Investing in education and skills has long been considered a key driver of economic growth both in the academic literature and by practitioners. Despite this widespread belief that the investment in human capital development is a key determinant of economic growth, the empirical estimates especially focusing on low-income countries (LICs) are less than conclusive. Together with the added complication that the measurement of the outcome of the investment in education and skills is not straightforward, causing researchers to use a range of proxies for human capital, it is not surprising that there is uncertainty in the policy arena as to the most effective type of education or skills within the LIC context. This systematic review aims to provide comparable, reliable and verifiable estimates of the effect of education on economic growth, controlling for study heterogeneity in terms of the measure of human capital used, growth measurement applied and country grouping.
In the conclusions, the systematic review suggests the widely held belief that investing in education and skills promotes economic growth in LICs is correct in general. It also identifies many gaps in the research field which, if filled, would enable a more effective policy response by international donors and governments in LICs. The most important issue is that of the education and skills measurements used. These are often chosen by academics in terms of data availability rather than usefulness as a measure for policy intervention. The human capital measures used tend to be measures of the inputs into the education process, for example enrolment rates as a measure of engagement, and educational expenditure as a measure of costs, rather than measures of learning. Therefore a discussion between academics and policy-makers as to what they mean by education and skills and how best to measure these may be a fruitful line of enquiry in terms of making the academic literature in this field more useful to policy-makers.
Hawkes, D.; Ugur, M. Evidence on the relationship between education, skills and economic growth in low-income countries: A systematic review. EPPI-Centre, Social Science Research Unit, Institute of Education, University of London, London, UK (2012) 83 pp. ISBN 978-1-907345-32-6