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

What economic value does New Zealand get from its qualifications and skills?

The previous section established that New Zealand is reasonably well placed among its peers for both the amount of tertiary education and the overall skills of the population. But do we get the full economic value from our skills and qualifications?

Figure 4 below compares the proportion of 25- to 64-year-olds with tertiary qualifications on the horizontal axis with gross domestic product (GDP) per capita on the vertical axis. GDP per capita provides a general measure of economic performance and wellbeing.  The latter has been averaged out over 10 years to smooth out the varying effects of the recession.

Most OECD countries have been plotted on the chart.2 The line shows the average relationship between tertiary education attainment and GDP per capita.  It shows that there is a moderately strong relationship between tertiary education levels and GDP per capita. New Zealand is well to the right on tertiary education, with a high proportion of the population with tertiary qualifications. However, we are well below the predicted line in terms of GDP per capita.3

This shows that given our considerable investment in tertiary education, we are not performing as well economically as might be expected. So then, why are we not getting more economic value out of our tertiary-educated workforce?

Figure 4:  Comparison of tertiary education attainment and average GDP per capita

Image of Figure 4:  Comparison of tertiary education attainment and average GDP per capita.

Source: OECD, Education at Glance 2009 and The Conference Board and Gronignen Growth and Development Centre
Note: Tertiary qualification is defined as diploma and above for purposes of international comparison.

Footnotes

  1. Norway is left out because it has a large oil industry. Luxembourg has also been excluded as it is a largely urban economy.
  2. A similar pattern is evident if tertiary qualifications are measured as bachelors degrees and above. The relationship is slightly weaker due to variations in the tertiary qualification systems across countries.