Education And Which Services Are Important In The Indian Economy?


Education And Which Services Are Important In The Indian Economy
A Dynamic Economy Begins With A Good Education. -Bob Taft Education is one of the most important aspects of development. It has a significant impact on a country’s economic prosperity. Without considerable investments in human capital, no country can achieve long-term economic progress.

  1. Education broadens people’s outlook on themselves and the world around them.
  2. It enhances their quality of life and provides a variety of social benefits to both people and society.
  3. It is critical for ensuring economic and social progress.
  4. It helps in the development of human capital, productivity, creativity, poverty reduction, encourages entrepreneurship, technological advancements, women empowerment, social development, health awareness, and other areas where economic development can be boosted.

These different roles of education in India’s Economic Development are addressed below.

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    What is the importance of education in the economy?

    The Relationship Between Education and Economic Growth – Decades of research confirm that increased investment in education leads to increased economic growth. This includes higher salaries for individuals, greater workforce effectiveness, and higher gross domestic product.

      New jobsGross domestic productAnnual earningsAnnual spendingFederal tax revenue

    A study from The Learning Agency teases out the relationship between education and economic growth one step further, examining the economic impact not just on high school graduation rates, but on the skill level of graduates. Their findings show that increases in math, reading, and writing skills correlate to significant increases in salaries.

    • What’s more, these higher-skilled workers are more effective in their jobs—leading to increased innovation and productivity, which benefits the economy as a whole.
    • The positive correlation between education and economic growth continues to track beyond high school and into postsecondary outcomes.
    • Two studies from the Brookings Institute illustrate this relationship.

    First, a college degree in any major is crucial to increasing a person’s earning potential, Second, the economic gains of postsecondary education aren’t limited to individuals, The Brookings Institute found that the average bachelor’s degree holder contributes $278,000 more to local economies than the average high school graduate through direct spending over the course of their lifetime, and an associate degree holder contributes $81,000 more than a high school graduate.

    High school graduation rates are highHigh school graduates possess career-ready skillsHigh school graduates go on to complete postsecondary education

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    What is the most important part of Indian economy?

    1. Agricultural Sector: – One of the most important sectors of the Indian economy remains Agriculture. Its share in the GDP of the country has declined and is currently at 14%. However, more than 50% of the total population of the country is still dependent on agriculture.

    Keeping this in mind, the Union Budget 2017 – 18 gave high priority to the agricultural sector and aimed to double farmers’ incomes by 2022. • Government subsidies to agriculture are at an all – time high. • Further, cropping patterns have shifted in favour of cash crops such as sugarcane and rubber. • Introduction of cooperative farming like – e – choupal etc.

    • Rise of SHGs such as Lijjat Papad. • Agricultural land is being brought under industrial and commercial use, thereby straining the remaining agricultural land. • Many export sectors have been opened for agricultural goods. • Food processing is emerging as a ‘Sunrise Industry’
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    What is the importance of education in India?

    Home » Social Justice » Issues related to Education Sector » Importance of Education for India

    Education is the tool which alone can inculcate national and cultural values and liberate people of false prejudice, ignorance and representations.Education provides them required knowledge, technique, skill and information and enables them to know their rights and duties towards their family, their society and towards their motherland at large.Education expands their vision and outlook, provokes the spirit of healthy competition and a desire to advance for the achievements of their consciousness regenerating truth, and thereby capability to fight injustice, corruption, violence, disparity and communalism, the greatest hazards to the progress of the nation.Quality education is today’s need as it is the development of intellectual skills and knowledge which will equip learners to fulfill the needs of professionals, decision makers and trainers.Education provides many opportunities in various fields for the development of the country. Education makes people independent, builds confidence and self-esteem, which is very important for the development of a country.The UNESCO Global Education Monitoring Report and the Education Commission’s Learning Generation Report:-

    171 million people could be lifted out of extreme poverty if all children left school with basic reading skills. That’s equivalent to a 12% drop in the world total.

    Education increases individual earnings

    Education increases earnings by roughly 10% per each additional year of schooling

    Education reduces economic inequalities

    If workers from poor and rich backgrounds received the same education, disparity between the two in working poverty could decrease by 39%.

    Education promotes economic growth:-

    No country in the world has achieved rapid and consistent economic growth without at least 40 percent of its adult population being literate.

    The creation of green industries will rely on high-skilled, educated workers. Agriculture contributes 1/3 of all greenhouse gas emissions. Primary and secondary education can provide future farmers with critical knowledge about sustainability challenges in agriculture.

