ECONOMICAL FACTORS AFFECTING EDUCATIONAL

PLANNING BY QURAT-UL-AIN NAEEM, UOK.

Index

i. Introduction 1

ii. Economic Factors 1

iii. Educational Planning 1

iv. Economical Factor in Education Planning 2

v. Basic Economical Concept in Educational Planning 3

vi. Applications of the Concepts to Educational Planning 5

vii. Importance of Economic in Educational Planning 5

viii. Some Characteristics of Education in Economic Analysis 7

ix. Weaknesses in the Economical Factor Influence 9

x. Economical Statistics Analysis in Educational Planning 9

xi. Related Researches 9

xii. Conclusion 10

xiii. Bibliography 11

1. INTRODUCTION Education economists analyze both what determines or creates education and what impact

education has on individuals and the societies and economies in which they live. Historically at

the World Bank a great deal of emphasis has been placed on determining outcomes to

educational investment and the creation of human capital. The primary mission of the economics

of education group is to identify opportunities for improved efficiency, equity, and quality of

education and promote effective education reform processes; to help improve, knowledge of

what drives education outcomes and results; to better understanding how to strengthen the links

of education systems with the labor market; and to build and support a network of education

economists and build bridges to all those who are interested in their work.

2. ECONOMIC FACTORS Stability of the economy across the globe, and trends such as consumer behavior, general

taxation issues, interest and exchange rates all impact upon every sector of society and education

is no exception.

According to JISC info Net (JISC info Net 2009),

“Economic factors are likely to include: funding mechanisms and streams;

business and enterprise directives; internal funding models; budgetary

restrictions; and income generation targets”.

The PESTLE investigation revealed that the current economic recession, together with increasing

consumerisation and international markets were the principal economic factors affecting the

educational sector.

3. EDUCATIONAL PLANNING

Educational planning is an activity which demands the deployment of many diverse skills. It

calls for the services of administrative officials, academic educationists and practicing teachers,

economists, sociologists and statisticians and many other kinds of specialist. The value, the

feasibility and the ultimate success of any education plan will depend largely on the team spirit

displayed by the planners. Educational planning is an activity which demands the deployment of

many diverse skills. It calls for the services of administrative officials, academic educationists

and practicing teachers, economists, sociologists and statisticians and many other kinds of

specialist. The value, the feasibility and the ultimate success of any education plan will depend

largely on the team spirit displayed by the planners.

4. ECONOMICAL FACTOR IN EDUCATION PLANNING

Why does educational planning require any study of economics? Without meaning

to suggest that other subjects don't have relevance for educational planning’s it

must nevertheless be said that without at least some familiarity with economics it is

very difficult to plan education. Certainly one can plan much better knowing

something about economic concepts and techniques. Planning of any kind is

basically the endeavor to work out how to achieve the maximum possible with the

resources available. Fundamentally, economics is the study of how people and

perhaps more important for our purposes society. Choose to allocate the resources

at its disposal in order to achieve its chosen objectives. The important point in

common between these two descriptions of planning and economics is that in both

cases we talk about using limited resources to achieve certain objectives. This

obviously has the implication that there is something fundamental to both, and we

shall see how any kind of planning is only an especially disciplined example of

economic behavior. As there are unsatisfied objectives it is necessary to make such

choices which are economic in character in order to achieve as far as possible the

desired objectives. This economic characteristic of behavior applies not just to

financial matters but to all kinds of everyday behavior. The basic point here is that

economics is about scarcity and the implications of this fact of scarcity for our

everyday behavior. The various reasons why government is interested in spending

money on education are well-known. There is public demand to be satisfied, there

is the need of the economy for skilled and qualified manpower, and there is a built-

in momentum of the educational system itself, such that once it is established it has

to be maintained, All of this is true and it provides a powerful set of reasons for

spending money on education Within the educational system choices have to be

made in the first place between spending more on primary education and less on

secondary or perhaps more on higher education, This is an economies choice

because, for example it is more expensive to expand secondary education by a

given amount than it is to similarly expand primary education. Secondary

education needs better qualified teachers so they have to be paid higher wages or

since more equipment is needed in a secondary school than in a primary school?

The school becomes more expensive. Also the educational system itself has certain

built-in limitations. Thus secondary education can only be expanded as fast as

additional teachers can be provided for it and of course there is limited capacity for

teacher training, Here again another economic element comes into decision

making. However it is not only economic factors which affect this decision-

making. There is very strong public interest in education and the public may want

certain kinds of education and be perhaps less interested in others so this has to be

taken into account in making decisions on how to develop the educational system.

