Professional Documents
Culture Documents
T00538969
Acknowledgment
To my wife Nusaibah, who have stood by my side and supported me with everything during my
To respected Dr. Hasnat Dewan, I would like to express my sincere gratitude to my academic
supervisor, who has encouraged me through my educational path and have been of ongoing
guidance and assistance along the way. Big thanks for your patience, help, and for the trust you
To respected Dr. Muhammad Mohiuddin, who was a very important help and guidance to me
TABLE OF CONTENTS
Income Growth...................................................................................................................................... 29
Methodology ................................................................................................................................. 41
Descriptive Statistics:............................................................................................................................ 56
Educational Policies and Curriculum Design Canada & Saudi Arabia Comparison....................... 58
TABLE OF FIGURES
Figure 3: Regression 1 - (Y :Exp. on Education Vs. Xs: GDP & Population) .............................. 46
Figure 4: Regression 2 - (Multi Regressions, Y:Mean Yrs. School Vs. Xs: GDP, Population, Edu.
Exp.) ....................................................................................................................................... 47
Figure 5: Regression 3- (Multi Regressions, Y: HDI, Vs. Xs: Population, Time 1-21, Edu. Exp.)
................................................................................................................................................ 48
Figure 6: Regression 4- (Multi Regressions, Y: HDI, Vs. Xs: Time 1 - 21 & Edu. Exp.) ............ 49
Figure 8: Regression 6 - (Y: Edu. Exp. per Cap, Vs. X: GDP per Cap.) ....................................... 50
Figure 9: Regression 7- (Y: GDP per Cap., Vs. X: Edu. Exp. As % of GDP)............................... 50
Figure 10: Regression 1- (Y: Exp. On Education Vs. Xs: GDP & Population)............................. 51
Figure 11: Regression 2 - (Multi Regressions, Y: Mean Yrs. School Vs. Xs: GDP, Population,
Edu. Exp.)............................................................................................................................... 51
Figure 12: Regression 3 - (Multi Regressions, Y: HDI, Vs. Xs: Population, Time 1- 21, Edu.
Exp.) ....................................................................................................................................... 52
Figure 13:Regression 4- (Multi Regressions, Y: HDI, Vs. Xs: Time 1-21, & Edu. Exp.) ............ 53
Figure 14: Regression 5- (Multi Regressions, Y: HDI, Vs. X: Edu. Exp.) .................................... 53
Figure 15: Regression 6- (Y: Edu. Exp. per Cap, Vs. X: GDP per Cap.) ...................................... 54
Figure 16: Regression 7- (Y: GDP per Cap., Vs. X: Edu. Exp. As % of GDP)............................. 54
Economic Returns to Investment in Education 6
TABLE OF TABLES
TABLE OF GRAPHS
(A Study and Comparison of Two Countries Education Performances, Canada & Saudi
Arabia)
EXECUTIVE SUMMARY
on individual incomes and it is a key to developing a healthier and better life to people around the
world. Countries of which investing more on education tend to have better outcomes in many areas,
on top of these areas comes the great financial returns. Moreover, it has been proven that
educational investment in most countries would bring benefits in many ways, such as creating more
jobs, improving the human capital and providing new financial returns.
order to provide a detailed examination and findings into, mainly, the relationship between
investing on education and financial returns, and also the link between investing on education and
poverty reduction, human development, income increase, and mean years of schooling. The
research analyzes the investment on education, for at least 21 years, in two high income countries,
in which one have very high level of Human Development Index, and the other one have relatively
lower Human Development Index, in order to achieve accurate results. The country in the first
category is Canada. It has been consistently ranking high in education rank worldwide for the last
decade. The other country is Saudi, who have focused recently on investing in education. The
elements of this study are measurement of financial returns, improvement in human capital, income
A Regression model with historical data of twenty-one years was created to determine the
effects of investing and spending on education on economic growth, productivity and schooling
years. The findings from the study indicate that a significant and positive relationship exists
between all variables. They highlight the importance of investing on education as a key factor to
great economic returns. This study creates a sort of foundation for further research into examining
Another important part of this research is the qualitative analysis, where many facts are
discussed to determine the reality of education in both countries. A comparison is a key here, where
we can figure out pros and cons in each system, and also the important elements and advantages
that each country has focused on and has caused improvement in the education system.
Economic Returns to Investment in Education 9
RESEARCH QUESTIONS
This study will investigate some relevant variables to answer the following main questions:
- What are the factors that each country has used to improve the education, and how can the other
RESEARCH METHOD
The methodology in this research will apply both qualitative and quantitative data. More
focus on qualitative by approximately 60% and a little focus on quantitative by 40% and will be
mostly used to improve the recommendations and solutions, besides supporting the findings of the
literature review. The collected data will be used to describe and test relationships as well as used
for examining relationships causes and effects in both targeted countries, Canada and Saudi Arabia.
DATA COLLECTION
Basically, All the gathered data originated from secondary research and resources that
included a combination of qualitative and quantitative research. The data that will be provided in
this research is a combination of quantitative and qualitative data as mentioned before. The
quantitative part will be secondary data. This data will be collected from different sources that play
significant roles in finding answers to the research questions, such as UN Data, Ministry of
Education, Statistics Canada, Ministry of Economy and Planning, World Bank Data, OECD Data,
Economic Returns to Investment in Education 10
and several reliable websites, journal articles and previous studies. A great help was provided from
TRU librarian during the process of collecting the needed data. Moreover, qualitative data is
TYPE OF RESEARCH
This business research is conducted without a specific decision in mind, so it is a basic type
research. The purpose, however, is to see how educational investment and educational businesses
can impact the overall economy in detailed vision that would help decision makers in the field.
TIME FRAME
The expected time frame for this research is going to be approximately five months as the
expected completion to be in July 2017. The first two months will be used in gathering and
collecting data from relevant sources. Data collecting will require having contacts with e-services
department in different ministries to dig deeper and find old data, as the ministries websites dont
show enough data. Later on, the analysis of the collected data will follow for the next three months.
It will be done on an ongoing basis after collecting the needed qualitative and quantitative data.
However, after having completed data analysis, providing and improving recommendations
and solutions will be during the last period of the research timeframe. Hence, some related and
important questions have to be answered in order to improve the recommendations, such as should
Saudi government invest more in primary education or higher education, should they spend more
on supporting private education sectors and should the Ministry of Education keep spending money
Economic Returns to Investment in Education 11
SYSTEM
As the world has recently faced a radical decrease in the oil prices, Saudi Arabia has
struggled the most since it is the world's largest oil exporter and producer. The economy, in general,
in Saudi Arabia is based on oil. In fact, oil revenues accounts for 90% of the country's exports and
almost 80% of the government revenues; and the oil industry accounts for 45% of Saudi Arabias
GDP (Basri, 2013). This issue has made a huge deficit in the Saudi budget during the last year, as
the Ministry of Finances statement about the national budget for 2016 shows, and it is expected to
Based on the previous fact, studying the alternatives that would improve the economy is an
important step in order to save the countrys economy. One of the most useful and important
alternatives is studying the impact of the educational businesses on the economic growth in Saudi
Arabia. The government has provided a plan, in 2016, which demonstrates the governments
ongoing attempts to increase long-term non-oil development through several focused investment
This research will study how the educational investments would provide a solution to the
economy. This solution includes the four main elements of this study: financial returns of
educational investment, improving human capital, income growth and the impact of educational
technology investment.