    Women with at least six years of education are more likely to use prenatal vitamins and other useful tactics during pregnancy, thus reducing the risk of maternal or infant mortality.

    Education has proven to benefit women and girls at a higher rate than boys. The empowerment that girls receive from an education both personally and economically is unmatched by any other factor.

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What is the importance of Indian economy?

Conclusion – This first and foremost step is to gather an idea on how India as a country is running itself, providing, producing, and investing. One should follow and note the country’s economic status, growth, fall, business, and new aspects. Without the economic aspect of India, one would hardly be able to grasp and conquer the country’s philosophy.
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What are the 3 main sectors of the economy?

Industrial output in 2005 The three-sector model in economics divides economies into three sectors of activity: extraction of raw materials ( primary ), manufacturing ( secondary ), and service industries which exist to facilitate the transport, distribution and sale of goods produced in the secondary sector ( tertiary ).

  1. The model was developed by Allan Fisher, Colin Clark, and Jean Fourastié in the first half of the 20th century, and is a representation of an industrial economy,
  2. It has been criticised as inappropriate as a representation of the economy in the 21st century.
  3. According to the three-sector model, the main focus of an economy’s activity shifts from the primary, through the secondary and finally to the tertiary sector.

Countries with a low per capita income are in an early state of development ; the main part of their national income is achieved through production in the primary sector. Countries in a more advanced state of development, with a medium national income, generate their income mostly in the secondary sector.
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Which are the three important sectors of Indian economy?

They are three sectors in the Indian economy, they are; primary economy, secondary economy, and tertiary economy. In terms of operations, the Indian economy is divided into organized and unorganized.
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What is the most important in economy?

In the course of monitoring the economy and setting monetary policy the Federal Reserve follows a large set of indicators of present and future output, employment, inflation, and economic conditions. However, most policy makers do not believe that any single indicator is “reliable enough to be used mechanically as a sole target or guide to policy.” Movements in several key indicators help the Federal Reserve monitor how successful it is in attaining its two primary economic goals, which are to promote “maximum” output and employment and to promote “stable” prices. Several of the indicators mentioned in your question play an important role in this process. The most comprehensive measure of overall economic performance is gross domestic product or GDP, which measures the “output” or total market value of goods and services produced in the domestic economy during a particular time period. GDP is probably the best measure of the overall condition of the economy because it includes the output of all sectors of the economy. It is common to use the quarterly real GDP series (nominal GDP adjusted to remove the effects of inflation) to determine the timing of business cycle expansions and recessions, although the National Bureau of Economic Research uses more timely monthly indicators to determine official business cycle dates. Total nonfarm payroll employment is used as a measure of overall labor market conditions. Job growth is classified as a coincident economic indicator, meaning that job growth rates move closely in line with GDP and the overall economy. Job growth, combined with information from unemployment rates and other labor market conditions provide analysts with tools for monitoring the health of labor markets. Inflation, defined here as “the rate of increase in the general price level of goods and services” can be measured in several ways. The consumer price index (CPI) is often used as a measure of inflation. Two other frequently watched inflation measures are the producer price index, which measures prices producers pay for inputs, and the GDP deflator, the series used to adjust GDP for changes in the overall price level over time. Analysts watch trends in these series, as well as interest rate spreads, the yield curve, and measures and surveys of inflation expectations to measure both the level of inflation and inflation expectations in the economy. In addition to the output, employment, and inflation indicators, a number of other economic indicators have different properties that make them valuable tools for analyzing the economy. One example is the index of leading economic indicators, compiled by The Conference Board, The index is a composite of 10 indicators that tend to move up or down several months before the overall economy. Emerging trends in this group of leading indicators tend to provide more reliable signals than movements of the individual indicators. Therefore, analysts often watch the index of leading indicators for persistent movements that may be taken as a signal of future trends in the direction of the economy. Several frequently watched individual indicators that are components of the index of leading indicators are the money supply (M2), index of stock prices (500 common stocks), consumer expectations, housing permits, and manufacturer’s new orders. Analysts also have a wide variety of other indicators of economic performance that they may follow. For example, staff at this Federal Reserve Bank regularly prepare an economic briefing packet that contains over one hundred charts and data tables that show over fifty economic indicators. The indicators range from labor market conditions to industrial production, from monetary policy indicators and interest rates to fiscal policy, from regional and domestic to international indicators, from oil prices to stock market indices. Reflecting the complexity of the economy, FOMC policymakers and staff economists review these charts and tables, as well as the results of econometric models, when they evaluate the economic health of their Districts and the nation. References U.S. Monetary Policy: An Introduction.1999. FRBSF Economic Letter 99-01 (January 1). /econrsrch/wklyltr/wklyltr99/el99-01.html > The Conference Board, Business Cycle Indicator Homepage, > For information on a variety of economic indicators, see the Federal Reserve Bank of St. Louis web site, > The National Bureau of Economic Research (NBER), US Business Cycle Expansions and Contractions web page, >
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What is the major importance of education?

