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ECONOMIC VALUE OF EDUCATION Education as Investment Education in the traditional view for decades understood as a form of social services to be provided to the public, in this context of education services as part of the public service or public service to the community of nations that do not provide a direct impact on the economy of society, so that educational development is not attractive to be the theme of the attention, his position does not attract attention in the construction steps. Opinion of the education sector development is precisely the sector that is consuming the budget without any obvious benefits (especially economically). Such a view is to bring people to doubt and even distrust of education sector development as the foundation for the progress of development in all sectors. This uncertainty manifests itself in such small budget commitment to the education sector. Allocate a budget for the education sector is considered a waste of money that is not useful. As a result, the budget allocation education sector usually remaining after the others first. The way this view is now beginning displaced in line with the finding of the thought and scientific evidence of the role and vital function of education in human understanding and position as a major force as well as a prerequisite for the progress of development in various sectors. The concept of education as an investment (education as investment) has developed rapidly and increasingly believed by every state that the development of education sector is a key prerequisite for the growth of other development sectors. The concept of investment in human resources (human capital investment) that can support economic growth (economic growth), has actually started to think about since the days of Adam Smith(1776), Heinrich von Thunen (1875) and other classical theorists before t he 19th century that emphasized importance of human skills investment. This new scientific ideas take an important milestone in the 1960's when a speech Theodore Schultz in 1960, entitled "Investment in human capital" in the face of the American Economic Association as the location of the basic theory of modern human capital. The main message of the speech was simply that the process of acquiring knowledge and skills through education is not a form of mere consumption, but also an investment. Schultz (1960) then noticed that the education sector to human development as its core focus has contributed directly to a country's economic growth by improving the skills and production capabilities of its workforce. Discovery and outlook have prompted interest in a number of experts to examine the economic value of education. The main reason of this change in outlook is the growing interest and interest during the 1960's the economic value of education. In 1962, Bowman introduces a concept of "human investment revolution in economic thinking”. Other researchers such as Becker (1993) and others participate in the testing of this theory of human capital. These developments have affected the pattern of thought of various parties, including governments, planners, international institutions, researchers and other modern thinkers, as well as the executor in the education sector development and human resources development. In developed countries, in addition to the aspects of consumer education is also believed to be an investment in human capital (human capital investment) and a "leading sector" or one of the major sectors. Hence the government's attention to the development of this sector in earnest, for example, the political commitment of the education budget is not inferior to other sectors, so the success of educational investment is correlated with macro development progress. In the 1970s, studies on the relationship between education and economic development had stalled because of the emergence of doubts about the role of education to economic growth in some countries, particularly in the United States and developing countries that receive aid from the World Bank at that time. This doubt arises, in part because of criticism among educational sociologists Gary Becker (1964, 1975.1993) says that the human capital theory emphasizes this dimension of human material so that less human than take into account the socio-cultural dimensions. Becker’s criticism would open the perspective of the philosophical belief that education is not well calculated solely as an investment but it is more economical than the social, cultural oriented human dimension is more important than economic investment. Because education must be made by the related cause of humanity itself (human dignity). Some others neoclassical studies, can reassure the importance of scientifically educated people who are directly supporting economic growth across all sectors of development that other macro. On the basis of scientific belief that eventually the World Bank re-realizes the program of international assistance in various countries. Contribution of education to growth is becoming increasingly stronger after taking into account the interaction effects between education and other physical investments. That is, physical capital investment will double the value added in the future if done at the same time also human resource investment, which will directly be doers and users in the physical investment. Now recognized that a country's human resource development is an essential element for prosperity and growth and for effective use of physical capital resources. Investments in human capital are an integral component of all efforts development. Education must include a broad spectrum of social life itself. Trackbacks Value of Education Human resource development through education