Economic Returns to Investment in Education 12
Additionally, and as part of the expected recommendations, this research will look into the
successful educational tips and ideas in Canada, and then study the idea of customizing these
programs to the Saudi culture, values and traditions. At the end, we will see how customizing and
using these programs in Saudi Arabia will increase the economic growth.
Economic Returns to Investment in Education 13
LITERATURE REVIEW
The following literature review will examine the importance of educational investments in
terms of promoting economic growth, and specifically will discuss the four economic growth signs
that are the measurement keys for this research; financial returns, improving human capital and
productivity, income growth and increasing the impact of educational technology investment.
Seeking information based on these measurement keys will help the decision makers in making
Financial Returns
Regarding financial returns, it will involve collecting and examining historical data to gain
information about the current and future financial health of educational investment. Thus, the study
will conclude with a clear analysis that will give us an idea about the size of the expected fiscal
revenue.
The report Returns to schooling around the world, World Development Report 2013
serves as a background paper for the world development report and is intended to find specific,
detailed and measurable outcomes of the capital investments made in the educational sector for
countries around the world. The studies regarding investment outcomes for schooling are not new.
They have been going on for quite some time, since the 1950s. However, they have rarely been
accurate. This new study aims to analyze empirical results as well as define dependent and
across the globe and the significance of these returns on the respective countries.
Economic Returns to Investment in Education 14
Education, according to the study is the single most important variable that drives economic
growth, reduces unemployment and poverty, as well as bringing in several social and non-
economic benefits. A majority of the studies done so far in the field have focused on schoolings
Moreover, the report also offers unique insights or observations after studying and
generalizing the data across the board. One observation indicates that private returns to schooling
are generally positive as compared to public schools. This might have to do with the
disproportionately high capital investment into the private school system. Additionally, this trend
is congruent across most of the countries surveyed in the study. Another observation indicates that
the rates of return are much higher for low or middle-income economies as compared to
industrialized economies. This is not surprising as most of the industrialized economies have
stagnant growth rates and very low real or potential growth year-to-year. The developing
economies have a pride in a much higher rate of return due to the increasing parity of labour quality
and higher capital investment in key industries. Finally, the returns in question seem to be highest
at the primary schooling level. Afterwards, the returns level off during the secondary and tertiary
levels of education.
As with observations, the study also draws certain conclusions based on the analysis of
information. One of the biggest findings in the study implies that estimated returns from schooling
are proportionally higher for women as compared to men. This point raises some interesting
questions, while also providing an indicator regarding the higher optimization of resources when
it comes to educating women. Additionally, it clashes with social biases and norms in certain
Economic Returns to Investment in Education 15
communities where women are overlooked or sometimes even prohibited from accessing
education. From the data provided in the study, this certainly seems to be the case in many of the
developing countries surveyed. Another conclusion points out that returns to schooling have
declined in the past few decades, on average. However, the decline has been at most modest,
suggesting a gradual leveling-off as opposed to a steep drop in rates of return. The report implies
this is due to constant increase in labor productivity that goes hand-in-hand with the increased labor
demand.
On the other hand, while the study posts some interesting and unique findings, it is not
without certain limitations. The main issue being that the study might not be strictly comparable to
other clusters of studies done previously and does not have a peer to validate its findings. A second
problem is research methodologies used to identify or calculate certain variables, which affected
the course of the study. Since researchers rarely use the same methods for calculation, the results
between two similar studies can vary greatly and provide alternate outcomes. This definitely raises
a question mark for the validity of test results and resulting conclusion. Additionally, since this is
a very large survey including hundreds of households and spread across many targeted countries,
there is no clear way to ascertain that the sample populations used for the study were completely
random. Often for such studies, researchers have to test sub-populations rather than randomized
subjects, and this can skew test results in one direction or the other. This is mostly due to sub-
populations being less expensive and easier to reach. Even the best studies are susceptible to
limitations and this should in no way take away from the validity of this study. However, since the
results are slightly questionable, we have decided to research, analyze and include more studies
An Analysis of the World Education Indicators by UNESCO talks about the changing of
economic and social conditions that have made education the top priority for many nations
worldwide. It indicates that there is now more societal and political pressure on making sustainable
investments in the education sector so as to secure our future when it comes to human capital
investment. The article also puts forward an interesting dilemma that many nations face; measuring
the growth, progress and standing of their educational systems when compared to other countries.
Due to this, many nations have actually started collecting comparative statistics and indicators to
measure performance. The OECD countries and UNESCO have even started pooling their
Regarding the measurements of this study, one of the most comprehensive ways to measure
the direct impact of education is by considering a nations gross domestic product (GDP). While
GDP is not a perfect reflection of economic well-being, constant GDP growth does lead to the
higher economic output which has been closely linked with a better standard of living. While GDP
can satisfactorily represent economic well-being, it fails to record the significance of non-economic
activities such as parenting, which is a huge influence on behavior, emotional intelligence, and
well-being.
The link between education, human capital, and economic growth can be efficiently
measured by analyzing variables such as physical capital, resources, educational infrastructure and
in some cases proxy variables such as social and institutional paradigms. Studies were performed
by looking at developed and developing countries, using the aforementioned variables. For the
Economic Returns to Investment in Education 17
purpose of the report, however, the relationship between WEI and OECD countries has been
explained a bit differently. Human capital has had the most impact in the economic growth of WEI
countries. The study found that on average, human capital accounted for half a percent of annual
growth in these countries. By comparison, only Greece, Italy, and Spain boast similarly high annual
growth rates. The link between human capital and economic growth has proven to be strongest in
countries such as Argentina, Philippines, Uruguay, and Malaysia over the past decade. Similarly,
countries such as India and Tunisia have made rapid advances in providing a modern educational
infrastructure that closely mimics that of OECD countries in the last decade. The study establishes
a clear link between advanced human capital and optimization of available resources. Even though
the WEI countries have comparatively thinner resources, they boast a higher economic growth rate.
As such, the only way this dissonance can be explained is through factoring in quality of human
capital.
