Investing in public education systems is crucial for countries seeking to leverage their demographic dividend. South Korea’s economic development, often called the ‘Miracle on the Han River,’ exemplifies the impact of strategic educational investments. During its rapid industrialization, the emphasis on education significantly improved literacy rates and provided the necessary skills for industrial and technological sectors.
Empirical research supports the notion that educational investment is positively correlated with economic growth. According to World Bank studies, each additional year of schooling is associated with up to a 10% increase in individual earnings, and countries prioritizing educational quality generally exhibit higher economic growth rates. Similarly, a study by Unicef found that each additional year of schooling is associated with an increase of 0.37 percentage points in GDP growth. This can rise up to 1 percentage point with improved learning outcomes.
As the demographic window narrows with time, the elderly population's proportion is set to rise, gradually diminishing the dividend. This transient nature of a demographic advantage underscores the urgency for strategic interventions to harness its potential before the contours shift towards an older demographic profile. In this context, strategic investments in education are paramount in amplifying the benefits of the demographic dividend. This is precisely what India is doing.
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