Theory tells us that when you invest something, there is an expected amount of return, either it be a gain or a loss. It's been said time and again that education is the best investment for a secure future, which is the primary reason why parents send their children to school in hopes that they land their dream jobs that can pay their adult bills.
The nature of the investment is largely monetary and the cost of how much a person is willing to give comes into question. How much should one give to obtain what one wants?
How proportionate is the relationship between education and return of investment? What if the situation is blown to a national scale of which a target GDP must be yearly met to stabilize the economy and encourage growth; how much is the right amount that the government should allocate for education then?
An opinion article published by The Conversation strikes an interesting discourse of reverse causality. Obviously, a country with a larger GDP would have to spend on education more. Does this mean that instead of the GDP being the effect of the investment, it now becomes the cause of the government's decision on education expenditure?
To answer the question, The Conversation referred to a graph by the World Development Indicators of the World Bank (WDI) using data from 151 countries. Plotted on the y-axis are the figures of GDP growth from 2000 to 2010 and on the x-axis are the corresponding government spending for education from 1990 to 1999.
The points of intersection go up and down but the general overview is a positive slope, indicating a positive relationship that the more the country spent on education, the higher their GDP grew than the other nations. To be specific, a 1 point increase in education expenditure pulled up GDP by 0.9 percent.
A study last year from the Monash Business School, Department of Economics, analyzed 31 journals and researches that solely tackled the direct link of government expenditure on health and education to economic growth. In terms of education, the study concluded that the relationship of education expenditure and GDP growth is mainly positive, regardless of publication bias or presence of other variables such as population increase, government quality and political instability.
Bloomberg, however, released a report in 2014 offering an opposite opinion: education spending doesn't necessarily lead to economic growth. It suggests that governments must focus more on the quality of education the students are receiving, that is if they are actually learning from the high cost they paid to get to school.
Bloomberg further advised that the schools' teaching approach should be less about measuring intelligence, but more about focusing on skills and lessons that would be helpful for the student's future job. Furthermore, upon graduation, opportunities must be available for students to make something productive out of the lessons they learned from their time in school.
In your opinion, does government expenditure on education positively influence economic growth? Sound off your thoughts in the Comments section below.
