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Education and Role of Government

Education and Role of Government

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Published by Professor Tarun Das

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Published by: Professor Tarun Das on Nov 26, 2009
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Globalisation of Higher Education and the Role of the Government
 By B. Bhattyacharya
 , Distinguished Professor and Director, Institute for Integrated Learning in Management (IILM), New Delhi 
1. Role of Higher Education
It is well known that education and health play an important role in boosting economicgrowth and development. If people are adequately educated and healthy, they can participate and contribute more in development process. Education, more particularlyhigher education, can help in increasing efficiency, productivity and internationalcompetitiveness of an economy.With a sustained growth rate of 8 per cent and above of the Indian economy in the recent past, there will be demand explosion for skilled manpower, especially in those sectorswhich can be called ‘sunrise’. Some of these are in the category of service industries andare mostly dependent for further growth on the competitive availability of the requiredskills, upgraded educational level and a global mindset. If the labour markets for theseindustries are not oriented towards meeting these evolving requirements, there will not bea growth in the skilled manpower. There will be upward pressures on the wage rates,which, in turn, will adversely impact the major source of India’s global competitiveness.India has done considerable progress in the sphere of higher education. The number of engineering graduates in India is 350,000 annually, compared to 70,000 engineeringgraduates in the United States, and 100,000 engineering graduates in Europe. India also produces 60,000 MBAs every year. Engineering colleges in the country have beengrowing at 20 percent a year, while business schools have grown at 60 per cent annually -with 348 universities and over 17,973 colleges spread across the country. In the year 2005, more than 2.5 million graduates were added, that included 25,000 doctors and600,000 science graduates and postgraduates.
This paper expresses personal views of the author and should not be attributed to the views of the organizations he is currently associated with. The author would like to thank Dr. Tarun Das, Professor and Head (Economics Area), IILM, for his help in preparing the paper.
But this progress is not enough if we desire to sustain high growth rate exceeding 8 per cent per annum and to maintain our competitive advantage in the global economy. Let memention some particular reasons for the need for expanding higher education at a faster speed than what had been recorded in the past.
(a)Role of IT and knowledge
 No longer capital, cheap labour and natural resources are regarded as the main sources of global competitive advantage. Knowledge and information technology (IT) have emergedas the principal drivers of growth and comparative advantage. Higher education helps toachieve this excellence in IT and other knowledge based industries.In recent years, India has made significant growth in R&D, IT and IT-enabled (IT-ITES)services and offshoring activities leading to explosive growth in knowledge-basedindustries. Many foreign affiliates have been established in automobiles, food processing,electronics, IT, transport, communications and financial services. Outsourcing hasincreased in IT, distribution, contact centres, back offices, R&D and manufacturing.India emerged as the 18th largest service exporter and increased its share in world serviceexports three times from 0.6% in 1990-91 to 1.8% in 2005-06. These exports were led byrapid rise of business, professional, and software services.Indian software exports increased from only $0.7 billion in 1995 to $23.6 billion in 2005-06 and accounted for 27% of total services exports.
Globally, India ranks
only toIreland in software and IT exports (RBI 2006).2
(b)Role of offshoring
Countries like India, Brazil, China, Dominica, Israel, Philippines, Rumania, RussianFederation have witnessed a surge of Business Process Outsourcing catering to the needsof developed countries. FDI from developed countries in the BPO sectors of thesecountries are also growing.India has emerged as a major player in IT-ITES and outsourcing hub due to high quality,skilled manpower, and low operations cost. Indian ITES-BPO exports recorded a growthof 33% in 2005-06 on top of 45% in 2004-05 driven by increased offshoring by firmsfrom US and Europe (RBI 2006).According to a recent study by McKinsey and NASSCOM (also reported in theDiscussion Paper of the Department of Commerce), the total potential global offshoringmarket is around US$ 300 billion, of which US$ 110 billion will be offshored by 2010.India can capture about 50% of this market and create direct employment for 2.3 million people and indirect employment for 6.5 million people. However, high quality manpower would be required for such jobs. Various professional and industry associations hold theopinion that significant expansion in higher education is required to meet the growingdemand for technical and management personnel in future.
(c) The unfolding demographic transition
At present, India is undergoing a favourable demographic transition. According to the population projections made by the United Nations, rapidly falling fertility rates in mostdeveloping countries have led to a "youth bulge". Another recent study by Emmanuel Y.Jimenez and Mamta Murthi (2006) of the International Monetary Fund (IMF) indicatesthat “In many middle-income countries and transition economies, the fertility transition isfairly advanced and the number of young people is actually declining (as in China andThailand). In others, which are not as far along (for example, Brazil and Vietnam),3

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