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Study: Cognitive Skills Completely Describe Economic Growth

Posted by Bert Maes on January 28, 2010

A new study from the OECD provides evidence of the link between educational attainment and prosperity.

Published on January 27th, the study, entitled “The high cost of low educational performance”, asks “Why do some countries succeed economically while others don’t?

Their answer is: economies with better cognitive skills in mathematics and science innovate at a higher rate, generate more ideas and new technologies and improve their productivity much faster.

The OECD continues: “Regional growth over the last four decades is completely described by differences in cognitive skills”. The math and science skills of the labor force are directly related to economic growth.

This actually says that:

  • raising cognitive skills are a crucial force in economic development;
  • improvement in the quality of schools is so very important;
  • the potential gains from improving school is truly enormous;
  • educational achievements transform economies.

An improvement of 50-point higher average in mathematics and science performance in PISA scores generates a 0.87% higher economic growth every year.

Or even a 25-point increase in PISA scores, makes the GDP in 2042 rise more than 3% higher than what would be expected without improvements in cognitive skills. This would increase to a 5.5% improvement in 2050, 14.2% in 2070, and in 2090 about 25% above the “education as usual” level.

Over many decades, the small rise in average 0,87% annual growth rates could bring a stonking $115 trillion in extra wealth for its member countries by 2090, the OECD reckons.

You can see this is a long-term perspective, but still, the report concludes “the enormous economic gains, put in terms of current GDP, far outstrip the value of short-run business-cycle management of current issues of economic recession”.

Arnold Schwarzenegger has cut $1 billion in California, the British government reduces spending on higher education by $980 million, half of American states will have spent all of their stimulus money ($787 billion) for education by the end of July. Cuts will follow, says the Economist.

These actions might be necessary (which I personally doubt), but the long-run issues should not be neglected. The economic value of successful school reform far exceeds any conceivable costs of improvement.

Countries must make substantial changes in raising the quality of learning outcomes now to reap the future benefits.

>> READ FULL STUDY: The High Cost of Low Educational Performance – The Long-Run Economic Impact of Improving PISA Outcomes (OECD, January 27th, 2010)

We welcome your views.

UPDATE: an additional graphic:


9 Responses to “Study: Cognitive Skills Completely Describe Economic Growth”

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