What Is the Relationship between Economic Development and Education?

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  • Written By: Esther Ejim
  • Edited By: Kaci Lane Hindman
  • Last Modified Date: 11 October 2019
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The link between economic development and eductation lies in the fact that education is a facilitator for economic development. Education is a human capital investment, which is expected to yield results that will translate to the improvement and growth of the economy of a nation. This effect can be seen in areas with a high percentage of well-educated people. Such people are able to channel their knowledge into concerete actions that lead to the development of the economy in comparison to those areas where there are few well-educated people.

An example of the link between economic development and education is the value derived from improvement of knowledge. Education involves a formal or informal process of instructing people and depositing a capiatal wealth of knowledge inside of them. For instance, when someone goes to school to train as an engineer, the process will involve series of trainings, tests and other forms of practical and theoretical teachings aimed at improving that person's knowledge. After the individual goes through this formal training, he or she will help develop the economy through the application of the knowledge gained from the training to various projects that will in turn lead to economic dividends.


Another example of the link between economic development and education is the ability of the members in an educated society to use their knowledge to discover new opportunities for wealth creation. For instance, most people in third world countries may not be able to develop models that will help them effectively utilize their resources in an beneficial manner due to a marked low ratio of educated people in comaprison to the percentage of educated people in developed countries. An example of this scenario can be seen in a situation where there is a lack of proper infrastructure for sustaining the efficient distribution of energy, leading to constant power outages and lack of power in certain parts of the community. Such a situation affects the ability of a country to produce successfully and often results in low Gross Domestic Product (GDP) for these regions.

Economic development and education are related by the manner in which education leads to the ability of individuals to create opportunities for economic development. For instance, an educated individual may be able to apply the knowledge gained through education to the development of items like solar energy-powered products as well as other equipment and machinery. These products can increase demand for locally produced goods and also boost the GDP of such countries.


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Post 3

In 2014, Germany made education free altogether. Germany is already a developed country with a very strong economy. But I think that the importance they give to education and how much they're investing in it also shows the strong link between education and development. I think all countries need to take Germany as a role model in this sense.

Post 2

@literally45-- I see what you mean but I think that your examples are different issues altogether. Some countries are relying on immigrants because they have low population growth. The main reason companies set up factories overseas is because Americans are paid fair wages and workers in developing countries get paid next to nothing under harsh conditions.

Education doesn't just mean that people will have white collar jobs. Education also means innovation and better technology. Innovation is actually one of the biggest reasons why the developed countries are where they are today. The biggest economic growth that occurs in this era is the ones that occurs thanks technological advancements. And we need educated people for that.

Post 1

Of course there is a relationship between economic development and education, but the relationship may be a little overemphasized. After all, economic growth is boosted by production and production requires workers. Some education is required for production work, but not a lot. This is the main problem with developed nations where everyone is educated. The more educated the people are, the less people there are for mundane production work in factories. This is why many developed nations are relying on immigrants or setting up factories overseas where workers are cheaper.

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