Do we need to spend more on higher education?

Amid all the talk about our higher education system being it crisis, it is worth having a look around the EU and asking how much each state spends on higher education (tertiary education) and to what extent that spend benefits the economies of those states.

The graphs below show what percentage of government income is spent on education across the EU. Ireland is pretty much at the median for both total spend and HE spend.



Now we look at how the spend relates to GDP per capita and GNI per capita. The currency is PPP dollars and these are dollars adjusted to take into account the different costs of living in each state. (It should be noted that Ireland’s economic numbers are always distorted by the output from our very large biopharma sector and by tax laws that many would claim make Ireland a tax haven.)



CORRECTION: x axis should read % of total government expenditure.

So what, if anything, does any of this mean? What it means is that we need to be careful about simply arguing that pumping more money into education will lead to economic prosperity. The relationship between education spend and prosperity is a complex one and education is not always the cause and prosperity the effect: causality can flow in the opposite direction, i.e., wealthy countries (e.g. those blessed with valuable natural resources) can afford to think long term and pump more money into third and fourth level education, and into basic research. Furthermore, economically weak nations might see pumping money into higher education as a way of promoting economic growth while wealthy states might simply decide that they’re doing alright with a moderate level of investment in higher education. Germany is a case in point.

So what about the Minister’s claim that Ireland will have the best education system in Europe by 2026? Non-Irish readers should know that Irish politicians always set ridiculous targets and they always miss them. I’m pretty sure that at one time we were promised the best broadband not only in Europe but in the World! We all know how that worked out. And politicians are always talking about excellence – centres of excellence and that kind of thing. Former Minister for Health, Brian Cowen, once got so exasperated with all the talk of excellence that he is reported to have exclaimed “all I want are centres of f**king adequacy!”

Anyway, what about the Education Minister’s claim? Well, in truth, it is best described as “not even wrong.” The best education system for any country is one that is most appropriate for the type of economy that the country has, and the one that meets the needs and desires of its citizens. A country like Germany whose economy is based on manufacturing, doesn’t necessarily have to spend huge amount on higher education. A country like Romania might have to spend a lot on HE to build up the expertise required to modernise its economy.

What about Ireland? Should we spend more on Higher Education? It would seem obvious that we should, at least if you listen to the academic establishment as they repeatedly claim that the system is in crisis. But the establishment is not making a case based on any real economic argument – the data does not show that investment in higher education correlates with anything. Rather, they are arguing for their own survival and their positions in the international rankings. And implicit in their argument is the idea that more is better.

But what if we took the German approach and designed our education system to suit our economy and our people. In order to do that we would have to get rid of our national inferiority complex that drives us to focus so much on becoming a “knowledge economy” with a big emphasis on STEM industries. And year after year there are articles in the papers highlighting the fact that big-brand multinational software companies are finding it difficult to recruit computing graduates. And guess what? They always will because Ireland will never supply enough computing graduates to meet the needs of the multinationals that we have ‘encouraged’ to locate here. So we’ll continue to import the expertise.


Education spend data

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