How can tertiary education deliver better value to the economy?

Publication Details

This paper asks how tertiary education can deliver better value to the economy. It is based on a presentation given at the New Zealand conference of the Association of Tertiary Education Management in Auckland in July 2010.

Author(s): David Earle, Tertiary Sector Performance Analysis and Reporting Division [Ministry of Education]

Date Published: December 2010

So what does this mean for tertiary education?

It is clear that New Zealand does have a well-educated and skilled workforce. While the demand for education and skills will continue to increase, the country is likely to keep up with the overall demand, with some areas requiring more attention than others.

However, the New Zealand economy doesn’t perform as well as may be expected for its level of tertiary qualifications.  There are a number of reasons for this, including recent expansion of the workforce, reliance on skilled migration, low capital intensity and the small size and relative isolation of the country. The role of skills and qualifications is an important, but relatively small part of the overall picture.

What matters most in tertiary education is the quality and relevance of the skills and knowledge that people gain. This is more important than increasing the number of people with qualifications alone.

The main avenue for raising economic performance is through innovation and increasing the returns to innovation through scale and links to international markets. The main barrier to innovation is availability of resources and skills, rather than lack of information. Small scale and poor linkages to international markets also dampen innovation rates. Tertiary education contributes most widely to innovation through the skills and knowledge that graduates bring to the workplace. Businesses also need to make use of these skills to focus on the value they are adding for customers, rather than just focusing on technical quality.

In conclusion, continuing to do what we are doing is good, but not good enough. If tertiary education is to deliver better value to the economy, then the focus needs to be on the value of what is being delivered.  In most areas, this is not about more graduates, but rather graduates who are better prepared to contribute to the economy and with the skills to add value to their jobs. These skills are most productive where businesses have the capital, management skills, scale and links to international markets to support innovation and productivity gains.