The United Nations Convention on the Rights of the Child recognizes education as a legal right of every child. Yet education remains a privilege to many. UNESCO data shows that 258 million children and youth were out of school for the school year ending in 2018.

Of that total, more than 129 million were girls and 58 million were of primary school age. Among those fortunate to have access to education, on the other hand, more than 617 million children and adolescents do not have minimum proficiency levels in reading and mathematics.1. What is education? Education is the process where an individual acquires or imparts basic knowledge to another.

It is also where a person:

develops skills essential to daily living, learns social norms, develops judgment and reasoning, and learns how to discern right from wrong.

The ultimate goal of education is to help an individual navigate life and contribute to society once they become older. There are various types of education but typically, traditional schooling dictates the way one’s education success is measured. People who attended school and attained a higher level of education are considered more employable and likely to earn more.

In developing, low-income countries, for example, there is a projected 10 per cent increase in a person’s future income for every additional year of education. Education helps eradicate poverty and hunger, giving people the chance at better lives. This is one of the biggest reasons why parents strive to make their kids attend school as long as possible.

It is also why nations work toward promoting easier access to education for both children and adults. Household food insecurity is a common problem in Somalia and is identified as a reason for student absenteeism. Many families are pastoralists, moving around where the food source is, especially during periods of drought. It becomes difficult for their children to attend school regularly.

Education helps a person hone their communication skills by learning how to read, write, speak and listen. Education develops critical thinking, This is vital in teaching a person how to use logic when making decisions and interacting with people (e.g., boosting creativity, enhancing time management). Education helps an individual meet basic job qualifications and makes them more likely to secure better jobs. Education promotes gender equality and helps empower girls and women. A World Bank report found that an extra year of schooling for girls reduces teen pregnancy rates by six per cent and gave women more control over how many children they have. Education reduces child mortality. According to UNESCO, a child born to a mother who can read is 50 per cent more likely to survive past the age of five.

A student from a primary school in Rwanda tries using a tablet computer in class. Many World Vision programs introduce technology into classrooms and youth training centres. Photo: Charity Beza Uwase 3. What are the different types of education? Education is typically divided into three categories: formal education, informal education, and non-formal education.

Formal education Formal education is the type that is typically conducted in a classroom setting in an academic institution. This is where students are taught basic skills such as reading and writing, as well as more advanced academic lessons. Also known as ‘formal learning’, it usually begins in elementary school and culminates in post-secondary education.

It is provided by qualified teachers or professors and follows a curriculum. Informal education Informal education, on the other hand, is the type that is done outside the premises of an academic institution. Often, this is when a person learns skills or acquires knowledge from home, when visiting libraries, or browsing educational websites through a device.

  • Learning from the elders in one’s community can also be an important form of informal education.
  • Such education is often not planned or deliberate, nor does it follow a regimented timetable or a specific curriculum.
  • It is spontaneous and may also be described as a natural form of education.
  • Non-formal education Non-formal education has qualities similar to both formal and informal education.

It follows a timetable and is systemically implemented but not necessarily conducted within a school system. It is flexible in terms of time and curriculum and normally does not have an age limit. The most common examples of non-formal education include community-based courses, vocational training or short programs that are not facilitated by professional instructors. A female student in Lebanon learns carpentry, a skill often associated with men. Education of all kinds empower girls and women in their communities. Photo: Maria Bou Chaaya 4. What are the benefits of education? If all students in low-income countries acquired basic reading skills before leaving school, entire societies could change dramatically.

According to UNESCO, 171 million people could be lifted out of poverty. But education isn’t just about living above the poverty line. It’s about quality of life, choices at work, and many other benefits, as listed below. Developing problem-solving skills The schooling system teaches a person how to make their own decisions by developing critical and logical thinking skills.

This prepares children for adulthood when both big and small decisions become a constant part of their daily lives. For example: coming up with solutions to challenges in the community or planning how to provide for a family. Self-reliance and empowerment Knowing how to read, write and do arithmetic is empowering.