contributes directly to economic growth, and hence expenditure on education should be viewed as a productive investment and not simply seen as something that benefits the consumer without a clear reversal (rate of return). A number of relationships have been tested in the framework of the conclusions. For example, the World Bank study of 83 developing countries showed that in the 10 countries that have the highest real growth rate of GNP per capita between 1960 and 1977, the state literacy rate in 1960 averaged 16 percent higher than other countries Also been described that investment in education has a direct impact on individual productivity and earnings. Most evidence comes from agriculture. Studies of farmers who are educated and the uneducated on low-income countries show, when the inputs like fertilizers and seeds are available for farming techniques better, the annual yield of a farmer who is not educated. Although this input is less, the income of the farmers who remained highereducation 8 percent (World Bank, World Development Report, 1980). The role of women in nurturing and raising children is so important to make education for girls to be very meaningful. The studies showed a significant correlation between the level of maternal education and child nutritional status and life expectancy. Furthermore, health benefits and better nutrition and lower fertility rates caused by other investments in other development sectors. Another study by the World Bank and conducted for the World Development Report presented in 1980 to test the estimated economic rate of return (rate of return) to investment in education in 44 developing countries. It was concluded that the benefits revert all levels are well above 10 percent. Various other studies always show that the relative value of human capital reversal is greater than physical capital. There is no country in the world that is progressing rapidly with the support of low-educated human resources. So if we do not expect to make progress with the development of human capital (education sector) as the main prerequisite, it is the same as "the bird missed the moon". Problems of Education in Indonesia According to Prof. Dr. Dodi Nandika (2005), Secretary General of the Ministry of Education, in his lecture at the Postgraduate Student Administration Education Program UPI Education, argued that the problems and challenges facing the field of education in Indonesia, among others: 1. Relatively low level of public education 2. The dynamics of changes in population structure has not been fully accommodated in the development of education 3. Inequality of education levels 4. Good Governance is not running optimally 5. Facilities are not adequate educational services and equal 6. The quality of education is relatively low and has not been able to meet the competencies of students 7. Higher education still face obstacles in developing and creating science and technology 8. Management education has not run effectively and efficiently 9. Development budget has not provided adequate education. The above problems are the problems faced by many developing countries including Indonesia. The role of education when examined in the economy, it will contribute to the role of government and society to the impacts will be experienced by the country of Indonesia in the long term future with the development of education as a basic policy of the country's development. In the 2005-2009 Strategic Plan of Ministry of Education, emphasized the role of education improvement effort: 1. Expansion and Equitable Education 2. Quality and Relevance of Education and 3. Governance and Accountability. The third program is an effort for the development of education equally to all parts of Indonesia, that left behind in the field of human resources quality improvement can be improved so it is not left behind by progress among Asia Pacific countries. Economic Value of Education According to Ari A. Pradana (2005) cites the opinion of Professor Joseph Stiglitz, in Jakarta "Provide the best education possible and can be achieved easily by all citizens", said Nobel Economics laureate, as fit on a daily Kompas (12/15/2004). Stiglitz posed this question when responding to questions about what kind of economic policies necessary Indonesia. He also commented that the question of education is one of the blunders of neoliberal policies adopted by Indonesia. The role of the technical language of education in human capital (human capital) in economic growth are not too long into the literature of economic growth theory. Presented by Ari A. Pradana confirmed the opinion of Lucas (1990) and Mankiw, Romer, and Weil (1992) which revised neoclassical growth theory of Solow (1956) is legendary. In his studies, they showed that the standard Solow theory can only explain how a country's economy could grow, but not enough to explain the level of per capita income gap between countries in the world. Only when the human capital variables included in the calculation, some of the gap can be explained. However, a number of mysteries remain. Level of education in developing countries actually have increased dramatically in the years 1960- 1990.Easterly (2001) showed that the median primary school enrollment rate increased from 88 percent to 90 percent, while for secondary schools from13 percent to 45 percent. Furthermore, if in 1960 only 28 percent of the world's primary school enrollment rate reached 100 percent in 1990 to more than half. In fact, the increase of the level of education in developing countries does not explain the performance of economic growth. Take the example of Africa. Between the years 1960 to 1985 the growth rate in the continent's schools by more than 4 percent per year. In fact, the economies of countries in Africa grew