The role of education in socioeconomic development in emerging economies; human capital components and mechanisms for the success in the future

• In Event: Economics and finance of education in developing and emerging market economies: Current developments and challenge

Proposal

This paper analyzes the role of education in economic growth with special focus on emerging economies with high participation in tertiary education. The practical challenge that this conceptual paper is trying to address is that economic growth is decreasing in the last decades – and traditional institutional approaches become less relevant for educational policy issues. In search for new and more efficient regulatory frameworks, it is important to understand the components of human capital and the mechanisms of their contribution to socioeconomic development. We argue that in the 21st century there are new trends in the role of education in socioeconomic development, with emphasis on emerging economies. These include increasing customization in production and consumption, rapid development of artificial intelligence and digital platforms.
Basing on two ideas by T. Schultz we propose an approach to economics of education and human capital, which implies:
1) Not only investment value but also consumption value of education (including immediate and durable consumption)
2) The expanded definition of human capital, with the special focus on the following four categories of individual development:
● Specialized skills adapted to specific jobs (specific human capital). According to classical human capital theory, it is created through specific (mostly, tertiary) education, as well as work experience.
● General human capital 1 – universal competences, for instance, creativity, critical thinking, cooperation and communication. It is developed through creative, project-based work and requires supplementing traditional education with new types of collective and independent activities.
● General human capital 2 - basic non-cognitive traits such as those found in the Big Five, as well as grit, perseverance, psychological adaptability in the face of social changes and challenges, and so on. These traits can be strengthened by specific activities and supported by an increased socio-personal component in education process.
● An expanded view of the concept of agency, or active independence, is the basis of General human capital 3, which engages with the entrepreneurial element of human capital (Schultz, 1975). This category describes a person’s ability to transform social structures and institutions, make improvements in the world in collaboration with others, and create new types of action, including economic ones.

Authors

• Pavel Sorokin, National Research University Higher School of Economics

• Isak Froumin, Institute of Education HSE