When a person can read, they can access endless learning and information. When they can calculate expenses and make a budget, they can start a small business. Paired with the ability to form opinions, literacy makes a person become more self-reliant, and gives them confidence. Promoting equality among individuals In an ideal world, there is no room for discrimination due to race, gender, religion, social class, or level of literacy.

This is where the value of education comes to play. Through education, one can develop strong, well-considered opinions – and learn to respect the views of others. Many experts agree that education is a significant contributor to peace in societies. Stability and financial security A person’s income is often linked to his or her educational attainment.

Around the world, there are more employment opportunities for those who complete high school, earn a degree, diploma or certificate, or go on to post-graduate studies. These can also mean higher salaries. Economic growth (as a nation) An educated population is important in building a nation’s economy.

According to studies, countries with the highest literacy rates are more likely to make progress in human and economic development. National economic growth begins with individual economic growth, which is often linked back to education. In Canada, 70 per cent of jobs have a college-level reading skill requirement. Elementary students from Papua New Guinea now have toy kits for recreation time at school. Play helps children solve problems, develop creativity and work as a team. Photo: Nelson Kairi Kurukuru 5. What does World Vision do to make education more accessible for girls and boys? One of World Vision’s objectives is to make education accessible for girls and boys around the world.

We see it as an effective tool to promote sustainable growth for children, their families and the communities that we support. In 2020, donors sponsored 377,888 children across 44 countries through World Vision Canada alone, Many of these children are now benefitting from formal education. At least 12,270 children attend after-school literacy activities, while 51,585 adults were educated on child protection.

World Vision has several programs which make education of children and youth a priority. These include Child Sponsorship, the Raw Hope initiative and the World Vision Gift Catalogue, Through these projects, anyone interested in helping fund the education of vulnerable children can participate. Rosemiah, a young teacher in the Philippines, helps children improve their reading skills through a program called the Culture of Reading. Photo: Ramon Lucas Jimenez 6. How can I contribute toward making education accessible? Children in Canada have access to free education all the way through high school – but it’s not true everywhere.

Below are some of the ways you can help make education accessible for girls and boys around the world. Child Sponsorship World Vision is known for our Child Sponsorship program. It is an initiative where we pool together funds from donors, partners and the Canadian government to provide access to necessities such as nutritious food, clean water, health care and education among others.

The program benefits children across 44 countries, emphasizing access to education. Raw Hope Raw Hope is another program where we strive to make learning possible, even in the world’s most dangerous places. We do more than provide access to life-saving essentials.

Raw Hope also includes the creation of safe spaces where girls and boys can play and continue their learning, even when life is in chaos. Gift Catalogue World Vision’s online Gift Catalogue invites donors to choose from many kinds of life-changing gifts–including several focusing on education. You can help by: donating textbooks for children, distributing school essentials, donating tech for a community, and helping send girls to school,

Volunteer While monetary donations are a great way to help, it is not the only option. You can also try volunteering your time by joining groups in your city or neighbourhood. Look for associations accepting volunteer teachers and share your knowledge with children of all ages. A boy in Rwanda solves a math equation. Arithmetic can help children learn to save money, create budgets, secure better jobs when they are older and even start small businesses. Photo: Charity Beza Uwase 7. Quick facts about education in Canada and the world Different countries and regions have different approaches to education, for children and adults.

Education in Canada is generally overseen and funded by governments (provincial, territorial and federal). Kindergarten in Canada is mandatory in most provinces and optional in a few. Starting in Grade 1, education is mandatory until a child is at least 16. The only exceptions are when families adhere to certain requirements for home schooling. Canada offers a Kindergarten to Grade 12 educational system, along with some other countries, such as the United States, Australia, Germany, Japan, Singapore and the Philippines. Canada once had a highly controversial residential school system. More than 150,000 First Nations, Métis and Inuit children were forced to attend church-run, government-funded schools between the 1870s and 1997. In 2016, some 750 million adults in the world still lacked basic reading and writing skills. Two-thirds of them were women.

Central Asia, Europe and North America have the highest literacy rates for youth aged 15-24 at nearly 100 per cent. The sub-Saharan region of Africa has the lowest, at 75 per cent. The criteria for assessing literacy vary between countries.
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What is the main benefit of education?

Benefits of Education are Societal and Personal – Those who get an education have higher incomes, have more opportunities in their lives, and tend to be healthier. Societies benefit as well. Societies with high rates of education completion have lower crime, better overall health, and civic involvement.
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What are the important topics of Indian economy?

