The link between education and economic development

Although Arizona’s political leaders are stressing their interest in seeing the state continue to develop economically, Arizona’s schools hover near the bottom in most of the national rankings. Despite the poor academic showing, the level of state funding for public education has been on a steady downward trend. The success of Singapore’s economic development program should remind Arizona’s education cost cutters of the vital and important role education can play in long-term economic development.

Lee Kuan Yew, Singapore’s founder and long-time prime minister, died recently at the age of 91. Over a period of time, his policies helped transform Singapore from an island backwater into one of the world’s richest countries. When Mr. Lee began his stint in politics in the late 1950s, the British colony that became the Republic of Singapore was a crowded island about three and a half times the size of Washington, DC. It had no natural resources, its diverse population was composed of immigrants from China, India, Malaysia and Indonesia. Since location and population were the country’s only developable resources, the government decided to chart a course to ensure that students got a world class education.

Working at the dicey intersection of regional tensions, Cold War antagonisms and economics, Mr. Lee understood that good governance was the foundation the country needed to put into place if it wanted to be able to develop a productive private sector. He had an uncanny knack for picking capable economic managers. As regional tensions flared and settled down, the economy was kept open, regulations transparent and government effective. In an area rife with corruption, Singapore wanted to keep its operations clean and proficient. The little country instituted a policy of paying its military and civil servants high salaries.

The policy of fostering education and competence paid big dividends in the long run. Singapore’s impressive makeover has become a much studied economic success story. In the ease of doing business rankings, Singapore is always near the top. The country’s bureaucracy remains efficient and honest. Today, Singapore has well-educated population, its schools continue to rank among the world’s best. The country’s GDP per capita is now among the highest in the world. If Arizona wants to promote economic growth, it needs to stop defunding its educational system. The legislature has to learn that an investment in human capital does pay off.