Similarly, once educational facilities are in operation they usually have to be kept

in operation and this necessitates restricting part of the resources allowed for

education to maintaining what already exists, therefore there is less available for

future expansion and this in turn is another limitation on the freedom of decision,

on the economic choices

This comes down to recognizing that although it is not only economic influences

which affect our educational choices all these decisions on education these

planning decisions, partake of the basic characteristic of economics namely, the

need to make choices within the limitations of scarce resources, Thus it can be said

that planning is only a specially disciplined type of economic decision where we

have particular objectives in mind.

5. BASIC ECONOMICAL CONCEPT IN EDUCATIONAL PLANNING

The basic point is to show how economics is primarily interested in studying the question how

we can make better use of the resources available in education and also to recognize that

planning is a particular technique for carrying this out, we begin to examine some of the

fundamental economic concepts which are relevant to the problem of making choices when we

try to behave economically. In particular we are going to look at savings and investment and also

we shall have occasion to refer to the concepts of production and consumption.

InvestmentIn economics investment refers only to net capital formation, i.e. the act of increasing of the

community stock of productive capacity. Thus an important aspect of investment is that it always

involves some kind of innovation In the case of government the motives for educational

investment may be somewhat more obscure and diverse. For example, much of government

investment is in developing educational services. These do not produce a physical product to be

sold in the market, but they can contribute to the productive capacity of the community, e.g.

education expenditure potentially increases the skill of the labor force. This can help the

economic policies of the government and in turn improve its political position so we can see that

there is a wide variety of possible motives for the government to choose to invest in educational

system.

SavingThe concept of saving has a restricted meaning in economics by which it excludes hoarding and

simply postponing consumption. We only count as saving that which involves withholding from

current consumption in order to have more future consumption. In this case of educational sector

there is an obvious motive for such saving relating to the motives we have referred to in their

choosing to invest for increased future profits.

Consumption

The concepts of consumption and production since these also have some importance in

educational planning. Consumption is a term about which not much needs to be said because

economists use the term consumption in much the same way as it is used in everyday

conversation, Consumption simply represents the disposal of the rest of income apart from that

which is saved, It is important to note that hoarding is included In consumption since hoarding is

only delaying the purchase of goods and services for current satisfaction, as explained earlier.

ProductionProduction in the economic sense is the total output of goods and services resulting from

previous investment. Taking example of this complexity from education, one of the objectives of

the educational system is to produce trained teachers who can hence be regarded as part of the

output of the educational system. But trained teachers are also a very important input in the

educational system because they help in the production of the qualified school leavers who are

another important output of the educational system. The point to be made here is that it is

comparatively easy to assess the gross production of a country but it is much more difficult to

calculate the net production, since this involves excluding all products which are used in further

production as investments, because to establish net production it is only necessary to count the

value added at each stage of production.

6. APPLICATIONS OF THE CONCEPTS TO EDUCATIONAL PLANNING

Among the economic considerations of most importance for the preparation of an education plan,

are the following: Gross national and per capita income, by major economic sectors; Government

income and expenditure at all levels, showing sources of revenue and types of expenditure;

Retail price and other economic indices; Rate of production growth for the economy as a whole,

for the main economic sectors, and if possible, for different branches of activity; and by sectors

and branches; labor and trained personnel; personnel requirements and openings for employment

by levels of education. Volume of public and private investment, in total Manpower resources:

shortage or surplus of The foregoing data should be supplemented by a study of the objectives

and rate of execution of the national plan for economic and social development, and analyses of

selected special studies carried out for the purposes of economic planning which may provide the

answers to many of the considerations listed. Though close co-operation between economists,

educationists and sociologists is certainly desirable and productive at all stages of planning, this

is undoubtedly one of the phases at which it is most necessary, and mutual consultation,

discussion and exchanges of information should be arranged so that, when the time comes to

work out the answers, the necessary agreement can be achieved with relative ease.

7. IMPORTANCE OF ECONOMIC IN EDUCATIONAL PLANNING

Education can be treated as both consumption and investment if considered from the individual's

point of view. When someone receives education it fits him in a wide variety of ways for what

can be called to use the simplest term a better life. He has greater access to culture, he can read

newspapers and so on, and this represents an increase in his consumption possibilities. But also

from this individual's point of view such education is an investment in that it provides him with

better qualifications for employment or better capacity to absorb further training. In this way he

can develop his future earning capacity and potentially his living standards as well. This is

considering education only from the individual recipient’s viewpoint, but investment in

educational development is also very important from the national point of view for economic

growth, mainly because of the possibility offered of increasing the supply of qualified

manpower.

