Education in every sense is one of the fundamental factors of development.
No country can achieve sustainable economic development without substantial investment in human capital. Education enriches people’s understanding of themselves and world. It improves the quality of their lives and leads to broad social benefits to individuals and society. 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.
The main purpose is to show the role of education in economic development and the effect of education on labour productivity, poverty, trade, technology, health, income distribution and family structure. Education provides a foundation for development, the groundwork on which much of our economic and social well being is built. It is the key to increasing economic efficiency and social consistency. By increasing the value and efficiency of their labor, it helps to raise the poor from poverty. It increases the overall productivity and intellectual flexibility of the labor force. It helps to ensure that a country is competitive in world markets now characterized by changing technologies and production methods. By increasing a child’s integration with dissimilar social or ethnic groups early in life, education contributes significantly to nation building and interpersonal tolerance.
Why is education important to development?
Education is central to development , It empowers people and strengthens nations. It is a powerful “equalizer”, opening doors to all to lift themselves out of poverty. It is critical to the world’s attainment of the Millennium Development Goals (MDGs). Two of the eight MDG’s pertain to education-namely, universal primary completion and gender parity in primary and secondary schooling. Moreover, education-especially girls’ education-has a direct and proven impact on the goals related to child and reproductive health and environmental sustainability. Education also promotes economic growth, national productivity and innovation, and values of democracy and social cohesion.
The Importance of Education in Economic Development
Prior to the nineteenth century, systematic investment in human capital was not considered specially important in any country. Expenditures on schooling, on-the-job training, and other similar forms of investment were quite small. This began to change radically during this century with the application of science to the development of new goods and more efficient methods of production, first in Great Britain, and then gradually in other countries.
During the twentieth century, education, skills, and the acquisition of knowledge have become crucial determinants of a person’s and a nation’s productivity. One can even call the twentieth century the “Age of Human Capital” in the sense that the primary determinant of a country’s standard of living is how well it succeeds in developing and utilizing the skills and knowledge, and furthering the health and educating the majority of its population.
No country has achieved constant economic development without considerable investment in human capital. Previous studies have shown handsome returns to various forms of human capital accumulation: basic education, research, training, learning-by-doing and aptitude building. The distribution of education matters. Unequal education tends to have a negative impact on per capita income in most countries. Moreover, controlling for human capital distribution and the use of appropriate functional form specifications consistent with the asset allocation model make a difference for the effects of average education on per capita income, while failure to do so leads to insignificant and even negative effects of average education. Investment in human capital can have little impact on growth unless people can use education in competitive and open markets. The larger and more competitive these markets are, the greater are the prospects for using education and skills.