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The role of education in economic growth


Introduction
In Botswana, education has, through the years, received the largest share of the government budget. In the 2014/2015 budget, for example, the allocation to the Ministry of education and Skills Development was P9, 26 billion or 28 percent of the recurrent budget, an increase of P1, 05 billion or 0.3 percent over the 2013/2015 budget. Invariably, the expenditure on education raises several questions.


Should the Botswana government really spend so much money on education? Is the Government getting a good return on this type of investment? What should be the basic strategy of the expenditure on education growth? What really is the role of education in economic growth? This article examines the role of education in economic growth and addresses some of these questions.


How education enhances economic growth
Economists have identified three ways in which education enhances economic growth; firstly education raises the efficiency of the labour, which in turn raises labour productivity and economic growth. Second, education induces innovation and technological progress; these factors which enhance economic growth.

Thirdly, education facilitates the acquisition of foreign technology. It is asserted that presently, new technology is generated mainly by the developed countries in Europe and North America. Once created, the new technology is then diffused worldwide through different channels, the major ones being international trade and foreign direct investment. However it is argued that a country must have absorptive capacity before it can successfully acquire foreign technology and this enhances economic growth.


The importance of education in the acquisition of foreign technology has been emphasised. It is observed that modern economic growth depends mainly on the international transfer of technology, which subsequently depended on education. The economic growth of Europe and North America has been explained by the fact that masse education was already fairly well established by the early nineteenth century in England, France, Germany, and the United States of America.


Quantity versus quality in education
The quantity of education is measured by the student enrolments and years of schooling. This has been the general focus through the years and it is an approach government by the assumption that the more enrolments ad years of schooling, the higher the economic growth rate., However, three basic problems have been identified in this approach, First the amount of knowledge that students gain in a year varies across countries, it is higher in some countries than theirs. Secondly, schooling is not the only means of acquiring skills. Rather skills can be acquired at the workplace from family and peers. Thirdly what really matters for economic growth is education quality and not quantity.


Quality of education is measured by what students learn that is the cognitive skills- basic mathematics reading and writing skills. These skills are considered to be more significant for economic growth than the mere quantity of education. Since schooling and learning are not necessarily joint outcomes, we need to ensure that students learn when they are schooling. Schooling is about showing up for classes while learning is about acquiring knowledge that makes a person functionally literate.


The case of Botswana
Figure 3 shows the trends in student enrolment in Botswana at all levels of education during the period 1974 to 2007. On the other hand, Figure 4 shows only the enrolments at tertiary institutions namely the University of Botswana and vocational and technical colleges. Clearly from these figures, there has been a substantial increase in student enrolments in Botswana. This means that the quantity of education has risen in Botswana and therefore is how to enhance quality of education.


As expected primary education has highest enrolment of students; followed by secondary; and then tertiary education. Because, at any given time, most students are in primary school, education quality should target primary schools. Targeting quality at primary school level will, as they say produce the greatest good for the greatest numbers. It will lay a solid foundation for higher levels of learning and reduce the attrition at secondary and tertiary levels.

Why? This is because “children must learn how to learn” Precisely the specific policies that can improve education quality in primary school include incentives for primary school teachers , reducing the student teacher ratio by increasing the number of teachers, improving discipline updating school curricula and re training of teaches , improving testing tools and procedures. Thus in the 2015/2016 budget, the Government of Botswana has allocated P644 million for operation costs of teaching staff and P235,83 million for in service training.


 The gap is unnecessary because the skills acquired from vocational and technical training are required for enhanced economic growth. Mupimpila and Narayanu (2009), for example, find a positive and significant impact of vocational and technical training on economic growth in Botswana.


In conclusion, we to turn to the questions raised at the beginning of this article. Should the Botswana government really spend so much money on education? Is the Government getting a good return on this type of investment? To answer these questions we consider the fact that substantial increase in student enrolments in Botswana occurred after the mid-1980s.

This suggests that the Botswana Government has among others invested in reproducible capital such as machines. In essence the Hartwick rule holds that revenue from a non-renewable resource such as diamonds should be invested in other economic activities that will yield income, output economic activities that will yield income output employment and consumption in the future after the non-renewable resource is depleted.


It is principle that s implied by the bank of Botswana in its annual report of 2017. Therefore on purely economic grounds, it is necessary for Botswana government to continue to spend so much money on education.
The dividends for this type of investment may not be apparent now but they will in the future.

By contrast the skills mismatch and the high graduate unemployment which are now prevalence in Botswana suggest that the government might not be getting good return on investment. Moreover, competitiveness reports rank Botswana lowly on the quality of education. The issue really is how to increase the quality of education and produce graduates that are demanded by employers.


This report is adopted from the Stanbic Bank Quarterly Economic Review, 2015

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