These general comments on investment and consumption in relation to education are fairly self-

evident, but in going beyond them it is necessary to recognize that the detailed application of

these concepts in educational planning has not been entirely successful so far. It has created a

great many problems for educational planners which are still far from solved. These concepts are

difficult to measure when used in relation to education, Thus although education has both

investment significance and a consumption significance it is very difficult in practice to identify

one part of education as having primarily the investment effect and another part primarily the

consumption effect. Thus in making a choice between developing different types of education we

might ask what are the relative contributions to economic growth of emphasizing technical and

vocational education or emphasizing general secondary education. To put emphasis on technical

and vocational education may mean immediately a better supply of certain types of skilled

workers. But emphasizing general secondary education may improve pupils' capacity for and

their receptivity to further training. In this way it may be possible to create a greater flexibility in

the future labor force than if we only endeavor to train people very specifically for certain

technical positions. This indicates a fundamental difficulty in human resource development. The

significance of the production concept in educational planning refers to our earlier example of

the characteristics of teachers in the educational programmed, in that they are both an input and

an output. This can be extended to a further level if we consider the need to produce people who

will staff teacher training colleges. They are an output of the educational system but then they

are also an input which in turn will help create something else teachers, which is again both an

input and an output of the system. Thus the question of gross and net production can become

quite complex even within the educational system. This concludes our illustration of the

applicability of some basic economic concepts to the study of educational planning problems.

8. SOME CHARACTERISTICS OF EDUCATION IN ECONOMIC ANALYSIS

Some special characteristics of education which affect its economic analysis are:

a) The direct economic impact of education is upon the quantity and quality of occupational

skills, labor usually accounting for some three quarters of national output, and education

being a major source of the productivity of labor. Education also has a direct impact on

the economy through increasing the stock of knowledge and ensuring its diffusion.

b) It can also have many indirect effects. It may raise the level of initiative and

inventiveness of the population; it may improve consumption patterns, and may promote

economic and social mobility. The educational system can serve also as an instrument of

selection by which a society finds its leaders, entrepreneurs, administrators and

technicians and improves their quality.

c) The demand for education may be divided for the purposes of analysis into two parts: one

for production purposes, and the other for consumption. W e uses our education to earn a

living, and we use it to enjoy the fruits of living. It is not easy to make this distinction in

practice and we have also to note that both the individual and society use education as a

means of preserving and developing their value systems-a function which does not fall

under either production or consumption in the economic sense.

d) The role of education as an item of consumption, and the fact that it is treated as a social

item in national accounting has obscured the part it plays as an economic investment.

Some economists have attempted to distinguish between investment in technical

education as productive and expenditure on general education as consumption. This

overlooks the fact that general education is a necessary prelude to technical education,

and underestimates the role of the educational system as economic infrastructure. Trade

is important as well as production, and grades such as clerks and accountants as well as

engineers are needed for economic development. It would seem that the whole of that

part of national expenditure on education which results in the raising of income can be

regarded as an economic as well as a social investment.

e) Education requires a relatively long-term span for its returns to accrue, but it has a lower

rate of obsolescence than most physical capital. For planning purposes a time span of ten

to twenty years has to be envisaged for the educational system as a whole. Quicker results

can of course also be achieved by influencing the students already in the ‘pipelines’.

Examples are special training facilities to young people already in the educational

system; temporary adjustments of curricula and teaching methods; programs of re-

schooling by re-capturing people who have already passed out of the educational system.

These can be effective provided the attraction of such short-term yields does not result in

neglect of the basic long-term functioning of the education system since quality as well as

quantity has to be watched at all times. Choices have to be made between investments in

the various educational levels based on long-term criteria in respect of both quantity and

quality.

f) The educational system is interlocked functionally with the socioeconomic environment.

The expansion of education is linked to the employment situation, since people expect to

earn a living commensurate with their educational attainments. And, being large

consumers of budgetary resources, educational systems are dependent upon the national

administrative and fiscal systems within which they operate. Only by integrating

educational planning with over-all planning can it be hoped to avoid the problems of ‘the

educational unemployed’ on the one hand and the shortages of trained cadres on the

other. The preferences of parents and pupils in the end govern entry into the different

available types of education, however good the educational guidance programmed may

be, and it is right that educational plans should allow for the element of human choice as

to the best use of one’s talents. But it is necessary to provide incentives and ladders to

lead pupils into priority occupations for the attainment of the development plan.