Furthermore, the study talks about how educational access should be equitable for it to
result in the greatest amount of good for the greatest amount of people. For a lot of low income
households in developing countries, prioritizing education involves diverting their resources from
other important expenses. Additionally, they cannot bear the cost of sending their children to
private school. From the analysis, we know that there is a clear difference between the quality of
education among private and public-school systems across WEI countries. By providing equal
access to everyone regardless of class, creed or economic disposition, we are creating a society that
values equality. The study notes that it is imperative for school systems to be uniform across the
board when it comes to providing quality education. As such, this study serves as an important
document for my own research regarding investment in education and the supposed benefits it
Economic Returns to Investment in Education 18
yields. (Financing Education Investments and Returns, 2002) same as: An Analysis of the World
education-investments-and-returns-executive-summary-2002-en_3.pdf
quantitative research and provides ample analytical samples and evidence to support the advent of
increased funding in the educational sector and its impact on infrastructure, GDP growth and
economic prosperity. Additionally, the report examines the non-economic, although just as crucial
impact of education on the quality of human life. The report is divided into three sections; the first
examines the relationship between education and economic growth, the second discerns the trend
between education and income distribution while the third covers the impact of education on
poverty. The report covers these three relationships in extensive detail, and analyses the dynamic
that closely connects all three concepts. MENA, which refers to Middle-East and North Africa
countries serve as the focal point of this study, with their rapid economic growth in recent years
The MENA countries make for an interesting study subject for this report due to the fact
that they experienced tremendous economic growth in the 1990s and 2000s, though this growth
has marginally leveled off in recent years. As a result, countries like the UAE have an
overdeveloped oil industry, yet not enough supporting infrastructure or other industries to make it
a global player. Most of the labor in the country comes from overseas, and it is actually a common
trend across most of the countries in the region. Given these conditions and the surrounding
atmosphere, it would be really interesting to observe the relationship between human capital
Economic Returns to Investment in Education 19
(through investment in education) and economic growth. There was a time of heavy educational
investment in some of the East Asian countries in the 1960s, which led to rapid economic growth
In summing up, improved educational efficiency will directly result in increased economic
growth, a more equitable income distribution and alleviation of poverty. Yet it is by no means
sufficient. Relevant government policies and structures also need to be in place to sustain and
improve on such results while also building supportive infrastructure, related industries and
technology to continue this upward trend and create tremendous human capital with endless
possibilities.
analysis provided by its predecessor and provides an inkling to the human capital theory and its
The human capital theory has been in existence since the 1950s, and was used to estimate
returns of education on national growth. In all the time that the theory has been in existence, there
have been several reviews that tried to establish a pattern in all the empirical studies that were
conducted, in an effort to better understand how the two concepts correlated with each other.
However, since there are more and more variables to be established as contributors of economic
growth, the report takes them into consideration as well, thus laying down the groundwork for an
extremely well detailed and subversive algorithm to calculate educations impact on economic
growth.
Economic Returns to Investment in Education 20
The report aims to establish certain patterns in order to identify some unique trends, which
predict the current influence of education on aforementioned variables. The report makes some
interesting observations from its analysis on establishing returns gained from education.
Apparently, private returns tend to be higher than social returns in industrialized countries that
were surveyed for the report. This information implies that returns gained from private schooling
exceed returns gained from public schooling. On the surface, it does make more sense as private
schools charge more money in fees, and are autonomous in their application of curriculum, thus
possessing more flexibility to apply their own practices. However, after considering the enormous
capital invested by the government in industrialized countries in addition to all the special programs
or supporting institutions funded through communal support, this observation does need more
analysis to fully be understood. This second piece of evidence would pertain to the micro-economic
aspect of the country, as this is a trend that has been observed on an institutional level. As for
developing countries, a more detailed mechanism for measuring effectiveness is needed, as the
variables currently being used to calculate economic returns are too broad and vague. A quasi-
experimental study has been recommended in the report, intended to be carried out in developing
countries, so as to identify unique patterns which are otherwise not clearly discernible at this point.
This may be due to the tremendous growth some developing countries are experiencing from their
industrialization, and as such it is impossible to isolate the growth factors resulting from education
Out of this view, and to highlight the role of education in economic development:
Successful and quality education relies on quite a number of factors. These factors are either
Economic Returns to Investment in Education 21
curriculum development, support and training of teachers and start age for primary education. The
provision of qualitative education to most people can only be achieved through the involvement of
both public and private educational sectors. Thus, education can also be seen as vital component
of growth and development-as input to the aggregate production function. Furthermore, the dual
role education plays as both inputs and outputs gives its central importance in economic
From this same previous study, this research showed that in developing countries
investment in primary education continues to be the number one priority of government. However,
the returns in primary education declined by the level of schooling and the country's per capita
income. His research also revealed that investment in women's education is in general more
profitable than that for men; returns are higher in private competitive sector of the economy than
among those working in the public sector. His study also showed that the public financing of higher
education is regressive unlike investment in primary education, which has consistently and
increasingly received financing by the government. These findings are discussed later on in this
study within the context of controversies in the field, concluding that investment in education
continues to be a very attractive investment opportunity in the world today, both from the private
When taking about the government role and expenditure on educational investment, from
this view: The irony is that the more unprofitable a given level of education becomes as a terminal
point, the greater the demand among the elite for it as an intermediate stage or precondition to the
Economic Returns to Investment in Education 22
next level of education! This puts great pressure on governments to expand educational facilities
at all levels to meet the growing demand They need to cover the education demand in order to
gain educated citizens who would play important role in improving the economy Countries that
have developed successfully have generally ensured that educational benefits are more broadly
available in the economy to the poor as well as the rich, in a rural areas as well as the urban
Out of this view, Aghion, Boustan, Hoxby, and Vandenbussche (2009) found that
educational investment affects growth on the private returns to individuals' greater human capital.
In addition, a variety of externalities would be affected too. For example, in highly developed
countries, education investments foster technological innovation, thereby making capital and labor
This key measure the impact of educational investments in the labor skills and knowledge, and
how valuable they are to the nation. Measuring the human resources development is important in
this research as it refers to knowledge, skills, and abilities acquired by individual through
education.
Education, according to the study Returns to schooling around the world, World Development
Report 2013 is the single most important variable that drives economic growth, reduces
unemployment and poverty. Also, the developing economies have a pride in a much higher rate of
return due to the increasing parity of labour quality and higher capital investment in key industries.
Economic Returns to Investment in Education 23
An Analysis of the World Education Indicators by UNESCO talks about the changing of
economic and social conditions that have made education the top priority for many nations
worldwide. While human capital has always been the key to reducing unemployment and boosting
productivity rates, new evidence has pointed to other non-economic benefits as well including an
improvement in health and a higher sense of physical well-being. As such, there is now more
societal and political pressure on making sustainable investments in the education sector so as to
Recent advances in technology and infrastructure, globalization of economic activities, and have
naturally increased the burden on educational systems to provide support and guidance in the
development of human capital. Education is now seen as an investment in the collective future of
societies and nations, and as such is focus of tremendous capital investments and grants. However,
great expectations alone do not yield great results. To successfully produce satisfactory results, a
good understanding on the nature of human capital and the resources required to ensure its adequate
supply is required. The report also broadly quantifies human capital as the knowledge, skills, and
competencies that facilitate economic, social, and physical well-being. The report also
substantiates how better educated people are more likely to be employed and part of the workforce.
And even though this can come as no surprise, the report does establish a clear link between higher
The report Education at a Glance (2016) provides a clear and interesting explanation in answering
the question: HOW DOES EDUCATIONAL ATTAINMENT AFFECT PARTICIPATION IN THE LABOUR MARKET?
