When a young adult pursues higher education – also known as tertiary, post-secondary or third-level education -- the reason or reasons are usually personal. Some students pursue this level of education simply because having a degree under their respective names helps bring respect and good image. Likewise, some student pursue higher education because they are aware that by having at least a college degree, their path to the future is clearer – better jobs, higher pay and improved lifestyle. In short, students pursue tertiary education because it contributes to their personal development.
On the other hand, does higher education contribute to economic development? How does it make contribution to economic development?
Take the case of South Korea. With almost no natural resources to exploit, South Korea was able to become a developed country with a high-income economy. It is ranked 15th in the world in terms of nominal GDP. It is now the fifth largest economy in Asia. In the past half a century, South Korea was an input-driven economy, but now, it is a knowledge-based economy.
Much of the economic growth in South Korea has been driven by knowledge. The country is among the top OECD countries investing a large percentage of their GDP knowledge, which includes field of higher education, software, and research and development. As early as 1950s, public third-level schooling started to rise, followed by beginnings of private higher education in the next decade. In the next two decades, South Korea promoted science and engineering programs. In the 1990s, the country’s focus was quality assurance, research and development, and performance-based funding.
As tertiary schooling in South Korea advances, the country’s economic development also accelerates. The Asian country has overall supported post-secondary schooling as a means to accelerate economic development.
When more students pursue higher education, economic growth could be seen through personal and public channels. Those who have pursued this level of schooling typically have job prospects, higher income, and a wider ability to save and invest – leading to better health and improved quality of life.
These personal gains, however, may not be too personal at all. When citizens of a country gain, the society also gains. Higher incomes also mean higher tax revenues. Higher incomes also mean greater consumption and greater demand for different products and services inclusive in an economy. With growing demand, businessmen will have greater incentives to invest to produce and introduce their products and/or service. This will lead to creation of more jobs and a rise in infrastructure projects in a country. The influx of investments into an economy also bodes well for the government as it means higher income from taxes and other regulatory fees.
Higher education graduates, armed with knowledge, skills and higher income, could help encourage entrepreneurships. Small and medium businesses are also a vital part of the economy as they do not only mean higher revenue from taxes but also more jobs for the less-educated ones.
Economies could also benefit less directly from higher education. For instance, higher education produces well-trained teachers, which in turn could improve the quality of compulsory education in the country and provide those non-college graduates to advance economically. When universities and colleges produce a crop of quality graduates, they are also helping build and secure future for younger generations.
Directly or indirectly, higher education does contribute a lot to economic development. As a country places emphasis on encouraging its younger generations to pursue this level of formal learning as well as on investing heavily on it, it is planting seeds for economic development.