Enhancing Economic Growth

Education is essential for poverty reduction and economic growth. In fact, no country has reached sustained economic growth without achieving near universal primary education.

Education spurs economic growth in the US and abroad

The developing world plays a large role in determining America’s economic fortune.  Today, the fastest-growing markets for American goods are in developing countries, representing roughly half of U.S. exports and one out of five American jobs.

In 2009, the U.S. exported $510 billion worth of goods and services to developing countries, and 97% of these export revenues went to small and medium-sized companies, the major engines of U.S. job growth.  Every 10% increase in U.S. exports leads to a 7% boost in U.S. employment.

Basic education in the developing world is essential to building the stable trading partners that growing U.S. export markets require.   Quality education equips people with the knowledge, skills and self-reliance they need to increase income and expand opportunities for employment.

An educated worker is more productive and earns a larger income than someone with no schooling.  Boosting individual capacity impacts household income, leading to growth in communities and national economies. Countries with strong education programs experience greater growth and stability than less-educated neighbors.

Research has found that 171 million people could be lifted out of poverty if all students in low-income countries left school with basic reading skills – the equivalent of a 12% drop in world poverty.

Key Facts

  1. Education is essential for poverty reduction and economic growth, as no country has achieved rapid economic growth without investing in education and reaching an adult literacy rate of at least 40 percent.
  2. For every $1 spent on education, as much as $10 to $15 can be generated in economic growth.
  3. If all students in low-income countries left school with basic reading skills, 171 million people could be lifted out of poverty.
  4. Households headed by a more educated person have, on average, higher wealth and lower poverty incidence.
  5. A farmer with just 4 years of schooling is 9 percent more productive than one with no education.
  6. An individual’s earnings increase 10 percent on average for each year of school he completes. The effect of education is stronger for girls, with wages rising 20 percent for every year beyond fourth grade that a girl is in school.
  7. Each one percent increase in the level of women’s education generates 0.3 percent additional economic growth.
  8. Research has found that countries that have experienced surges in literacy rates by 20-30% have seen simultaneous increases in Gross Domestic Product (GDP) of 8-16%.
  9. It has been estimated that the failure of 65 transitional, low- and middle-income countries to educate girls to the same standard as boys collectively costs them $92 billion every year.

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