Education is missing a trick on industry, says OECD

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Speed read

  • Boosting labour productivity is essential to close the income gap
  • Developing countries are under-investing in the technical skills needed to enable this
  • But China is paving the way, primarily through importing global knowledge

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Developing and emerging countries should more closely link up education and technology policies to produce the technical skills needed to boost their economies and “close the income gap with advanced countries”, according to a report by the OECD (Organisation for Economic Co-operation and Development).

The report, Perspectives on Global Development 2014 launched this month in Paris, France, highlights a mismatch between the skills that the economies of developing and emerging countries need and training being offered to people.

For instance, it says that in a number of African countries industrial labour costs are high relative to workers’ productivity because of a shortage of trained engineers.

Unless labour productivity is increased, many developing and emerging countries will not be able to close the income gap with advanced economies for many decades, the report warns.

“There has been little linkage between what students study, and what countries need.”

Phillip Griffiths, Science Initiative Group

“Many developing countries underinvest in the more technical, mid-level skills that are most needed for their economies,” says Martin Wermelinger, an OECD economist. “Education systems in developing countries need to be flexible so that they can quickly adapt to [the] changing needs of the economy.”

Developing countries also need to encourage innovation, the report says. By developing products and processes domestically and importing global knowledge, developing countries could gain a competitive advantage, it adds.

The Chinese model

Among the BRIICS — a group of six emerging national economics (Brazil, Russia, India, Indonesia, China and South Africa) — China has been the most systematic in importing global knowledge through various means, it says.

“China’s strategy to improve education and skills, coherent with its technological upgrading, can be viewed as a model for other developing countries,” Wermelinger tells SciDev.Net.

“China has not only been tapping global knowledge through imports of capital goods, [but is] also sending many more students to foreign universities than any other emerging economy,” he says. “Adopting global knowledge through various channels helps China to move into higher value-added sectors.”

But Wermelinger notes that as costs are rising in China, including labour costs, workers will need more specific skills to allow the country to move into the higher segments of the economy.

Surveying the needs

The report recommends that governments use surveys to identify and assess the skills needed in the economy.

Once the skills have been identified, developing countries can allocate public funds accordingly in tertiary education and vocational training. The private sector has an important role to play in interacting with educational institutions to help define the curricula, the report says.

“Countries that have been at the middle-income level for several decades, such as Brazil, Mexico or South Africa are still struggling to provide high-quality basic education to everyone. The problem is even higher when looking at the supply of more specific, mid-level technical skills,” Wermelinger says. 

Education can be more effective if teachers are given better training, social recognition, and stronger incentives such as better wages and pensions, the report says.

The report says that developing countries should also increase their investment in research and development (R&D) to boost their innovation capabilities, which will enable them to take advantage of existing global knowledge and technology. Developing countries’ average investment of less than one per cent of GDP (gross domestic product) on R&D, compares with OECD average of 2.4 per cent of GDP.

Phillip Griffiths, chair of the Science Initiative Group, which is dedicated to fostering science in developing countries, says: “One barrier in developing the technical skills needed by African countries has been the outdated, discipline-based model of education that dominated for many years after the close of the colonial era.

“There has been, until recently, little linkage between what students study, and what countries need in the way of trained scientists, engineers, and technicians who can contribute to economic growth,” he tells SciDev.Net.

But Griffiths adds that some institutions are now becoming aware of the need for educational strategies to be better aligned with economic needs and also that the private sector has a responsibility to communicate more clearly and forcefully the knowledge and skills they require.

Link to full report
See OECD’s graph below for labour productivity in your country: