A common notion is education is the solution to most economy problems. Right from alleviating poverty to ending discrimination, it plays a significant role by spreading awareness. Education and training play an even more important role in the advancement of economy.
For instance, wages tend to fall in areas where labor supply is high. Industries where entry to work is low, people can easily get in, while areas that require higher education and/or advance degree tend to have high pay because supply of labor is low. At the same time, the cost for such training and education is significantly high.This and similar other dynamics have a powerful impact on the economy.
How education benefits a nation
Globalization and international trade needs countries to compete with each other. Countries that advance economically hold competitive and comparative advantages over economies that don’t try to focus on competition. It is rare that a country will specialize in multiple industries. Most developed economies hold superiority in one or two industries and have disadvantages in other in a global market place. Education and training of a country’s workforce plays a significant role in sustaining the competitive edge in the global market.
How training benefits an economy
A developed economy’s workforce is capable of operating industries at a competitive level than other economies which maximizes returns and profitability for the industry. Training workforce enables workers to operate at unmatched levels, giving the industry a competitive edge, which results in greater productivity and efficiency. Thereby, generating desirable profits. Countries can try incentivizing training through tax breaks, providing facilities and infrastructure to train workers, skill development programs for youth and under privileged demographics, and collaborating with the industry on upskilling and reskilling initiatives. Working with education leaders to formulate commensurate education policy and improving education management to deliver necessary skills is imperative to keep economy progressing. Educating leaders on the benefits of regular training and frequent upskilling is critical step in advancing companies.
For instance, the government of India, recently updated its education policy to include subjects that are more in-demand in the industry and prepare children for the Future of Work.
It is unlikely for an economy to hold a competitive advantage in all industries, it can focus on industries where skilled professionals are readily trained.
What’s more, the difference in level of training in workers is a significant factor that separates developed countries from developing countries. Other factors like geography, resources, infrastructure, etc. certainly play significant role, but having well –trained workers gives the economy an upper hand and creates positive externalities. Educating leaders and business leaders realize the potential of well –trained workforce that can be deployed fast and begin realizing the benefits, instead of having to train workforce on the job.
In summary, companies benefit from the external factor of having a skilled workforce from which companies can hire workers. This sometimes result in a high skilled workers concentrating in one region. This results in similar businesses clustering in one geographic area because of the workers.
The knowledge and skills of workers in an economy is a key factor in the growth of industry and economy. Economies that have significant supply of educated and well-trained labor, whether brought on through regular education or specialized training and vocational programs, can capitalize by development and scaling up industries. Nations need to ensure through law –making and skill development programs that their citizens have access to formal and specialized training that can broaden their skillset and advance their life, industry, and economy at the same time. Education leaders must assist the government to understand education management and guide them on how it can be done effectively.