Mains Economics Syllabus for UPSC 2023: – Indian Economy syllabus for UPSC mains/Economics syllabus for UPSC mains: UPSC Economics syllabus for mains is included in the General Studies Paper III which contains the topic Economic Development. Focus on these areas to ace the UPSC Mains exam.

  • Indian Economy and issues relating to planning, mobilization of resources, development, growth, and employment.
  • Inclusive growth
  • Budgeting
  • Major cropping patterns in different parts of the country, different types of irrigation, transport, and marketing of agricultural produce and issues and associated constraints; e-technology for Direct and indirect farm subsidies and minimum support prices ; PDS – objectives, functioning, limitations; issues of buffer stocks, food security ; economics of animal-rearing, Technology missions.
  • Food processing and related industries
  • Land reforms
  • Effects of Liberalisation
  • Infrastructure: Energy, Roads, Ports, Airports, and railways
  • Investment models

Economic growth and development, finance, banking, budget, the balance of payments, poverty and related issues, population composition and related characteristics, social sector initiatives related to education, health, and sanitation, and international financial institutions are some of the important notes in economics for UPSC 2023 Prelims and Mains covered in this article,

  1. Overview Of Indian Financial System
  2. Blue Bonds
  3. SEBI – Objectives, Structure, and Functions
  4. SIDBI and its Functions
  5. Khadi and Village Industries Commission
  6. Primary Agricultural Credit Societies (PACS)
  7. Toy Industry in India and its Future
  8. Concept of ‘Greenwashing’
  9. Impact of GST on Inflation
  10. Importance of Public Investment for India’s Economic Growth
  11. Pink Revolution in the Food Processing Industries
  12. Environmental Impact Assessment
  13. First Five-Year Plan: Objective and Assessment
  14. Causes Of Rupee Falling Against US Dollar And Its Effect
  15. Livestock Insurance Scheme
  16. Plan Holiday of Five Years Plan
  17. Five-Year Plan Related To Blue Revolution
  18. Impact of Digital India Programme on the Economy
  19. Armed Forces Special Powers Act 1958 (AFSPA)
  20. GST Revenue Collection
  21. Right To Information (Amendment) Bill 2019
  22. Net Non-Performing Assets Ratio (NNPA)
  23. Main Objective Of The Fifth Five-Year Plan
  24. Fourth Five-Year Plan: Self-Reliance
  25. National Family Health Survey (NFHS-1 to NFHS-5)
  26. Dichotomy of Development
  27. National Translation Mission
  28. The Tea Board of India
  29. RBI And Its Functions
  30. Tertiary Sector And Its Potential
  31. The National Cyber Security Policy, 2013
  32. New Urea Policy 2015
  33. Climate Action Tracker
  34. Surrogacy (Regulation) Bill, 2020 India
  35. Miyawaki Method
  36. Wardha Scheme of Basic Education 1937
  37. Fractional Orbital Bombardment System
  38. Causes of Inflation and Who get Benefits from it?
  39. Coal Controller Organization
  40. National Family Health Survey-5
  41. Cartagena Protocol
  42. Metal Industry: Current Outlook And Future
  43. Types of Taxes
  44. What is Food Subsidy?
  45. Discuss Supply and Demand Reversal Of Environmental Resources
  46. Official Reserve Transactions
  47. Factors Affecting Agriculture In India
  48. Role Of Rice In Boosting Nourishment
  49. International Bank of Reconstruction and Development (IBRD)
  50. Types of Inflation
  51. Agricultural Produce Market Committee (APMC)
  52. Feminization Of Agriculture
  53. Special Economic Zone (SEZ)
  54. Objectives And Principles Of Taxation
  55. Role Of Public Sector In Industrial Development During Planning Decades
  56. Direct And Indirect Farm Subsidies And MSP
  57. Labour Regulations And Its Effects In India
  58. Foreign Direct Investment
  59. Regional Rural Banks in India
  60. Impact of Repo Rate and Reverse Repo Rate on Economy
  61. New Industrial Policy 1991
  62. Govt’s Efforts to Improve Widening of Tax Base
  63. Food Processing in India: Scope and Significance
  64. Liberalization of Foreign Trade
  65. Investment in Infrastructure is Essential for Rapid and Inclusive Economic Growth
  66. Link Between the Economy and the Environment of a Country
  67. Money Laundering: Problem and Prevention
  68. Role of Energy for Economic Development
  69. Broad Money and Narrow Money
  70. Capitalist and Socialist Economic Systems
  71. Inclusive Growth of India
  72. Public-Private Partnership For Inclusive Growth
  73. Difference and Relationship Between Foreign Trade and Foreign Investment
  74. Importance of Efficient and Affordable Urban Mass Transport
  75. Effect of Autonomous Change in Aggregate Demand on Income and Output
  76. Challenges of Power Sector of India
  77. Regional Resource-Based Manufacturing
  78. Challenges For Indian Women Against Time and Space
  79. Industrial Corridors in India
  80. National Population Policy 2000
  81. Minimum Support Price (MSP)
  82. Govt’s Initiatives to Make Food Grain Distribution System More Effective
  83. Difference Between NITI Aayog and Planning Commission
  84. Role of Cooperatives in Food Security
  85. Role of Self-Help Groups in Poverty Alleviation
  86. Role of Foreign Exchange Market in India
  87. Ex-Ante and Ex-Post Investment
  88. Potential GDP and its Determinants and Factors
  89. Role of Supermarkets in the Supply Chain Management
  90. Open Economy Autonomous Expenditure Multiplier Smaller than Closed Economy
  91. Educated Unemployed – A Peculiar Problem of India
  92. Types of Expenditure in Budget
  93. Role of Micro-Credit in Meeting the Credit Requirements of the Poor
