In 1995 Gary Becker wrote: “During this century, education, skills, and knowledge have become crucial determinants of a person’s and a nation’s productivity. One can even call the 20th 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 utilising the skills, health, and habits of its population.”
There are at least three mechanisms through which education affects economic growth. First, education increases the human capital inherent in the labour force, which enhances labour productivity, leading towards a higher level of output; second, education increases the innovative capacity of the economy and fosters new knowledge, technologies, products, and processes that promote growth; third, education facilitates the diffusion and transmission of knowledge needed to understand and process new information and to implement new technologies that promote economic growth.
And further, international evidence suggests that, rather than counting how long students have sat in school, it seems crucial to focus on how much students have learnt while in school when estimating the effect of education on economic growth.
A study conducted by the Asian Development Bank demonstrated a clear causal relationship between investment policies in education and health and the high performing Asian economies of South Korea, Taiwan, Singapore, and Hong Kong. These countries consistently pursued a policy of high investment and expenditures in the education and health sectors that paid off in the form of high performing economies.
Moreover, after the late 1990s, the quick overcoming of the Asian economic and financial crisis was attributed to the presence of highly skilled and adaptive labour force that these countries had created. Currently, both Vietnam and Malaysia are spending over 6% of GDP on education, aimed at enhancing their national and regional competitiveness.
The average education expenditure in OECD countries is above 6% of GDP. Bangladesh has achieved steady GDP growth from 1994 to 2014, averaging 5.62%, but has kept the amount of GDP allocated to education stagnated at around only 2.2%, which is far lower than countries with a similar GDP per capita.
The proposed budget allocation of Tk31,605cr for FY 2015/16 appears to be the highest allocation in recent years, but it falls short by international standards. More needs to be done to implement the new education policy of the incumbent government. Furthermore, the Bangladeshi education chronically suffers from poor quality and low efficiency at all levels which significantly reduce the value of money spent.
The 1974 Education Commission Report, among others, made four significant policy recommendations for the modernisation and restructuring of the education system of the newly independent country: Extending primary education to eight years by 1983, devolving primary education to the local authority, professionalising education administration and management at all levels, and spending 5% of GDP for education increasing progressively to 7% of GDP.
Unfortunately, none of these recommendations was implemented by the successive governments that ruled the country -- be they autocratically or democratically elected. 36 years later, the National Education Policy 2010 virtually made the same recommendations of extending primary education to eight years by 2018 (further delay of 35 years, if at all implemented), spending 6% of GDP, and decentralising/devolving education. Had the 1974 Education Commission recommendations been implemented, perhaps Bangladesh would have achieved a higher-level socio-economic profile similar to SE Asian countries like Malaysia, Thailand, and Vietnam.
These countries consistently spent an average of 5-6% of their GDP over the past several decades. In Bangladesh, the distribution of resources is also highly iniquitous. According to a World Bank benefit incidence analysis, the poorer households in Bangladesh are receiving more public education spending at the lower education levels (as the better-off households send their children more and more to better quality private schools), but the higher education spending is directed more toward the richer population.
Most countries, whose students are among the best performers in international assessments of learning achievement (viz PISA), have provided a high degree of autonomy to their local authorities and schools, especially their teachers and parents, in deciding what courses to teach and how to use funds at the school. This having been said, there are some clear general policies which are important.
Foremost among these is that the performance of a system is affected by the incentives that various actors face. That is, if the actors in the education process are rewarded extrinsically or intrinsically for producing better student performance, and if they are penalised for not producing high performance, this will improve performance. The incentives to produce high-quality education, in turn, are created by the institutions of the education system -- all the rules and regulations that set rewards and penalties for the people involved in the education process.
Therefore, one might expect that institutional features have important impacts on student learning. International evidence suggests three institutional features that are part of a successful system for providing students with cognitive skills: Choice and competition, decentralisation and autonomy of schools, and accountability.