Economic Returns to Investment in Education 24
Thus, the answer of this question has many points to cover the whole idea of its aspect. While
previous research from different topics has successfully established that higher educational
attainment yields greater monetary benefits, this report provides supplementary data to enforce that
notion on a macroeconomic level. As an example, the report cites that the average unemployment
rates from the countries surveyed for people with below secondary education are 12.4%. In those
same countries, unemployment rates for people with tertiary education stands at 4.9%. On the
surface, this represents a big difference in workforce participation, even before considering the
structural and frictional types of unemployment. Additionally, across the countries surveyed, men
on average boasted higher employment rates than women. However, when we consider countries
with higher levels of education, this gap shrinks greatly. The report conclusively shows graphs and
trend lines to support this explanation. Finally, the report establishes a pattern through the different
faculties of study and cross-references employment rates for said faculties. The sciences,
technology, construction, and manufacturing have greater employment rates on average than
humanities, languages, and the arts. In growing economies, this is a common trend as these fields
The OECD countries, the Organization for Economic Cooperation and Development, are some of
the most highly industrialized economies in the world. To maintain their dominance in the global
marketplace, these countries require a constant supply of highly skilled labor. The expanded
education opportunities have increased this pool of workers, and since they boast skills desirable
by most employers, are more likely to find jobs. On the other hand, people with lower educational
levels are relegated to working menial or support jobs to people more highly educated than them.
Also, they stand a greater risk of being unemployed due to shifts in the economic system. Being
Economic Returns to Investment in Education 25
directly related to each other, shifts in the labour market create ripples in the greater society. As
demand for labour grows, employers expect a greater skill-set from their workers. As technology
continues to supplement or replace most aspects of business, employers similarly expect potential
employees to have rudimentary knowledge of said technology. In this case, education can become
the great equalizer, as it can lead to people getting similar opportunities, acquiring similar
knowledge, and providing similar avenues of growth. In some OECD countries, it might be
necessary to boost female workplace participation rates in order to boost productivity, as these
countries have abnormally disparaging gender rates of employment. As the full potential of women
is not exploited after their schooling, the countries in question are forgoing on immense potential
skilled-labor. Traditional gender roles, including family planning, and children are preventing
women from realizing their full potential. Education can provide a bridge to close the gap between
The report clearly demonstrates and investigates employment rates of different economies,
relative to educational attainment. Analysis in our report will extensively study trends in this
Attainment of higher education requires countless sacrifices on the part of the individual,
including time, money, and effort. Looking at this from a different angle, it can be seen as an
investment in human capital. With the economy as it is, and the much higher competition
experienced by millennial to be a part of the workforce, perhaps higher education is the answer,
and it makes sense for them to delay their labour market activities for some time. While these
factors make higher education attractive on a microeconomic level, there is something to be said
Economic Returns to Investment in Education 26
for macroeconomic benefits too. Countries benefit from having an abundance of well-educated
high earners. Not only do they stimulate the economy through higher spending, they also reduce
government costs as they do not depend on social welfare, public benefit programs and make
According to a research by Hanushek & Woessmann (2010), there is strong evidence that
the cognitive skills of the population rather than mere school attainment - are powerfully related
to long-run economic growth. The relationship between skills and growth proves extremely robust
In addition, it can also be enhanced by continued and focused education (Becker 1964).
Human capital productivity can be improved through education and labor market experience
An early study by Nelson, Richard and Phelps (1966) shows that a more educated labor
force would imitate frontier technology faster. In addition, Benhabib and Spiegal (1994) have
expanded on their work, arguing that a more educated labor force would also innovate faster. Also,
Lucas (1988) observed that the accumulation of human capital could increase the productivity of
In respect of the impact of education on the future workers productivity, educational and business
leaders have agreed on that one of the main objectives of educational investments is to prepare
essential for a satisfying and rewarding life and a fundamental to the broader nation of expanded
human capabilities that lie at the heart of the meaning of development. Therefore, the need for
quality education to spur economic growth cannot be over-emphasized. (Todaro & Smith, 2015).
Out of this view, it is fundamental to enhancing the quality of human life and increasing
social and economic progress. (United Nations, Report on the World Social Situation, 1997).
Hence, Human Capital must therefore, be given direct attention in its own right, especially
in developing economies to encourage long term economic growth. Aside the many direct benefits
that educated persons are likely to have, they also benefit the community through innovation.
Previous studies have also shown that health and education contribute directly to well-
being, therefore, the impact of human capital investments in developing countries can be quite
Figure 8.1, with the title: (Age-earnings profiles by level of education) in Venezuela,
studying the indirect and direct costs of education and the income later, comparing it with
Economic Returns to Investment in Education 28
uneducated workers income who started working at early age. Overall, the chart describes that
incomes vary depends on people level of education. It declares the fact that people with higher
education start working on full-time jobs later comparing with people with less education level.
However, the higher educated group start with greater wages. (Todaro & Smith, 2015).
Education plays a key role in the ability of a developing country to absorb modern
technology and to develop the capacity for self-sustaining growth and development Education
technology abilities and skills is important part in terms of achieving the highest benefit of any
educational investment. In (2002) Ringstaff & Kelley have explained that the main aim of investing
in educational technology is to serve the goal of increasing students' basic skills and knowledge,
so that students use the technology as a resource to help them develop higher order thinking,
creativity, research skills, and so on. In that view, and as a result, this aim will help in increasing
development, production quality, and technology advancement (Adriente & Guiking, 2015).
Quality education might offer other important outcomes such as better parenting skills,
efficiency of consumer choices, healthier lifestyle choices and much more. This study measures all
Economic Returns to Investment in Education 29
the economic, non-economic and miscellaneous benefits that schooling has to offer. Naturally,
some of the benefits offered by schooling are unique to particular countries. These benefits include
income distribution among other things. The study provides ample evidence of these proposed
benefits and links them to the success of schooling in those particular countries. Returns to
Income Growth
There are many evidences showing that with educational investments the income will
increase and educational quality directly affects individual earnings. A study by Hanushek and
Woessmann (2010) has shown that more schooling is associated with higher individual earnings.
They conclude that policy makers often assert that if their state spends more on educating its
population, incomes will grow sufficiently to more than recover the investment.
The major rationale for higher education and its link to potential economic growth was that
individuals can get better jobs with higher pay through the advent of secondary or tertiary
schooling. For many, schooling also provides the possibility of social mobility. Logic follows that
better educated workers are more easier and faster to train, and can be counted on to perform more
complicated tasks. They also bring other qualities to the table, such as efficiency, awareness of
time, and dependability. One factor that definitely supports such a theory is that countries with the
most productive labor forces tend to have better levels of schooling, on average. As such, this
theory can definitely be proved from a macroeconomic perspective. Additionally, education also
contributes to innovation, as the workers capacity to innovate is increased. Not only is innovation
Economic Returns to Investment in Education 30
achieved through the creation of new technology, it can also be achieved by finding new ways of
using available technology. All these factors result in higher productivity per capita.