  94. Women’s Health is a Matter of Great Concern in India
  95. How Health is Related to the Overall Growth and Development of India?
  96. Main Characteristics of Capitalist Economy
  97. Strategies to Improve Health Facility in India
  98. Microeconomics and Macroeconomics
  99. Legal Measures Taken by Government to Empower Consumers
  100. Non-Farming Production Activities and Their Impact on Economy
  101. Marginal Propensity to Consume and Save – Definition & Relation
  102. Impact of Natural Disasters on Food Supply
  103. Effects of Underemployment
  104. Diversification Towards Animal Husbandry, Fisheries and Horticulture
  105. Quality of Population
  106. Trade and Investment Policy Reforms Since 1991
  107. Importance of Increasing Area Under Irrigation in India
  108. Policy Tools to Control Money Supply
  109. Types of Receipts of Union Budget
  110. Objectives of Government Budget
  111. Scope and Future of Organic Farming With Sustainable Development
  112. How to Protect Workers in the Unorganized Sector?
  113. What is Buffer Stock and its Impact on the Rationing System of India?
  114. Types of Loans People Obtain From Various Sources
  115. Future Perspective For Non-Conventional Sources of Energy In India
  116. Activities of 3 Main Sectors of the Indian Economy
  117. Pros and Cons of Globalization
  118. Factors Caused For Rapid Growth in Economic Development in China
  119. How Public Sector Contributes to the Economic Development of a Nation?
  120. Why Modern Farming Methods Required More Inputs?
  121. 4 Major Sectors of an Economy
  122. Economic Reforms in India in the Light of Social Justice and Welfare
  123. Achievements of India’s Industrial Sector Between 1950-1990
  124. Role of Service Sector in Modern Economic Development of India
  125. Population as an Asset for the Economy Rather Than a Liability
  126. Deindustrialization in India Before 1947 and its Impact
  127. World Climate Research Programme
  128. Mining Sector In India And Its Challenges
  129. India State of Forest Report (ISFR) 2021
  130. Agricultural Revolutions Of India
  131. Environmental and Health Impact of Fly ash
  132. Department of Economic and Social Affairs
  133. Ratan P Watal Committee
  134. Foreign Portfolio Investment
  135. Trade and Development Report 2022
  136. Achievement of Ayushman Bharat
  137. Shrinkflation
  138. National Logistics Policy 2022
  139. China’s Poverty Alleviation Programmes
  140. Labour Reforms and Issues
  141. Consequences of Declining Fertility
  142. PRASHAD Scheme
  143. Shanghai Cooperation Organisation
  144. Food Safety and Standards Authority of India
  145. Public Provident Fund
  146. Non-Aligned Movement
  147. Aajeevika
  148. Social Entrepreneurship in India
  149. Rubber Industry
  150. Direct Benefit Transfer
  151. Per Capita Income: Uses And Limitations
  152. Windfall Tax
  153. Importance of Niti Aayog in India
  154. The Role of Trade Union in India
  155. Trade Unions in India
  156. National Education Policy 2020
  157. Effects of Globalisation on Indian Society
  158. Accelerate Vigyan Programme
  159. Marshallian Approach to Price Determination
  160. BIMSTEC and SAARC
  161. Digital Lending and its Regulation
  162. Construction and Demolition Waste Management
  163. Ultra Poverty in India
  164. Universal Basic Income
  165. Refugee Crisis in India
  166. Open Network for Digital Commerce (ONDC)
  167. Eastern Economic Forum
  168. Government Securities Acquisition Program (G-SAP)
  169. Old Tax Regime Vs New Tax Regime
  170. Labor Unions in India
  171. Movement of the Working Class in the Pre-Independence of India
  172. Operation Twist
  173. AgriTech Summit 2022
  174. Trade Union Legislation of India
  175. Green Hydrogen
  176. Micro Irrigation Fund
  177. Initiatives for Rural Women
  178. MoU for Multi Modal Logistics Park (MMLP)
  179. Basel Norms
  180. Initiatives taken by Central Govt. to Improve the Quality of Education in India
  181. Buoyancy in Direct Tax Collection
  182. Narcotic Drugs and Psychotropic Substances (NDPS) Act
  183. Green Economy
  184. Financial Stability and Development Council (FSDC)
  185. National Pharmaceutical Pricing Authority (NPPA)
  186. Absolute and Relative Poverty
  187. Development of Enterprise and Service Hubs Bill (DESH), 2022
  188. Small Savings Instruments
  189. Bad Bank
  190. Fiscal Responsibility and Budget Management (FRBM) Act
  191. PM Cares Fund
  192. RBI – Digital Payments Index
  193. National Pension System
  194. The Gandhian Model of Development -Five Year Plan
  195. Importance of Five Year Plan in India
  196. Boosting Infrastructure of Rural India
  197. Bank Board Bureau (BBB) and Financial Services Institutions Bureau (FSIB)
  198. Unified Payments Interface (UPI) and its Challenges
  199. National Intellectual Property Awareness Mission (NIPAM)
  200. Freebies vs Welfare Schemes and its Impact on Economy
  201. Important Aspects Of International Trade
  202. Agritourism and its Future in India
  203. Nominal and Real Effective Exchange Rates
  204. India’s Unique Job Crisis
  205. Agri-Food Technology
  206. Social Media Accountability
  207. Currency Management by Reserve Bank of India (RBI)
  208. Caste-based MGNREGA Wages Payment
  209. Economic Condition and Planning After Independence
  210. Prevention of Money Laundering Act 2002
  211. Inflation Indexed Bonds
  212. Rapid Financing Instrument and Rapid Credit Facility
  213. Cooperatives on Government e-Marketplace (GeM)
  214. World Population Report 2022
  215. Green Revolution Krishonnati Yojana
  216. Twin Balance Sheet Problem
  217. Five Year Plan And A Socialistic Pattern Of Society


