To be or not to give: The GDP dilemma

Sincere apologies, Hamlet! This distortion is to highlight the current impasse and to stress the need for thinking beyond short-term situational measures.

The impasse is in getting the public university system going and in dealing with demands without forgetting that there is a nation in waiting and the vision for it involves that it should become a knowledge hub. Thus the leadership requires is in understanding the nexus of education, the value of human resources and the goal of a knowledge hub. The plea is to let vision dictate action.

The Merchant of Venice portrays Shylock and his unreasonable, self-thinking and demanding nature and the character elicits no sympathy. Of course Shylock is quite sure that he is not negotiating. Negotiations demand a different approach.

Negotiations

When we sit down for negotiations and when one side is weak in representing its views or presenting them in a way that is not acceptable, negotiations may fail, but can we forget the underlying issue?

When the State is one party to the process, there is more responsibility on it to realise progress while the other group may be classically following TU action. An impasse is also created when people with deep-rooted prejudices meet across tables and discusses issues relevant nationally though the feelings may be that these are political views.

Sadly there are no rules ‘per se’ for negotiations. This is perhaps what we may see today with GDP and education: The broader issue of the ongoing academic strike action. The specific issue is the salary anomaly of academics, which is an imperative to retain staff and attract quality staff.

In this write up I wish to consider the broader issue of GDP and education, having addressed the former earlier. This is in need of serious consideration devoid of colour and affiliations. I for one do not want to see this particular jewel in the national crown being left to die of chronic neglect (www.ft.lk/2011/06/30/it%e2%80%99s-free-and-we-are-proud-of-it/).

Means to success

The means to success from an economic analysis is to leverage the system to yield more than it costs to provide the ‘free education’ and handsomely so. If at the end of the day with all those who come out leaves through Katunayake and later in the year perhaps through Mattala and never come back, then that is a real shame and one can be sure of no decent return to the nation on that investment.

This trend has been slowly happening in sciences and engineering and we just do not display these statistics. Pure dollars flowing in as a result is also meaningless if there are no ideas and personnel present to utilise them on the home front and external consultants are to be used for dream planning.

In a vacuum, RFPs, pre-feasibilities and feasibilities can cost quite a lot and we may generate lot of visitor traffic but in the long run to no avail as many documents on shelves speak out silently.

Higher education’s potential

Higher education’s potential for a multiplier effect on an economy appears to be least understood. We just consider our ability to invest and look at the numbers and shrug our shoulders and declare that we cannot and it is not possible. Economists close the chapter and one is back to square one, including the state of education.

If there is no money, then naturally one cannot invest and education, like the old and the feeble without social support, has to manage in any way possible. You need doers with the right attitudes and a system that is in neglect does not mould the mindset, though till the last dying stages it may be able to issue a certificate.

When education is transaction-based, the same set of attitudes may not be achievable and I think we can witness that when we look at some of the systems in existence today. However, I will not discount the role of the private sector in education subjected to strong quality and an ethical framework and under one umbrella.

Education is too important a subject to be in the hands of market forces which are bottom-line driven. If demand and supply is the basis to go, then the United States’ federal budget should not be pumping money to get so many professionals qualified in nanotechnology at all levels currently. The State is taking a lead because it understands the responsibility it has in building the economy so it supports the future that the country requires.

6% of GDP for education

Don’t think that I am too muddled as an academic with today’s developing scenario. However 6% of GDP is much talked about and is a dream for some and a nightmare for others.

The percentage of allocation from GDP to education has become a hot topic. It is a process of education in itself as even a straightforward calculation appears to be difficult enough. From statistics to arithmetic, no one appears to be wiser!

The question is how much we spend and the demand is how much one should spend. The objection appears to be in that no way can the State do that because the State does not have that much to spend. However, both dreamers and those having nightmares need to understand that it is our future which is at stake.

The ‘to be’ aspect for the nation: Right thinking will indicate that ‘not to give’ is not an option. A meaningful input and a roadmap as a starter are important. Some of us know that GDP is a fuzzy indicator anyway. However, a well-educated populace is not.

“Sri Lanka under-invests in higher education in comparison to middle-income countries and the other developing countries.” This statement is not one by FUTA but from the 2009 World Bank publication – ‘The Towers of Learning: Performance, Peril and Promise of Higher Education in Sri Lanka’. The facts and the analysis were out a long time back and this, like other reports, perhaps only adorned the bookshelves.

Importance of an educated workforce

Let us take a step back and see what one stands to achieve with education. The wealth creation cycle is important to be understood. This is what one sees with developed nations. The classical cycle in wealth creation can be depicted as follows.

Basic research to intellectual properties and then to wealth and investment back to research the cycle continues. The three steps of basic research, applied research and intellectual property management all needs an educated human work force. Thus it should be obvious that an educated workforce is at the heart of wealth creation.

Why State? I do not subscribe to the view that the private sector is the engine of growth. I think the private sector can be an excellent growth promoter as well as an accelerator in an economy when the fundamentals are right. The fundamentals and the foundation are the State’s responsibility.

Obama’s United States had to provide bailout packages in trillions of dollars to business sectors and a weak State cannot do that. However, it is interesting when one sees the percentage of our State revenue/GDP as well as the State expenditure/GDP that both ratios are falling.

State role is seen when looking at public debt/GDP. Simple mathematics can reveal within how many years the State’s role in our national GDP ceased to exist. This is the basis of the argument that the State has no money to invest in education as per the quantities demanded – all the more reason for embracing education for us to come out of this ‘poverty’.

It perhaps is obvious that deeds cannot match a promise of an immediate 6% GDP. 6% GDP has come from an international gathering which has collectively declared the necessity to invest in education of similar numbers – Dakar action plan. We only need to spell out the roadmap in detail.

The data collection needs to be better with all inputs counted and with the negatives weeded out – i.e. what a parent may spend for tuition as this reflects poor resources within the real system.

Multiplier effect

The multiplier effect is evident when considering the attributes of a knowledge economy. The three specific indicators patents granted by USPTO/mil people, technical journal articles/mil people and total royalty payments and receipts (US$/pop) can become active within a climate of research and innovation. Returns to the economy are seen in the last indicator.

The public university system is the way to go while elevating some to the status of research universities. Private systems will abhor investments minus immediate returns and may well stick to a selected set of courses.

While the per capita income is a criterion in determining the economic standing of a nation, the State can consider the per student allocation as the basis for universities. The ‘poverty level’ in this criterion will vary from study program to program as related requirements vary and these need to be understood.

The recent court judgment would have been interesting and more forward-looking if it stated that more students should be taken without having a negative impact on the per student allocation and understanding the additional capital needs when such a major influx has to be accommodated. Otherwise it is downhill for quality and would in no way be serving justice.

To be or not to give – time will tell and the authenticity of leadership will be shown. It is not about saving face but about steering the ship ably. It was Michael Faraday who said that “an intelligent country ought to recognise scientific men among its people as a class”. Am I venturing into another demand here?



(The writer is Professor of Chemical and Process Engineering at the University of Moratuwa, Sri Lanka. With an initial BSc Chemical engineering Honours degree from Moratuwa, he proceeded to the University of Cambridge for his PhD. He is also the Director of UOM-Cargills Food Process Development Incubator at University of Moratuwa. He can be reached via email on [email protected])