On Learning, Productivity & Economic Growth

Smart city technology concept young woman using modern urban application of bus stop in Barcelona for find out schedule of transport, female touching big digital screen which reflecting light

When it comes to human well-being on planet Earth, what’s the most important trend? One could argue for advances in public health, improved economic opportunity, urbanization, technology innovation, or the expansion of democracy (when it appeared that was actually happening). I’d argue that, with some relation to all of these, it is expanded access to learning.
Learning opportunities, both formal and informal, are rapidly improving globally. For example:

  • Progress on universal access to primary education (91% in 2015, up from 83% in 2000);
  • Nearly a quarter of young people across the world now enroll in further or higher education courses; 
  • MOOCs make the best courses from top professors available for free; 
  • Open content and easy translation make it easy access learning resources anywhere there is a broad band connection.

The question is when and how will this translate into productivity and growth?

More skills, better economics

“An economy’s ability to grow over time—its ability to innovate and raise both productivity and real incomes—is strongly tied to the quality of education provided to the vast majority of workers,” said Stanford economist Eric Hanushek. “Skills and intellectual capital are increasingly important in a modern economy, and schools play a central role in the development of valuable skills.”
Hanushek further asserts that it is not simply attainment levels that matter, saying, “[H]igher levels of cognitive skill appear to play a major role in explaining international differences in economic growth.” He calculates that “a highly skilled workforce can raise economic growth by about two-thirds of a percentage point every year.”
The data is clear, according to Hanushek, “skills drive economics.” Comparing Latin America to Eastern Asia, Hanushek says the lesson is that countries should focus on what kids know, not how much schooling they’ve had (i.e., quality matters).
As an economist, Hanushek thinks about the incentives—national and state leaders should be holding people accountable for real outcomes, creating competition and choice, and introducing performance rewards.
On the EdTech front, Hanushek would like to see incentives to use tech better. Because, he suggests, “the future of every city depends on skills.”

Productivity barriers

The conceptual link between learning, productivity, and economic growth makes sense. But it’s been hard to see this growth engine at work in current economic conditions. The U.S. is experiencing a weak recovery where productivity growth and wages are growing at a pathetic pace. And it’s worse in most other countries. Why isn’t improved access to learning driving productivity and economic growth?
George Mason economist Tyler Cowen said “it is hard to prove there is much connection at all.”
Dambisa Moyo (@dambisamoyo) argues in her TED talk that ideology is often the barrier between learning, productivity, and growth. She argues that both state-sponsored (e.g., China) and market-driven (e.g., U.S.) models fail to solve social ills, foster corruption and create income inequality.
In The Rise and Fall of American Growth Northwestern economist Robert Gordon contents growth will be held back by the headwinds of rising inequality, stagnating education, an aging population, and the rising debt of college students and the federal government leaving little room for wage growth over the next 25 years.
Gordon acknowledges that it is hard to see how technology could be displacing huge numbers of workers without raising measured productivity. Former Treasury Secretary Larry Summers said, “The question of how to square developments that are large enough to have a major impact on wage and employment patterns with the paucity of measured productivity growth looms for future research.”
The broken link between learning, productivity, and growth, Gordon suggests, is a sociological phenomenon or a reflection of increasing problems in education. Let’s dig a little deeper.

Learning hunch

Hanushek says the link between learning and growth is clear but it’s long term. “In the short run business cycles reflecting insufficient aggregate demand can drive hold down economic output, produce unemployment, and the like.”
Short term cycles can also be helped or hurt by government policy choices but, according to Hanushek, “short run fluctuations are much less important than differences in long run economic growth rates.” For example, the Great Recession loss in U.S. output was roughly one-tenth the present value of getting achievement to the level of Germany (25 points on the PISA scale). Rick said getting to German levels of achievement would add a half a point to US growth rates.
My hunch is that these dueling economists may rely too heavily on rear view mirror observations –which are linear projections of the past–while we’re living on a curve of exponential technology which is eating jobs at a rate faster than predicted but also boosting learning opportunities at an unprecedented rate.
Will techno Pacman eat jobs faster than than humans learn to work smarter? That seems to be an open question.
I’m more optimistic about rapid improvement in formal education than most. Plummeting device prices (i.e., $200 Chromebooks), adaptive learning tools, and blended learning environments are spreading faster than most people realize.
The real economic wildcard is the global explosion of informal learning opportunities–the life changing benefit of search, the blossoming landscape of postsecondary learning opportunities, and the emerging show-what-you-know world of badging and credentialing.
On Friday, Morgan Stanley economist Ellen Zentner said we’re in for several more years of slow productivity and economic growth. Call me a tech-optimist, but I think there’s a chance we are getting smart faster than most economists predict and at some point (soon) that will translate into improved productivity and growth.
For more see:

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Tom Vander Ark

Tom Vander Ark is the CEO of Getting Smart. He has written or co-authored more than 50 books and papers including Getting Smart, Smart Cities, Smart Parents, Better Together, The Power of Place and Difference Making. He served as a public school superintendent and the first Executive Director of Education for the Bill & Melinda Gates Foundation.

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Tom Vander Ark

Related tidbit: Reliance will launch 4G services in the second half of 2016 providing 80% of India's population with high speed mobile internet coverage. Hard to imagine that won't contribute to learning, productivity and growth

Gary Gruber

They are not going to learn if they are hungry, sick and dying of thirst. Better take care of those and safety needs first. Check out the old Maslow hierarchy of needs, then talk about learning skills to survive.

Tom Vander Ark

Why Tyler Cowen thinks Robert Gordon is too pessimistic about growth: https://www.foreignaffairs.com/reviews/review-essay/2016-02-15/innovation-over

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