Saturday, July 23, 2016

Cambodia - Education Must be Rewarded

With an average gross domestic product (GDP) growth of around seven percent in the last decade, Cambodia is much wealthier and has just become a lower middle-income country. But do people have enough to live the life they value? How much is enough and how can it be measured?

Many data and indexes have been used to measure the ability of people to live the life they want. Development economist Mahbub Ul Haq defined this ability in the context of human development and framed it in terms of whether people are able to “be” and “do” desirable things in life.

The “being” dimension includes the opportunity that people have to be fed, sheltered or be healthy while the “doing” concerns their ability to get an education, to work and participate in community life.

Since it was first defined in 2010, human development has been annually recorded by the United Nations Development Program (UNDP) through the human development index (HDI). The index measures three dimensions that reflect countries’ achievements in education, health and living standards, and has been complemented over the years by other indexes that address the nuances of measuring human development.

The multidimensional poverty index (MPI) stands out for its ability to record these dimensions in a simple and intuitive way among countries, within countries and most importantly between groups in the same country.

Another unique feature of the MPI is its ability to capture the level of deprivation and lack in human development. The MPI can gauge changes in the number of those falling in this category ‒ the MPI poor ‒ and changes in the intensity of poverty over time.

This implies a pivotal innovation in the way governments approach their poverty reduction policies. It emphasizes not only that is necessary to reduce the number of people living in poverty, but that it is equally  to improve the living conditions of those that remain below the poverty line to improve the indicator that defines multidimensional poverty.

The country’s index was last calculated through the Cambodian Demographic and Health Survey 2014 and presents insights on Cambodia’s human development. As suggested by national and international measures defined by income and consumption, Cambodians are better off today. The number of people deprived of education, health and optimal living standards decreased from seven to five million people. While Cambodians have enjoyed better health and living conditions over the years, their educational attainment lags behind.

With over 1.6 million Cambodians living with at least one child not in primary school and two million living with at least one household member not completing primary education, almost a quarter of the population does not currently possess the knowledge and skills they need to live the life they want.

Possessing the necessary skills would be important for Cambodians but equally important for the country if it aims to sustain the economic growth it has experienced so far. As a determinant of human development, education is a necessary condition for productivity and sustainability.  Many Cambodians lack the adequate education that would ensure them a better future, and lead to greater human development.

In the light of high employment-to-population ratios, the MPI results suggest that Cambodians are employed in jobs that do not require a high level of education and thus, do not bring high returns. But why are households not getting more education if it brings better incomes? Cambodia’s high drop-out rates in primary and secondary education, as reflected in the MPI data, demonstrates that households reckon completing primary or secondary education not worth as an investment because of the low returns involved.

As highlighted in the Asian Development Bank – International Labor Organization study on Asean integration, Cambodian growth hinges today in sectors “where levels of productivity are not significantly higher than in agriculture ‒ and sometimes lower” and that do not require much higher levels of education beyond primary level. Only the business, insurance and real estate sectors are more productive, but they require investing in education to complete at least university studies.

If the economic sector fails to propose viable opportunities for all secondary and higher education graduates, what would people pursue an education for?

It would be critical for Cambodia to go up the value chain and counter the current underinvestment in education at the demand side. If provided with job opportunities with high returns, Cambodian households would potentially be encouraged to demand for higher education. Likewise, if relevant economic sectors were to require specific technical skills, this may drive the supply to provide quality and tailored technical higher education that would generate a higher skills match.

By closing the education gap, Cambodia can therefore create a virtuous circle of education supply and demand that would bring prosperity to the middle of the education spectrum which has, at the opposite ends, unskilled and high qualified labor. This is especially needed in such a critical moment as in Asean integration. The presence of higher skilled laborers at all levels available in neighboring countries may dissuade foreign direct investors in higher value added sectors, leaving Cambodia at the lowest step of the regional value chains.

At the same time, should education fail to meet the needs of the newly established economic sectors and if necessary investments were made in higher value added sectors, Cambodians might miss out on the best job opportunities to the benefit of workers from neighboring countries.

All in all, Cambodians are in need of a much better education and a more diversified economy to live the life they want and value. That is equal to saying human development needs to be attained in Cambodia at the individual and country level.

Better living standards and a reduction in consumption and income poverty have assisted economic growth so far but they cannot, by itself, sustain this growth over time without the necessary investment in human development. Higher level of human development determined by better education will improve productivity and bring prosperity to both the lower and higher skilled. It will influence the motivation to demand for better education and thus, spur the education sector to provide better opportunities.

Marisa Foraci is an economist at the United Nations Development Program in Cambodia.

Marisa Foraci

You can find older posts regarding ASEAN politics and economics news at SBC blog, and older posts regarding health and healthcare at IIMS blog. I thank you.

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