  • Importance Topics related to History for UPSC 2023
  • Importance Topics related to Geography for UPSC 2023
  • Importance Topics related to Polity for UPSC 2023
  • Importance Topics related to Economics for UPSC 2023
  • Importance Topics related to Science & Technology for UPSC 2023

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What is the impact of education on economic growth?

Education and economic growth In 1900, Spain and Finland were very similar: they were underdeveloped, largely agricultural countries with a low level of literacy (scarcely 40% of the population) and a similar income per capita.50 years on, Finland’s income per capita doubled Spain’s, all Finns were literate and secondary education had started to spread to all social classes in the country.

  1. Meanwhile, in Spain, illiteracy was still widespread and secondary education a rarity.
  2. Almost 70 years later, and in spite of Spain’s huge economic development and improvements in terms of education, Finland’s income per capita is still higher than Spain’s.
  3. And so is its level of education.
  4. Therefore, were Finland’s educational improvements the key to its success? This must certainly be partly the case.

Education directly affects economic growth insofar as it is essential to improve human capital. Let’s take this step by step. An economy’s production capacity depends on different factors. These include physical capital, technology and the number of workers, as well as their quality.

This quality is largely determined by what is called human capital (the stock of knowledge, skills and habits). An increase in workers’ educational level improves their human capital, increasing the productivity of these workers and the economy’s output. Numerous studies in the field of labour economics have attempted to measure this relationship between a worker’s education and its productivity, called the private return to education.

And the findings have been incredibly positive. The precursor to all such studies is the equation developed by Jacob Mincer in 1974, known as the Mincer Equation. This relates workers’ earnings (seen as a way of measuring their productivity) with their years of schooling and work experience,1 It goes without saying that equating a worker’s education with their years of schooling is highly flawed since it assumes that, for instance, one additional year of primary education has the same effect on a worker’s productivity as an additional year of university education.

