Investing in human capital for inclusive growth: focus on higher education

Investing in human capital for inclusive growth: focus on higher education

Aiming for inclusive growth requires as a first step an understanding of the forces that support positive growth rate of real per capita gross domestic product (GDP) in the long run. The benefits from higher education in the Philippines, however, are not automatically inclusive. One major factor behind this is that households for the most part internally finance higher education. There are no credit markets that families with insufficient funds can turn to in order to finance college education for their children.

This paper has two objectives:

  • analyse the role that investing in human capital--especially in higher education--plays in the observed phenomenon of economic growth with income inequality in the Philippines
  • present policy recommendations that stand a good chance of addressing concerns about growth with inequality. In other words, how can investing in higher education contribute to inclusive growth? The basic notion of the latter involves boosting growth and creating benefits that are within reach of every Filipino

Currently, the Philippines is confronted by a low proportion of enrollees and graduates in higher and scientific education and needs to raise its stock of labor with higher and scientific education amid rising demand for skilled workers and widening gaps in lifetime earnings between college and high school graduates. Several policies are indicated, but priority must be accorded to instituting loan programs for higher education, accelerating rationalization of the state university and college sector based on instituting regional university systems and centers of excellence, and devising grant programs for content standards for subjects and courses and formulating standardised tests for measuring and monitoring compliance with those standards applied to both public and private institutions of higher learning.