9. WEAKNESSES IN THE ECONOMICAL FACTOR INFLUENCE

Economic factors are another major factor leading to school dropouts. The younger students

coming from the poor section of the society lacks the basic needs of livelihood, safety and

stability at home. Thus, many of them drop out of the school to support family and meet their

stomachs by the following means as:

Instability in family

Limited income or poverty

Price rise

Corruption

Lack of College Grants

Private Schools vs. Public Schools

10. ECONOMICAL STATISTICS ANALYSIS IN EDUCATIONAL PLANNING

The economic resources of a country are naturally of a decisive importance in all educational

planning. They are therefore extremely important for the integration of educational planning into

an overall economic planning for a country.

Gross national product, indices of economic growth.

Total public expenditure, by authority and purpose.

Institutions by level and type of education.

Teachers by qualification and length of service.

Number of teachers lost to the educational system each year for various reasons.

11. RELATED RESEARCHES 1. In 1958, the Inter-American Seminar on Overall Planning for Education, held in

Washington and sponsored jointly by Unesco and OAS in pursuance of the

recommendation of the meeting of Minister of Education, made a powerfully reasoned

declaration of the need for overall planning of education in America. Particularly

significant is the same Seminar Is recommendation that a Conference on Education and

Economic and Social Development in Latin America be held,

"In order to consider, on a basis of adequate scientific studies, the relationship between education and social and economic development, the better understanding of which will be a valuable contribution to the effectiveness of overall planning for

education”.

2. UNESCO convened a Regional Conference on Free and Compulsory Primary Education

in South Asia and the Pacific (Bombay, 1952) with two objectives:

(1) Locating the major needs and problems of this region in so far as the provision of

compulsory primary education is concerned.

(2) Mobilizing the resources of the Member States as well as of communities inside and

outside the region and enlisting the assistance of international organizations for meeting

these needs and solving these problems.

12. CONCLUSIONThe above study reveals the significant aspect of the topic “economical factor affecting

educational planning”. It is concluded as from the economic point of view, it is essential to be

able to determine what priority education is to be given in the face of conflicting claims on

scarce resources. It is critically examined, how the capital concept used in economics can be

made use of in educational matters. Thus it perhaps gives more attention than is necessary to the

difficulties Involved. However, having recognized that there are considerable difficulties, this is

not to say that this type of approach should not be made use of in educational planning. It can be

so used, but this must be done with a proper sense of caution. It has been observed that economic

development programs do not achieve their expected results "because of a shortage of the

skilled .manpower to put capital to good: use, which in turn results in slowing down the

programs and a low level of productivity. For effective and adequate planning to enhance

educational reform, there is the need for adequate fiscal resources to develop it. The percentage

of the government budget always earmarked for education is too meager. Hence, there is hardly

enough fund for the planning unit of the educational sector to embark on serious educational

reform and innovation. Planning of any kind is basically the endeavor to work out how to

achieve the maximum possible with the resources available. Fundamentally, economics is the

study of how people and perhaps more important for our purposes society. Choose to allocate the

resources at its disposal in order to achieve its chosen objectives. The important point in common

between these two descriptions of planning and economics is that in both cases we talk about

using limited resources to achieve certain objectives. This obviously has the implication that

there is something fundamental to both, and we shall see how any kind of planning is only an

especially disciplined example of economic behavior. As there are unsatisfied objectives it is

necessary to make such choices which are economic in character in order to achieve as far as

possible the desired objectives. This economic characteristic of behavior applies not just to

financial matters but to all kinds of everyday behavior. The basic point here is that economics is

about scarcity and the implications of this fact of scarcity for our everyday behavior.

13. BIBLIOGRAPHY Educational Planning At Grassroots By J.b.g.tilak The economics of educational planning by Friedrich Edding Economics of Education by Prof. Frank Levy Education and development by Harry Joseph Robinson, Stanford Research Institute Economic factors for planning by Jacksonville & South Jacksonville, Illinois Socio-Economic Factors in Educational Development by P. K. Michael Tharakan What is educational planning? by Philip H. Coombs ESSENTIAL ECONOMIC CONCEPTS FOR EDUCATIONAL PLANNING by A.C.R Wheeler The analysis of educational costs and expenditure by J. Hallak Elements of Educational Planning by unesco. http://www.ehow.com/info_7863720_economic-factors-education.htm http://www.jrf.org.uk/publications/socio-economic-disadvantage-and-experience-higher-

education http://ewds.strath.ac.uk/work-with-it/Home/PESTLE/Economic.aspx

http://www.jagranjosh.com/articles/Educational-Catastrophe-Economic-Factors-for-Dropouts-1291203974-1

http://www.educationfactor.org/article.php?id=43 http://www.researchgate.net/journal/02727757_Economics_of_Education_Review