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Toward a Paradigm of Competitive Economies

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May 30, 2016 / 0 Comments

Research conducted on endogenous growth (Aghion and Howitt, 1992) was followed by the emergence of economies and, by extension, societies that are knowledge-based, which raised great hopes that a new model of economic and social development had been established. Various pieces of research, including by the World Bank,[1] have demonstrated successfully how the mechanism operates through the training of human capital to place economies on the virtuous path toward development. Nations that have invested extensively in education are among the category of countries described as “developed” (Japan, South Korea…) or as “emerging countries” (BRICS: Brazil, Russia, India, South Korea, and South Africa).


Notwithstanding the above, this hypothesis is at least attenuated by the paradoxical situation that has been observed, whereby some countries that have invested heavily in education fail to attain “developed” status (countries of the Middle East and North Africa – MENA, including Algeria). This anomaly places serious limitations on the paradigm.


The purpose of this paper is to analyze the factors that prevent these countries from successfully implementing an economy founded on knowledge and to examine ways and means of restructuring investment in education to promote the development of a new competence-based paradigm.


Investments in Education and Skills


Indeed, this theory (G.S. Becker, 1964) holds that investment in human capital helps to promote sustainable economic growth, which, in turn, in a cumulative process, places nations on a virtuous path toward development.


The scenario outlined above has not been observed in certain territories (countries of the MENA region, for example). The reason for this shortcoming may be explained by a lack of entrepreneurial spirit, in the Schumpeterian sense of the term, where innovation and creativity are essential to nurture and support this growth.


This means that economic, social and cultural conditions required to produce this dynamic are either inadequate or inexistent. The main task, therefore, is to identify these conditions and define the reasons behind their absence/inadequacy.


At the same time, this theory is circumscribed by the asymmetry of information, which, though attenuated by the rapid development of Information and Communications Technologies, is not resolved by it.


The schematic process on which this theory is based—information-knowledge-skills and know-how—is stymied by the wastage of the resources expended throughout the various stages of transformation. The environment in which activities to develop human capital are carried out is marked by inertia (resistance) and friction (interference). At times, it is the attitude of the person imparting these skills (in other words, the trainer) that can be the root cause of the loss of momentum.


Here, too, it is important to consider the quality of the training being given. The transition from the stage of knowledge to that of acquired skill is not achieved; gaps in training hobble access to spaces created to promote inventiveness, innovation and creativity, even where there is dedicated infrastructure in place, such as incubators or other institutions that nurture human capital.


Toward a New Paradigm of Skills-based Economies


A study conducted in 2013[2] by the Organization for Economic Cooperation and Development (OECD) among 24 member countries on the skills of 16-65 year olds shows that:


“The development and utilization of competences can have the effect of enhancing job prospects and quality of life and even stimulate economic growth.” 


It further states that:


“The study demonstrates that early quality training is a significant determinant of success in adult life. However, countries must provide a framework for life-long learning that is flexible and grounded in the impartation of skills, particularly for adults of working age.” 


While it is true that a colossal effort has been made to invest in education (the figures attest to this), human capital formation has not had a commensurate impact on the cultural sphere in this region of the world. This poor outcome cannot be attributed solely to the classic forces of inertia that are a feature of conservative or archaic societies and which would hinder change and progress.


Indeed, the stultifying limitations observed when analyzing school textbooks, pedagogical practices and current teaching and learning methods are not sufficient in themselves to explain these shortcomings. One could explore the ways and means of facilitating the transition from “human capital” to “cultural capital,” whereby a software engineer, for example, could also be a lover of music and a conductor in his private life.


This major obstacle can only be decisively overcome by reforming the organizational structure of society, putting clear emphasis on the enhancement and expansion of Information and Communications Technologies, centered on enhancing skills. This entails a reform of the organization and operation of educational institutions, with a focus on establishing spaces to promote innovation, creativity and inventiveness that result in improved skills and competence. Consequently, the quality of education and training will guarantee improved skills based on qualifications as much as the self-fulfillment of the person possessing such skills.


This article is part of a blog series featuring the views of tertiary education experts from the Middle East and North Africa (MENA) regarding tertiary education in their respective countries as well as the use of the University Governance Screening Card, an innovative tool that enables universities in the region to compare themselves with international standards, define their own unique set of goals and establish benchmarks to assess the progress in achieving them. The University Governance Screening Card (UGSC) was developed under the World Bank/CMI program on tertiary education and applied by 100 universities in the MENA region.


[1] Notably, research by G. Psacharopoulos, H.A. Patrinos, Returns to investment in education: a further update. World Bank, 2002.

[2] OECD, Plus de compétences pour une société meilleure, October 2013.


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