind of argument it’s not just thinking about supplying the education, it’s saying that knowing where the possibilities for an economy to specialize and develop are going to be important in thinking about how economic development takes place.


Higher education is expanding rapidly in Africa. Millions more men and women are enrolling in university; according to the UNESCO Institute for Statistics, the number of students enrolled in tertiary education shot up from 6.1 million in 2000 to 12.2 million in 2013. But what does this mean for economic development?

It’s not quite as simple as "more students equals higher income", say the authors of an Atlas Award-winning study. Higher education is key to economic development, but the way the two relate is complex, say the researchers.

“Of course investing in education leads to improved incomes, but that’s just too simple a model to account for real development in the real world,” said Dr. Simon McGrath, Professor of International Education and Development at the University of Nottingham and one of the authors of the study, which is published in the International Journal of Educational Development.

Until recently, the focus was on primary education, since more people can be reached with the same investment. However, since 2000 there has been an increasing understanding that higher education plays a key role in economic development.

The study, funded by the South African Department of Higher Education and Training, proposes a new way of looking at the relationship between higher education and economic development. The widely adopted human capital view is that higher education increases skill and knowledge and results in higher income. But the researchers behind the new study say many more things need to be taken into consideration: geography, sectors, available skills and education systems and networks of companies are all important factors.

“Development is actually deeply contextualized, it’s deeply based in particular sectors, in particular skillsets, in particular firms, in particular countries,” said Dr. McGrath. “There’s got to be a focus on how you build the capability in those spaces to do those things, not just thinking it’s a simple case of investing in education and leaving it to the markets. That will only do so much.”

The team looked at case study sectors in South Africa on three levels – primary (sugarcane farming), secondary (automotive) and tertiary (astronomy) – to see what factors account for the effect education has on the economy in each case. They conducted background research on aspects like the value chains, employment patterns and policy frameworks associated with each sector. They then mapped out all the actors involved and interviewed them to find out more about the skills and strategies needed in each sector. They also interviewed all universities in the region.

The case studies highlighted the importance of geography: for the automotive industry, South Africa’s location is not conducive to rapid growth, since surrounding countries are not well equipped for the market. However, for astronomy, the country won a large international research project because of the clear sky in rural areas that are within close proximity to Cape Town, a world city.

“Higher education will continue to play a key role in economic development,” said Dr. McGrath. “As we start working towards the new Sustainable Development Goals, we will need professionals across all sectors – doctors, teachers and engineers will be vital to our future success, and education is central to producing those professionals.”

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