  1. Neither does it take into account possible differences in the quality of the education received, particularly relevant for analyses carried out with data from different countries.
  2. Some studies therefore distinguish between primary, secondary and tertiary education and add quality controls such as the results from tests carried out internationally.

Another problem, more substantial and therefore more difficult to resolve, is whether such studies actually measure the effect of education on productivity or rather the result of talent. For instance, if more talented people are the ones who receive more education, then the estimated effect of education on productivity would largely reflect this greater talent and not the higher level of education.

In order to avoid this problem (in technical terms, an omitted-variable bias), some articles have attempted to use natural experiments. One of the most curious used identical twins with different lengths of schooling. Such twins are genetically identical and tend to have the same family environment, so their skills and habits should be very similar.

Such studies have found that one additional year of schooling results in an increase in earnings, and therefore productivity, of between 6% and 10%,2 In addition to education’s direct effect on a worker’s productivity, numerous economists also point to important education externalities for growth, larger than private returns.

  1. Paul Romer, for instance, suggests that societies with a large number of highly skilled workers generate more ideas and consequently grow more.
  2. In a recent work, Aghion et al present a theoretical model and some empirical evidence that shows more advanced economies benefit from workers with a university education since this promotes technological innovation, augmenting the productivity of both physical capital and the workforce as a whole.

On the other hand, developing economies benefit from workers with a primary and secondary education as this helps them imitate the technologies developed in richer countries, thereby also increasing the productivity of their physical capital and workforce,3 Given their huge importance, the existence of such externalities, or social returns, and their quantification are undoubtedly important when designing educational policies in order to avoid underinvestment in education.

  1. Individuals tend to decide the level of educational training they wish to attain based on the private returns they expect to receive and do not take social returns into account.
  2. A significant social return would therefore justify policies to encourage greater investment in education.
  3. But studies focusing on quantifying the effects of education on economic growth and which therefore attempt to reflect both private returns and externalities also face several complications.

Like studies focusing on private returns, they need to accurately measure the education variable, distinguishing between different educational levels and controlling via quality. They must also deal with a problem of inverse causality: is it the case that countries which invest the most in education grow the most and achieve the highest levels of income? Or, alternatively, do countries with higher levels of income tend to invest more in education? Both relationships are bound to exist but, in this case, we need to know the extent of the former since it will determine what kind of educational policies need to be implemented.

In order to identify this relationship, some studies make use of what are called instrumental variables. In other words, they look for countries or regions whose educational level has changed for some reason, independently of their growth rates. A mission which, in many cases, is almost impossible. Changes in mandatory education policies or appointments of politicians on legislative committees responsible for educational investment in US states are some of the events that have been considered.

However, in such cases the findings of the different empirical studies are not conclusive: some show clearly greater social returns than private while others find that both types of return are similar,4 Lastly, other kinds of externalities also result from education.

But beyond the relevance of education in economic growth and in fostering democracy, in the words of the United Nations: «education is a fundamental human right and essential for the exercise of all other human rights».Clàudia CanalsMacroeconomics Unit, Strategic Planning and Research Department, CaixaBank

1. See Mincer, Jacob (1974), «Schooling, Experience, and Earnings», NBER Book. On the other hand, although wage income largely reflects a worker’s productivity, there are other elements that can affect it, such as legislation, the role of trade unions, etc.2.

See Card, D. (1999), «The causal effect of education on earnings», Handbook of Labor Economics 3: 1801-1863, for a summary of the empirical literature. In this summary, David Card also comments on the use of the geographical proximity variable for individuals to university as a good proxy of the talent-free educational level of individuals.3.

See Romer, P.M. (1990), «Human Capital and Growth: Theory and Evidence», Carnegie-Rochester Conference Series on Public Policy, Vol.32. And Aghion, P. et al. (2009), «The Causal Impact of Education on Economic Growth: Evidence from U.S.», Brookings Paper.4.

  1. Acemoglu, D.
  2. And Joshua, A.
  3. 2000), «How Large Are Human-Capital Externalities? Evidence from Compulsory-Schooling Laws», NBER macroeconomics annual 15: 9-59, show a small social return.
  4. And Moretti, E.
  5. 2004), «Estimating the social return to higher education: evidence from longitudinal and repeated cross-sectional data», Journal of Econometrics 121, 1: 175-212, a clearly higher social return.5.

See Glaeser, E.L., Ponzetto, G. and Shleifer, A. (2007), «Why Does Democracy Need Education?», Journal of Economic Growth 12.2: 77-99. : Education and economic growth
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