Education as an economic good
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Education as an Economic Good
Education : Necessary Cost or Wise Investment?
V.Thanikachalam, Ph.D
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The most important resource of India
• Her citizens• Not its soil, minerals,climate or extent of
territory
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Economics
• Study of human wants ,and their satisfaction;concerned with production and consumption of goods and services
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Goods
• Those things that satisfy human wants
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Economic
• Scarce; can be economized
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Nonmaterial
• Services;usually in short supply
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Consumer
• Goods used to satisfy wants
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Producer
• Goods used to produce other goods
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Durable
• Can be kept or stored
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Multiple
• Can be used more than once
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Economics
• Is concerned with two primary phenomena,desires and resources
• Economic issues involve a basic confrontation between opposing forces
• Desires and resources,man and environment • The confrontation is brought into being
primarily because desires are infinite,whereas resources are finite
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In The history of civilization
• Is a continuous illustration of man’s wants exceeding his means.
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Education : an important industry
• It utilizes money and valuable resources to produce its product
• One of the largest industry in India• Produces intangibles in the form of
valuables,but immeasurable goods or services
• Objective data readily available to determine its financial input.
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Education…
• It is NOT devoid of a profit motive and is largely operated by NON GOVERNMENT ORGANIZATIONS(Private Trusts) but,dependent on government for its financial support.
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Education produces non-free services
• Education is not a free good in economic sense
• Students are loosing income while attending college (indirect cost)
• Capitation fee(banned,but collected and paid)
• Living expenses and tuition fees paid
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Purchaser of Educational Services
• Education is a consumer good
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Teachers
• Salary is augmented owing to the accumulated of large amount of education
• Confirms the fact that education is simultaneously a producer good
• It produces ability to satisfy his wants
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Technical services by the graduates
• Multiple-use• Durable
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Education aids economic growth
• Increases human productivity• Gains in social ,political, economic life• Costs of education are in reality necessary
and real investments in human capital.
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Relation of education economic growth
• Is very real
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Technical Education
• Provides the intelligence and skill essential to modern industry
• Contributes to health and safety• Results in better conservation of natural
resources• Leads to personal thrift and the developing
of capital resources
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Engineering Education
• Is the basis of efficiency in business management,export of products
• Increases the volume and lifts the level of consumer demands
• Improves the earning power and spending power of the people
• Accelerates the economic life stream of the nation
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Allocation of funds
• The marginal rupee principle• The point of diminishing returns• Investment in human capital
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Education is an investment in human growth
• John Kenneth Galbraith• Harold Groves• Milton Friedman• Theodore Schultz• Charles Benson
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Education as an agent of growth
• An important role of education is to contribute directly indirectly to the development of national economics
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Education –catalyst of change
• Furnishes the information and skills base • Rational thought and attitudes• Values• Aptitudes• Motivation to change the irrelevant and
obsolete practices• Paves ways to respond to the emerging
challenges
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Economic benefits of educationto individuals
• Enjoy a broader range of job opportunities• Provides security against loss of jobs
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Role of technical education
• To develop people to meet the human capital demand
• A catalyst of socio-psycho-cultural changes in developing economics
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Educational development
• Should precede the development of other sectors of economy
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Expenditure return
• Direct financial return due to competency• Financial options• Hedging options• Non-market returns• Residence-related benefits• Employment –related benefits• Social benefits
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Non-economic benefits
• Education an investment in people• Knowledge base of education• New knowledge, innovations,and
inventions contribute greatly to economic growth
• They enable the efficient production of new goods and services
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Impact of industrialization
• Technical education emerged as one of the most important source of the accumulation of human capital which itself was regarded as instrument of generation of wealth.
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Thank you
•Invest more in education to achieve excellence.