Quality education increases economic output

Quality education increases economic output

We will take a look at factors that increase economic output.Also those that negatively affect employment and productivity which lowers economic output, then the ways high-quality education develops skilful masses who add great value to economic development.

Factors that increase economic output include:

1. Sound economic policies on fiscal and monetary economic decisions help to develop a nation's economy.Fiscal policies are ways the federal government increases or decreases it spending so as to encourage consumption in recessionary times, or to reduce consumption in inflationary times.
Government opens up the economy and increase spending when the economy tilts toward recession.Such move helps the economy to recover back to normal.

When the economy begins to move toward inflation, quick policies of reduced spending mop up the extra money in circulation and the economy returns back to normal.

Fiscal policies alone are not enough. Monetary policies from the central bank must align with government's fiscal policies. Monetary polices include the decision to sell or buy bonds, increase or decrease interest rate, currency valuation, among others. These policies help to open investment for foreign and local investors, increase or decrease currency value, and provide smooth inter-currency and inter-trade relationship among nations.

When trade runs smoothly, investment increases and unemployment reduces.With more people employed, their consumption increase which increases a nation's economic output.Increased economic output results in higher GDP and reduction in poverty.

2. Well-structured economic management system is essential to handle the complexities of manning a nation's economy. Moving a nation from recessionary gap or inflationary gap to normal economic growth is not an easy job. It is a job for the highly trained economists who would set up super-efficient economic team.

The team would structure a nation's economy so as to produce at full output.This means strengthening any bottle-neck around investment. Investors must be encouraged with policies that support their businesses. Decisions on taxes, interest on loans, barriers to business entry, fiscal spending, among others must all be properly be thought-out using best economic approach by the team.

3. Availability of natural resources is a important factor that encourages economic development. The earth is rich in natural resources. When a nation has more of these resources, the nation can convert them to economic prosperity. In as much as a nation is advantaged to possess many natural resources, it does not mean that the nation can adequately apply the advantages for economic benefit.

4. Skilful masses is one highly important advantage that a nation can have. The reason is obvious, they run the economy, they increase production, and they make a nation affluent.

Now that we have treated some of the ways a nation can be economically developed, let's see the factors that hinder such development.

What are the factors that negatively affects full employment and productivity?

Poor economic policies and management: Running the economy is very complex and requires the brain of well-trained economists. A country with poor economic management team make poor economic policies. The policies affect investment negatively which results to increased unemployment and lowers GDP as more people becomes poor and less productive.

 Unskilled labor force: This is a key factor of underdevelopment. It is also the reason for poor economic management team. The output of unskilled or less skilful labor force is below the maximum capacity that the nation can produce.With a less-production economy, a nation's unemployment becomes high leading to perpetual recession unless moves are made to qualitatively increase skilled labor force.

Now, what is the primary reason for the increased unskilled/poorly skilled labor force? Yes, that's right...lack of quality education.

What ways does high-quality education lead to high economic output?

High quality education produces high skilled people, and high skilled people produce increased economic output. High economic output lowers unemployment, increases GDP, eradicates poverty and lift a nation to economic development. 

Thus, for a nation to become economically developed, high quality system of educating citizens must be in place. Only such a system generates skilful masses that launch a nation to economic powerhouse.

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By Paul Nwosu