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President Barack Obama at the University of Texas in Austin, Texas August 9, 2010.
Higher Education and the Economy: Advanced and emerging economies are putting
a lot of emphasis on education and its importance for economic growth but
experience shows that there is no magic bullet.
In Ireland, the Government has the narrow focus of banking on its faith-based
'smart economy' strategy, which has put academic scientific research at the core
of enterprise policy even though its optimistic expectations have no relationship with
said on Monday that the United States gave up its top
position as the world
leader in University enrollment about 10 years ago, as students in
nations like South Korea, Canada and Russia
began to surpass their American counterparts.
Now the United States ranks 12th among 36
developed nations in college graduation rates, a
trend the president said he intended to reverse.
In 1970, 30% of global university enrollment was in the US.
“Over a third of America’s college students,
and over half our minority students, don’t earn
a degree, even after six years,” President Obama told
students at the
University of Texas in Austin. "So we don’t just need
to open the doors of college to more Americans.
We need to make sure they stick with it through
graduation. That is critical.”
He added, “That’s how we’ll lead the global
economy in this century, just like we did in the
The administration says while close to 70% of high school
graduates in the United States enroll in college
within two years, just 57% graduate
within six years. An estimated 16.7m
Americans age 25 to 34 currently possess college degrees,
but the administration calculates that for the
United States to resume its place as the world
leader in college graduation rates, the nation
will have to provide for 11m more
young people to enter and complete college by
the end of the decade.
If current population trends hold, an
estimated 3m more young adults will
graduate during the next 10 years. But there
will be a gap of eight million students.
The president said in his speech:
"It’s an economic issue when the unemployment rate for folks
who’ve never gone to college is almost double what it is for
those who have gone to college. Education is an economic
issue when nearly eight in 10 new jobs will require
workforce training or a higher education by the end of this
decade. Education is an economic issue when we know beyond
a shadow of a doubt that countries that out-educate us
today, they will out-compete us tomorrow.
The single most
important thing we can do is to make sure we’ve got a
world-class education system for everybody. That is a
prerequisite for prosperity. It is an obligation that we
have for the next generation."
Grover J. "Russ"
Whitehurst, a Senior Fellow at the Brookings Institution think-tank in
Washington DC, commented on Monday that US university enrollment rates have gone down (they
have been rising) because other countries have leapfrogged the US.
He said a presidential address is not the place to address subtleties, but
policymakers and practitioners in higher education will need to do so if the
increased emphasis on attaining college degrees is to pay the expected
dividends. In that sense, focusing on the horserace may be counterproductive.
Whitehurst said the relationship between years of schooling and economic output at the
national level is complex, to say the least. A small but consistently positive
relationship between long-term growth and years of schooling is found in
econometric studies, but there are many caveats and exceptions that are relevant
to designing higher education policy in the US. He said for one thing there is
tremendous variability in the relationship. For example, Germany has a stronger
economy than France but half the percentage of young adults with a college
degree. Further, France has increased its percentage of young adults with
college degrees by 13 percentage points in the last 10 years whereas Germany’s
output of college graduates has hardly budged, yet the economic growth rate of
Germany has exceeded that of France over this same period. Whitehurst says
educational attainment is not a magic bullet for economic growth. Education
credentials operate within boundaries and possibilities that are set by other
characteristics of national economies. "We must attend to these if more
education is to translate into more jobs'" he said.
Whitehurst added that a growing body of research suggests that policymakers should pay more
attention to the link between job opportunities and what people know and can do,
rather than focusing on the blunt instrument of years of schooling or degrees
obtained. In international comparisons, for example, scores on tests of
cognitive skills in literacy and mathematics are stronger predictors of economic
output than years of schooling. Within the US, he said there is evidence
that for many young adults the receipt of an occupational certificate in a trade
that is in demand will yield greater economic returns than the pursuit of a
baccalaureate degree in the arts and sciences.
The former director of the
Institute of Education Sciences at the US Department of Education, said a single-minded pursuit of regaining the world’s lead in college graduates may
ignore the fact that one size does not fit all nations or all young
adults. He added that one of the distinctive feathers of the US higher education system is
its diversity, with over 6,000 institutions of all manner and stripe serving
students of many ages and needs. In contrast, the higher education system is
most of the countries with which the US compete is centrally managed and
homogenous. He concluded: "We should make diversity our strength by establishing national
policies that encourage institutions to adjust quickly to changing needs in the
marketplace for learning. A good place to start would be creating much better
information on the graduation
rates and employment outcomes associated with particular degree and certificate
programs at particular institutions. If we’re to win the international
horserace we will need to create the conditions for horse races among
postsecondary institutions in this country with finish lines of productivity and
has the key advantage of attracting foreign talent who are generally
educated at US universities and in California’s Silicon Valley, an estimated 50%
of start-ups are either launched by an entrepreneur who was born overseas or one
who is among the founding partners. The national average is 25%.
So America gains
hugely because many bright foreign students remain in the country.