The relationship between education and income distribution is slightly more complex. In
theory, the distribution of income from employment and that of education should be closely related.
Early work on the subject has suggested that lower levels of education lead to a very inequitable
work, while a small percentage of the populace control a majority of its wealth. Higher levels of
education result in a number of industries, institutions and jobs being created and individuals have
greater flexibility in selecting their career orientation. The society is thus divided into several
different classes and the community as a whole move towards a more urban and civilized future.
Having studied and analyzed the data from the MENA countries, the report observes that while
income distribution has improved over time, since we started measuring it in the 1950s to present-
day. However, the report also notes that other significant variables have remained unchanged.
In answering the question: WHAT ARE THE EARNINGS ADVANTAGES FROM EDUCATION? For the
OECD countries surveyed in the report: Education At a Glance 2016, the earnings gap between
people with secondary education and those with below secondary education is adequately high.
However, the earnings gap between people with below secondary education and those with tertiary
education is even higher, both significantly and marginally. This suggests a much higher potential
wage acquisition through the attainment of tertiary education. The report has determined that on
average, people with doctorates, masters degrees or other equivalent degrees earn almost twice as
Economic Returns to Investment in Education 31
much as people with higher secondary education. Similarly, those with a bachelor's or equivalent
degree earn 48% more and those with a short-cycle masters equivalent earn 20% on top of that
than people with only upper secondary education. While the data provides some interesting
observations, it is imperative to note that the educational structures in OECD countries vary slightly
and this can skew the data marginally. Across the OECD countries and at all levels of educational
attainment, the gender wage gap is inherent and although women proportionally have higher
educational attainment, they continue to earn less than their male counterparts in almost every
industry. The issue is the same for educational attainment as well, with tertiary-educated women
earn only 73% as much as tertiary educated men. Interestingly, the gender wage gap at tertiary
As previously discussed, people with higher levels of education stand a better chance of
employment, on top of which, they have a clearer path through natural progression at their
workplace as they already possess many of the skills required to take on additional responsibilities.
These benefits, combined with the potential to increase earnings exponentially in later years make
higher education more lucrative. On the other hand, people with lower educational levels perform
labor-intensive work for the most part, which is easy to sustain in their youth, but not in later years.
Consequently, they start experiencing a constant decline in earnings in their later years. Finally,
the data represents an average score for different variables, though it is important to note that these
variables represent factors which are considered important in diverse labor markets including
demand for specific skills, supply of labor, and other microeconomic situations unique to each
market. As such, different faculties of education might take precedence in some countries over
others.
Economic Returns to Investment in Education 32
Averaging the financial returns for all the people with tertiary education across OECD
countries, the net financial returns for women are slightly lower (around two thirds) than the net
financial returns for men. This is not a curious observation as we discussed how women are paid
less for doing similar jobs. The only possible explanation for such a concurrent theme in disparate
earnings and financial returns is a gender wage gap. While that statement is true, it is also true that
higher education translates to higher financial returns. While returns are definitely higher for
tertiary education, returns from higher secondary and post-tertiary education are quite high too. For
lower levels of educational attainment, the returns seem to fizzle out eventually as labour becomes
intensive and difficult to sustain at a later age. While the report mostly focuses on individual
returns, it does mention other societal benefits having many high-income contributors to the
economy, including greater tax contributions, higher social involvement and better standards of
living.
Improved education helps families escape some of the vicious cycles of poverty in which
they are trapped Investments in human capital have to be undertaken with both equity and
efficiency for them to successfully realize their potential impact on incomes Health and
education levels are much higher in high-income countries People will spend more on human
capital when income is higher Explain the relationship between investing in education which
leads to improving the human capital, which leads to higher income and then leads to this
statement Developing country officials are drawing lessons from the many studies showing the
interrelationships among health, education, and incomes and are devising integrated strategies
A more educated students prospects of earning considerably more income through future modern-
Education, according to the study is the single most important variable that drives
economic growth, reduces unemployment and poverty (Returns to schooling around the world,
The report Economic Returns to Investment in Education, 2004, considers the relationship
between education and poverty reduction. Research on the subject strongly points that economic
growth is the key to a successful poverty reduction strategy. Economic growth provides people
from all social classes more opportunities to find better work and it also alleviates the lower crust
of society by providing them with an equal chance to compete with those marginally more
fortunate. And in this case, education is the great leveler. Education provides a bridge for the
economically challenged by endowing them with skills, capabilities and the confidence to compete
in today's workplace and succeed. The report contains excellent models and hypotheses, which
A previous study by the World Development Report had declared that education is the key
to creating, adopting and spreading knowledge, but the gains in access to education have been
unevenly distributed, with the poor seldom getting their fair share. (World Bank, World
This view is well articulated in the 20002001 World Development Report, Attacking
Poverty, which states that: Growth is essential for expanding economic opportunity for poor
peoplethough this is only the beginning of the story of public action... The question is how to
Economic Returns to Investment in Education 34
investment and technological innovation is necessary, as is political and social stability to underpin
public and private investment. And asset and social inequalities directly affect both the pace of
Education is critical for economic growth and poverty reduction. Education systems
produce the global economys workers and expand knowledge. Schooling produces the skills that
propel individual labor productivity. A host of social and non-market benefits are also produced
by schooling, including but not limited to child well-being, health status, efficiency of consumer
choices, fertility and social capital. The individual contribution of schooling has often been
http://siteresources.worldbank.org/INTMENA/Resources/EDU_02-Chap02-Education.pdf
Over all, the previous evidence shows that educational investment is important to nations
to provide a positive impact regarding increasing financial returns, human resources development,
schools
compared to men.
6. Human capital has had the most impact in the economic growth of WEI
countries.
7. The link between human capital and economic growth has proven to be
9. There was a time of heavy educational investment in some of the East Asian
countries in the 1960s, which led to rapid economic growth and higher levels of
human capital.
countries
Economic Returns to Investment in Education 36
11. returns gained from private schooling exceed returns gained from public
schooling.
government.
13. investment in women's education is in general more profitable than that for
men;
14. returns are higher in private competitive sector of the economy than among
education,
innovation, thereby making capital and labor more productive, and it will be
IMP
HU
Economic Returns to Investment in Education 37
19. average unemployment rates from the countries surveyed for people with below
20. men on average boasted higher employment rates than women. However, when
we consider countries with higher levels of education, this gap shrinks greatly
22. For highly skilled labor, the expanded education opportunities have increased
this pool of workers, and since they boast skills desirable by most employers,
23. people with lower educational levels are relegated to working menial or support
jobs to people more highly educated than them. Also, they stand a greater risk
24. education can become the great equalizer, as it can lead to people getting
avenues of growth.
25. Education can provide a bridge to close the gap between conservatism and
progressivism.
