Financing Education for Economic Uplift

By Zubair Faisal Abbasi

Monday, 04 Oct, 2010 | 01:29 AM PST | DAWN: Economic and Business Review



BOTH theory and practice of development policy establish the fact that education plays a significant role in the economic development.

The New Growth Theory espouses that technological capability and innovation emanate as a result of planned and strategic investments in research and development activities.

Specialists in national innovation systems also claim that successful and competitive firms do not seek profit maximising strategies but try to build competitive edge in research for new products, techniques of production and business processes.

One important point which runs through the whole argument is the importance of education in building human capital to catch fish in the higher ends of the market.

Pakistan over the years had paid lip service to the idea of national innovation system and is still following the same thinking while financing for higher education is collapsing under structural adjustments of the economy.

As the Planning Commission announced cuts in expenditure, the teachers organised strikes which led to ‘amicable resolution of the issue’.

The resolution was more fascinating than the decision to impose reduction in financial outlays. Who lost in the resolution? These were the students who, though being important stakeholders, were neither in the process of dialogue nor in agenda setting. As expected, the axe fell on scholarships for next year and promising students suffered ultimately.

Two factors were important in getting this undemocratic outcome of the dialogue. One, the absence of organised student bodies and the second a sheer fall in academic standards which do not require students to be acquainted with national policy and planning, let alone critically think and examine issues which affect them.

The system, to a large extent, has degenerated into helping students mug up powerpoint presentations and reproduce them in exams, produce plagiarised essays and get inflated scores with no or little contribution to body of academic literature. This is a very serious situation both in the private and public sector universities.

Therefore, higher education is largely in a state of serious turmoil despite monetary (though insufficient) injections in the past. This is primarily not because of availability of large open spaces in public universities which must be handed over to the private sector for some business activity. The issue is not that accumulation in private hands in itself generates growth momentums which the current leadership in the Planning Commission tends to believe. In fact this is a bad diagnosis and will lead to administration of bad medicine.

In essence, it is due to a general lack of regulatory capacity in the institutions of the state which could link up the banking, government, universities, and industry for development of research and development for rapid economic growth. Economic managers might be dreaming about some invisible hand coming in to develop such linkages as a result of supply and demand operations in the market.

The empirical evidence from the UK, US, Germany, Japan and other East Asian economies shows that the state has to play a very important role in risk socialisation for investment in research and development which helps economies to take sustained growth path – a path which starts from horse shoemaking to textile to computer hardware to biotechnology and helps develop a robust system of national defence as well.

The Planning Commission needs to think in terms of planning and coordination mechanisms rather than just playing as monetarists manipulating supply of money and leaving everything to the imperfect markets. The current policy and direction of the Planning Commission is bound to play not only bad politics but also bad economics to the detriment of the current democratic regime.

Source: http://tinyurl.com/3acwjx5

http://www.dawn.com/wps/wcm/connect/dawn-content-library/dawn/in-paper-magazine/economic-and-business/financing-education-for-economic-uplift-400