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Investing more and better in education: critical for the economy of the future
OECD´s february 2024 “Economic Outlook report” provides global economic GDP growth estimates (growth of 2.9% in 2024, since 3.1% in 2023, and 3.0% in 2025) and policy recommendations to governments to achieve future sustainable and inclusive growth. After declining educational performance in many countries, the report considers that boosting human capital and skills by ensuring adequate and high-quality spending on education, will be crucial to face the challenges of slowing productivity growth, ageing, digitalization and climate change. All this in an environment that will require finding a balance between additional public spending needs and the credibility and sustainability of public finances.
Main takeaways of the report:
- Fiscal policy needs to prepare for future spending pressures: In a context where public debt levels are generally higher than before the pandemic (at levels relative to GDP seen before only in wartime in many countries), governments will face mounting future spending pressures to deal with ageing populations, the climate transition and plans to raise defence expenditure. In this regard the report considers that Government spending needs to focus more on investment in the areas that drive sustainable growth, especially in human capital as educational improvement is needed to boost productivity growth and to fulfill the skills needs of the future economy.
- Human capital key to improve productivity and to successfully achieve a future green and digital economy: The OECD's PISA 2023 report shows with concern how between 2018 and 2022 there was an unprecedented drop in performance in many countries for 15-year-olds tested in reading and mathematics. The report flags this with concern considering that according to the OECD there would be a correlation between declining PISA scores and a persistent negative impact on the level of productivity over the next 30-40 years.
While school closures during the pandemic may have contributed to negative scores, persistent downward trend is pointing out longer-term issues in educational systems in some countries. Educational system´s reforms will be needed, to improve teaching quality and teachers’ qualifications; enhance the effectiveness of resources targeted to disadvantaged students and schools or expand vocational education and lifelong learning among other measures. These reforms will involve additional public expenditures.
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