26. Countries benefit from having an abundance of well-educated high earners. Not
only do they stimulate the economy through higher spending, they also reduce
27. strong evidence that the cognitive skills of the population rather than mere
29. a more educated labor force would imitate frontier technology faster
30. the accumulation of human capital could increase the productivity of other
itself. It is essential for a satisfying and rewarding life and a fundamental to the
broader nation of expanded human capabilities that lie at the heart of the
meaning of development
32. it is fundamental to enhancing the quality of human life and increasing social
33. Aside the many direct benefits that educated persons are likely to have, they
35. people with higher education start working on full-time jobs later comparing
with people with less education level. However, the higher educated group start
36. the main aim of investing in educational technology is to serve the goal of
38. Quality education might offer other important outcomes such as better
much more.
41. policy makers often assert that if their state spends more on educating its
population, incomes will grow sufficiently to more than recover the investment.
42. The major rationale for higher education and its link to potential economic
growth was that individuals can get better jobs with higher pay through the
43. countries with the most productive labor forces tend to have better levels of
schooling, on average
INCOME GROWTH
increased
46. Higher levels of education result in a number of industries, institutions and jobs
being created and individuals have greater flexibility in selecting their career
orientation.
47. the earnings gap between people with secondary education and those with
between people with below secondary education and those with tertiary
48. people with doctorates, masters degrees or other equivalent degrees earn
49. those with a bachelor's or equivalent degree earn 48% more and those with a
short-cycle masters equivalent earn 20% on top of that than people with only
50. the gender wage gap is inherent and although women proportionally have
higher educational attainment, they continue to earn less than their male
51. tertiary-educated women earn only 73% as much as tertiary educated men.
52. people with higher levels of education stand a better chance of employment, on
top of which, they have a clearer path through natural progression at their
additional responsibilities.
53. people with lower educational levels perform labor-intensive work for the most
part.
54. the net financial returns for women are slightly lower (around two thirds) than
55. Improved education helps families escape some of the vicious cycles of poverty
56. People will spend more on human capital when income is higher
57. investing in education which leads to improving the human capital, which leads
59. Education, according to the study is the single most important variable that
POVERTY REDUCTION
60. Education provides a bridge for the economically challenged by endowing them
with skills, capabilities and the confidence to compete in today's workplace and
succeed.
METHODOLOGY
Research Method
The methodology in this research will apply both qualitative and quantitative data. More
focus on qualitative by approximately 80% and a little focus on quantitative by 20% and will be
mostly used to improve the recommendations and solutions for targeted countries and education
overall.
Data Collection
The data that will be provided in this research is a combination of quantitative and
qualitative data as mentioned before. The quantitative part will be secondary data. This data will
be collected from different sources that play a significant role in finding answers to the research
questions, such as Ministry of Education, Ministry of Economy and Planning, Ministry of Finance,
Ministry of Petroleum and Mineral Resources and Ministry of Labour data. These data will be
Data Analysis
The data analysis will be determined through regression analysis where the economic
growth variable is the dependent variable, and the independent variables are investment in
education, government spending in supporting private educational sectors, oil price and human
index. Another big part of the analysis would be determining the factors that help in education
RESEARCH ANALYSIS
Data Analysis
The data analysis will be determined through regression and multi-regression analysis as the
following layout:
Expenditure on education value is the independent variable, and the dependent variables are
Mean years of schooling for both countries is the independent, and the dependent variables
Multi regression as in: HDI is the independent, and Expenditure on education, time and
X2= Population
X3= Time
Where:
Economic Returns to Investment in Education 43
HDI= a0 + a1 x1 + a2 x2 + a3 x3
HDI= a0 + a1 x1 + a3 x3
HDI= a0 + a1 x1
In addition, this analysis uses the educational observations, trends and case of Canada and
Saudi Arabia to identify the factors that affect the two countries education reality and its effects
toward economic growth in both countries, which is mostly going to be done via qualitative data.
Main data source was World Development Indicators, it was the source for Government
06-01. GDP indicator code: NY.GDP.MKTP.CD. Also, the population and mean years of
schooling, for both countries, were contributed from the same source.
Human development index (HDI) for both countries was gained from UNDP website,
Actual expenditure on education for both countries was taking by multiplying GDP (current
For Canada data, there was missing data on Education Expenditure (% of GDP) for the
years: 1996, 1997, 2003, 2004 and 2006. However, after spending long time in finding the
data, and with the help of TRU librarians, it appears that these missing data dont exist.
Hence, it has been calculated by the moving average, as there are no radical changes noticed
For KSA, the years, from 2007 to 2011 in World Development Indicators data, of Education
Expenditure (% of GDP) were missing. However, it has been provided in Saudi Fiscal Year
reports from Alarabia.net which is part of the MBC group. According the MBC website:
MBC Group (Middle East Broadcasting Center) is the largest and leading private media
company in the Middle East & North Africa region that enriches peoples lives through
information, interaction and entertainment And it has been known as a reliable news that
is directed to present the Saudi government views in the Middle East. Then, the messing
GDP years in Saudi data (2007, 2009, 1010 and 2011) have been calculated by dividing
Education Actual Expenditure by GDP current $US, then the total was multiplied into 100.
Data Found
The regression results are analyzed using the data analysis tool on Excel 2016. However, variables
are tested at the 95% confidence level. More details in the following:
1. Multiple R Interprets the extent to which there exists a correlation or association between
3. The p-value - The p-value was used as a determinant of significance. This value determines
Canada Regressions:
relationship between GDP and educational expenditure in Canada over the 21 years examined.
Thus, the sufficiency is significant. The more GDP would be increased, the more investing on
education is provided. However, and surprisingly, the population is increasing but not as same ratio
level as GDP.
Economic Returns to Investment in Education 47
Regression 2- (Multi Regressions, Y: Mean Yrs. School. VS Xs: GDP, Population, Edu.
Exp.)
Figure 4: Regression 2 - (Multi Regressions, Y: Mean Yrs. School Vs. Xs: GDP, Population, Edu. Exp.)
As both GDP and Population Increase, the level of schooling Increases in Canada over 21 years.
Relationship is too strong as shown on (Multiple R). However, on the negative side, Expenditure
on education is not relevant, and the Coefficients of its relationship with mean years of schooling
Regression 3- (Multi Regressions, Y: HDI, Vs Xs: Population, Time 1-21, Edu. Exp.)
Figure 5: Regression 3- (Multi Regressions, Y: HDI, Vs. Xs: Population, Time 1-21, Edu. Exp.)
When Time increases over the years, and at the same time education expenditure is increasing too,
HDI increases over the years as a result. In another word, when HDI increases and goes up, actual
Population and HDI, thus the level of growing in both variables is not the same. Regarding the
Population: it is growing up over the years, but HDI and expenditure on education are not
Important note: in 2010, UNDP changed the methodology of calculating the HDI, thus, in this
research we ignored the impact of that methodological change, because the previous data was
calculated by the old way, which is the majority of the data collected for this study.
Economic Returns to Investment in Education 49
Regression 4- (Multi Regressions, Y: HDI, Vs Xs: Time 1-21, & Edu. Exp.)
Figure 6: Regression 4- (Multi Regressions, Y: HDI, Vs. Xs: Time 1 - 21 & Edu. Exp.)
Here, both relationships are Positive and significant, when time and expenditure on education
In this regression, the situation is very positive, and there is a strong relationship. As education
Figure 8: Regression 6 - (Y: Edu. Exp. per Cap, Vs. X: GDP per Cap.)
Figure 9: Regression 7- (Y: GDP per Cap., Vs. X: Edu. Exp. As % of GDP)
Economic Returns to Investment in Education 51
Figure 10: Regression 1- (Y: Exp. On Education Vs. Xs: GDP & Population)
As GDP and population increase, expenditure on education increases too. There is a significant
Regression 2- (Multi Regressions, Y: Mean Yrs. School. VS Xs: GDP, Population, Edu.
Exp.)
Figure 11: Regression 2 - (Multi Regressions, Y: Mean Yrs. School Vs. Xs: GDP, Population, Edu. Exp.)
Economic Returns to Investment in Education 52
Regression 3- (Multi Regressions, Y: HDI, Vs Xs: Population, Time 1-21, Edu. Exp.)
Figure 12: Regression 3 - (Multi Regressions, Y: HDI, Vs. Xs: Population, Time 1- 21, Edu. Exp.)
border line with strong correlation. However, while population and expenditure on education are
Important note: in 2010, UNDP change the methodology of calculating the HDI, thus we ignore
the impact of that methodological change, because the previous data was calculated by the old way
old way, which is the majority of the data collected for this study.
Economic Returns to Investment in Education 53
Regression 4- (Multi Regressions, Y: HDI, Vs Xs: Time 1-21, & Edu. Exp.)
Figure 13:Regression 4- (Multi Regressions, Y: HDI, Vs. Xs: Time 1-21, & Edu. Exp.)
All relationships in this observation are positive and significant. With time increasing and spending
Here it shows a positive correlation, positive relationship between HDI and education expenditure,
Figure 15: Regression 6- (Y: Edu. Exp. per Cap, Vs. X: GDP per Cap.)
Figure 16: Regression 7- (Y: GDP per Cap., Vs. X: Edu. Exp. As % of GDP)
Economic Returns to Investment in Education 55
Data Comparison:
Saudi Canada
Saudi Canada
Descriptive Statistics:
GDP (current US$) (X) Canada Actual Exp. On Edu. ($US) (Y)
GDP (current US$) (X) Saudi Actual Exp. On Edu. ($US) (Y)
80,000,000,000.00
60,000,000,000.00
40,000,000,000.00
20,000,000,000.00
-
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
Educational Policies and Curriculum Design Canada & Saudi Arabia Comparison
For a proper comparison of the Canada and Saudi Arabia educational systems, some non-
financial factors such as the differences in educational policies and curriculum designs, schooling
age, mixed-gender schools and the socio-economic benefits contribution of international student to
In Canada, education is for the most part provided publicly, funded and overseen by federal,
provincial, and local governments. Education is within provincial jurisdiction and the curriculum
is overseen by the province (Friendly, Beach, & Turiano, 2001). Education in Canada is generally
divided into primary education, followed by secondary education and post-secondary. Within the
provinces under the ministry of education, there are district school boards administering the
educational programs and school curriculum differs across provinces, this fact has lead to
competition environment between provinces and has brought diversity over Canada. However, the
same idea is missing in Saudi, where all thirteen provinces are directed and controlled by one single
system.
Regarding the schooling years, most education programs in Canada begin in kindergarten
(age five) or grade one (age six) and go to grade twelve (age 17 or 18), except in Quebec, where
students finish a year earlier. After completion of a secondary school diploma, students may go on
women to enroll in some courses in the University. Both sexes have equal access to education and
funding support from the government for those who seek student loans. However, the system is
Economic Returns to Investment in Education 59
lacking in terms of gender equality in Saudi Arabia, this is going to be discussed in further details
later.
One of the key non-factors affecting the educational output is the school start age. In Canada
educational system, emphasis has consistently been placed by the government on early education
due to its importance in ensuring a solid background to build on, promotion of quality education
and yield outcomes for sustainable economic growth. It is easy to notice that, in general, kids start
the fundamental skills of writing and reading at an early age compared to the situation in Saudi
Arabia.
Kindergarten start age is five years in most provinces in Canada, except Quebec. The reason
for this is evident through increased research in the area of early childhood development that
suggests younger children may not be as developmentally ready as their chronologically older peers
to learn in an instructional environment. Therefore, it is required that every child attains a minimum
age of five before starting kindergarten. The reason for this is to allow for maturity, development
of stamina and capacity for socio interaction, all of which are developed during the pre-school
The Canadian educational system adopts a play based teaching approach for kids at this
stage, it is well-known nowadays by the term Edutainment. This is to help develop potential
benefits on peer socialization, school readiness, and numeracy and language skills. Also, a growing
body of child development researches, neuroscience, and program evaluation demonstrates that
high-quality early childhood care and education programs improve school readiness and later
Economic Returns to Investment in Education 60
outcomes for young children (Demma, 2010). This has been a fundamental building block for
Canada educational system. This helps the kids from a very early age to develop social skills and
boots their confidence, learning capacity, awareness and creativity. All of these have been seen to
positively impact the growth of the educational system and ultimately promoting economic growth
in Canada overall.
On the other hand, in Saudi Arabia, education has four major characteristics: emphases on
Islam, a centralized educational system, separate education for women and financial support. Islam
is the core of most of the curriculum. The centralized educational system for both women and men
is under the purview of the ministry of Education. All schools at all levels utilize the same methods
of instruction, textbooks, evaluation techniques, curricula, and educational policy is the same
across the country. However, a few high-schools have a slightly different system that is also
Although women constitute 58% of all university graduates in Saudi Arabia, their
educational background still does not guarantee them a job after graduation. The Saudi education
system, unfortunately, limits women's access to labour markets and participation in the global
economy. However, recently the feminist movement in Saudi has put pressure to society and
government to make changes, and it paid off recently. The education system does limit gender
equality so in two ways. The first way is by restricting women's entry into certain fields of study.
Women are excluded from studying engineering (recently they have opened a few majors in a few
universities), journalism, aviation studies and architecture. Thus, such fields are reserved for men.
Economic Returns to Investment in Education 61
For decades, the lack of majors available for women has caused a shortage of the female
nursing, and public administration among some other professions. In some fields of study, such
as natural and social sciences, the number of female university graduates exceeds the number of
male graduates. In these areas women now represent a major and underutilized human resource,
(AlMunajjed, 1997). In conclusion, because of this system which is struggling by the slow process
of improvement and making core changes, women are not able to completely contribute to the
economic growth in Saudi Arabia. In another word, by limiting women's access to the labor market
through restrictions on certain areas of study and on access to certain jobs, education is not
preparing Saudi women for the global economy and is once again only helping to preserve the
socially accepted status quo. These have over the years negatively impact the contribution of
women to national economic growth and therefore undermined the huge amount of monies spent
on funding education.
The current educational system in Saudi Arabia which limits womens access to the labour
market and by not preparing men for the reality in the global market and thereby creating the need
Also, apart from the limitation for women education, the Saudi government education
curriculum is different from what is obtainable in Canada in many ways: The school starting age
in Saudi Arabia was recently increased from 3 to 4 years in 2014 (Francis, 2014). Children aged
enrollment of first grade of primary education and kindergartens are not part of the official
Economic Returns to Investment in Education 62
education ladder. Some private nurseries have been established with technical and financial aid
from the government. According to government data, 100,714 children (51,364 male and 49,350
female) are in pre-primary education in 2007 and this represents an enrollment rate of 10.8%, for
boys 11.1 and 10.4 percent for girls. These figures are low compared with the enrolment rate in
Canada. According to Statistics, more than half (54%) of parents with children aged 4 and under
The impact of gender segregated schools in the Saudi Arabia educational system is also
having a negative impact on educational outcomes. In Saudi Arabia, the Shari'a (Which is a
reflection of understanding Islam) is embodied in Saudi education programs, and the goal of
education is to instill in Saudi society a particular vision of the moral and religious life This is
true and many people are not satisfied with its result and consequences over the years.
At universities level, students, for both genders, do not pay tuition for all majors available in
government universities, which is most of the preferred universities in Saudi. Moreover, there is a
monthly pay that is provided for every student by the education ministry and the government to
help students cover their needs and academic requirements. This salary is equal to about $350 CDN
every month, it helps students to at least cover the basic academic and living needs.
Besides the previous point, the students-houses provided for universities students in main
cities are also very discounted to help students save some money while studying. The average cost
for students habitats every semester is about $350 CDN. These financial advantages help students
to focus more on studying rather than working to provide a basic living cost. The pressure of
Economic Returns to Investment in Education 63
providing funds to study and for university materials is almost none. By this, most Saudi students
The volunteering experience is something that the Saudi Education system needs to consider.
As there is a requirement of voluntarily hours from every student in Canada to enroll into
universities, the Saudi system needs to benefit from this experiment as it helps in increasing the
social responsibility to students, and then as a result, more outcomes would be provided to the
community.
When taking about the major advantages of the Saudi education system, King Abdullah
Scholarship Program is a key in this regard. It has created more higher educated people and
empowered more women by education and varieties of majors that wasnt allowed before. The
program is still progressing, and more students are provided with better international education.
The youth generation, overall, is well-educated, from different reliable universities around the
On the negative side, the system in Saudi Arabia does not have a clear discrimination policy in
schools, this did not help in decreasing the bullying level. In universities, there is no appeal
process system in which students can seek justice if they face discriminations or oppression from
faculties. The ministry should implement such a system to apply justice over universities.
Talented Students are supervised, monitored by King Abdulaziz and His Companions
Foundation for Giftedness and Creativity. It is a national cultural foundation that is honored to be
Economic Returns to Investment in Education 64
presided over by the Custodian of the Two Holy Mosques who supervises it directly and
continuously. According to their official websites, the foundation vision is: For the Gifted and
Creative to become the most important contributors to the Nation and its Prosperity. And the
mission is: We contribute to building a national framework for giftedness and creativity, we
provide outstanding care to the gifted, and we promote excitement for science and knowledge.
(http://www.mawhiba.org.sa/en/AboutKacgc/Pages/Vision.aspx)
Part of the recommendation to Saudi education system, is that if the government can own and
creates more private educational sectors, and indicate its returns to the government, that would be
great and would make more financial returns. As it has been proven according the literature review
that returns on private educational sectors are greater than public sectors.
There was a statement made by the ministry of education in July, 2017. It states that fitness
classes are going to be available for women and it is expected to take place the year after. However,
adding fitness classes was an issue discussed for many years before. This small story tells us that
the decisions are been made in a very slow-cycle system. This slow movement on the education
solutions overall is going to affect the education improvement for the long term. It is understood
that due to social traditions, such a decision needs to take time to process, but again, real
https://www.moe.gov.sa/ar/news/Pages/edu-sport.aspx
International Education: Canada is a home for thousands of international students who come to
Canada for the purpose to seek quality education. This has continuously improve the sustenance of
Economic Returns to Investment in Education 65
quality education in Canada. Existing literatures have shown that there is a positive value
associated with international students coming to study and staying in Canada. A study by Roslyn
Kunin in 2014, which looked at the economic impact of foreign students in Canada revealed that
about $11.4 billion was spent on tuition, accommodation, and discretionary spending (Associates,
2016).
The literature revealed that after accounting for the Canadian scholarships and bursaries, total
annual expenditure of international students including their visiting families and friends,
contributed almost $11.4 billion to the Canadian economy in 2014. This translates to $9.3 billion
in GDP contribution to the Canadian economy. This $9.3 billion figure includes $6.7 billion
contribution to GDP in direct value-added associated with tuition, food, and accommodation, and
$2.6 billion in indirect value-added associated with firms supplying goods and services to the
Also, this inflow in to the Canadian economy translates to the creation of about 122,700 jobs
(equivalent to 104,100 FTE).This spending by international students represents revenue for goods
and services from overseas and amounts to about 11% of Canadas total service exports to the
world
Looking at this on a provincial level, Ontario, with the largest number of students, followed by
British Columbia and Quebec have significant economic contributions. Ontario shows the largest
contribution to GDP at $4.4 billion (47.3% of $9.3 billion), followed by BC with 23.4%, and
additional $919.4 million per year in total spending to the Canadian economy. This represents
about $697.8 million contribution to GDP, and supporting 8,100 jobs (or equivalent to 5,900
FTE jobs).
Using a total impact approach (including direct, indirect, and induced impacts) to account
for the $11.4 billion international students spending, we estimate a much higher contribution
of around $12 billion to Canadas GDP, and support for around 152,700 jobs (Associates,
2016).
Saudi-Arabia as the largest Arab country boasts of about 25 public universities and 65 private
colleges, as well as many technical colleges with over 71,000 international students mainly
from Yemen, Syria, Egypt, Palestine and Jordan. Saudi-Arabia even though spends about 23%
of its annual budget on education does not in return get as much economic impact of this huge
spending on its GDP as Canada due to the less attractive education to students and people across
all continents as such Saudi Arabia does not get as much international students as much as
Canada.
Economic Returns to Investment in Education 67
RESEARCH CONCLUSION
The data analysis has shown that there is, overall, a strong and positive relationship between
the expenditure on education and the economy growth. When countries expend more on education,
the GDP would increase, HDI would go higher, and people life quality would be bettered out.
Countries which take a special care for education would be among the best countries in terms of
healthy life, strong economy and life expectancy. In this research, it has been found that, in both
Both Saudi and Canada education is improving and changing, but the Saudi system needs
to implement the success in the Canadian system to overcome future difficulties and challenges.
These changes require fast decisions need to be considered regarding early childhood, gender
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Arthur, C. (2012). Financial Literacy Education for Citizens: what kind of responsibility, equality
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Baki, R. (n.d.). Gender-Segregated Education in Saudi Arabia: Its Impact on Social Norms and
Barnett, W. S. (2008). Preschool Education and its Lasting Effects:Research and Policy
Implications.
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