only 0.5 percent per year. That, too, because there are “economic miracle" in Africa, namely Botswana and Lesotho. Most other African countries actually recorded negative growth in that period. Senegal experienced an extreme case of having school enrollment growth of 8 percent per year, but has a negative economic growth. In the same period the East Asian countries experienced economic growth rate higher than the growth in school enrollment. However, the differences were not many, only 4.2 percent compared with 2.7 percent. That is, if education is the secret to economic growth; the difference should be much larger. Besides cannot explain the performance of economic growth, education also failed to explain the phenomenon of growing inequality in income percapita. Pritchett (2003) showed the degree of convergence between countries in the world of education. Throughout 1960-1995, the deviation standard in education level fell from 0.94 to 0.56. But, at the same time, the standard deviation for income per capita across countries increased from0.93 to 1.13. The basic assumption in assessing the contribution of education to economic growth and reduction of educational inequality is increasing worker productivity. If the increased worker productivity, economic growth will increase. On the other hand, rising productivity means rising incomes. Alwaysassumed that the benefits of education increase in the aggregate will be greater for the poor. Thus, if the level of education increases, the income of the poor will also grow faster and eventually inequality will shrink. The problem, such assumptions cannot always be generalized. The benefits of education in terms of productivity and income of workers increases apply only to certain types of work. As a result, increase the level of education is not necessarily beneficial to the growth and equity. Especially if we talk about the benefits of education for the poorest groups. Studies of Foster and Rosenzweig (1995) regarding the impact of education on farmers in India during the green revolution can give some idea. Agricultural sectors in countries such as India (also Indonesia) are very relevant in the discourse of economic development because the majority of the population, including those that fall into the poorest, there is in this sector. In these study farmers who have a basic education is far more productive than those without school. However, there was no significant difference between a secondary education and basic education only. In addition, in areas of natural and geographical conditions of ugly, productivity is often determined more by experience, not education. For farmers in places like this, go to school but not very useful, it also makes them lose so many years of experience working in the fields. One could argue either; with education a person may experience social mobility. They do not have to continue to be farmers and the poor if we could get an education. That's the problem. In many other developing countries for social mobility is not always possible. In India caste is one of the barriers to social mobility, in addition to many other obstacles. In countries such as Indonesia, corruption is entrenched down to the reception staff could be another reason why social mobility is relatively difficult. Specific Economic Intervention in Education Argument that education and educational policy is not beneficial to the prosperity of a country. This is completely unfounded opinion is impairs. The message is there are many other things that lead to the positive contribution of education is not very big in promoting economic growth and equity in other words, education is not a magic spell. Consequently, government intervention in this field should also be done carefully. Form of prudence is not stuck to measure the magnitude of the role of government budget allocations for education. Budget is important, but not on how much, but planned to use for what, why and how. In some developing countries in Asia that although most teachers are paid too low, from the ADB study said that an additional budget for buildings and equipment results in greater improvement of education quality. In terms of the level of education where the budget should be allocated, Booth (2000) writes that in Indonesia in 1980 to 1990's World Bank report that is too large government subsidies for higher education led to growing inequality. The reason, college graduates are the most benefited from the economic boom during that period. In addition to the budget problem, the level of education in a country may face another problem outside funding. Here are the specific needs of government intervention to address those problems. For example, in Kenya found that the low quality of basic education due to lack of nutrition of primary school pupils due to intestinal worms. Distribution of worms bat for primary school students was more effective in improving the quality of education there. In conclusion, there is no government policy that can be universally predictable in all countries. This is the core of the populist critique of neoliberal policies. This is the opposite also applies, no populist policies that apply universally. And not everything can be solved with a bigger budget. According to Mohammad Ali (2005), Malaysia proposed that the high progressing the development of human resources, as in the reign of Prime Minister Mahathir Mohammad, has launched the future development of human resources by investing in a high enough rate of 28 percent of state budgets, and PM Mahathir administration that runs for 17 years. Looking at these successes, the country of Indonesia to the 1945 Constitution as amended to mandate the government to establish the education budget 20 percent of the state budget as set out in Article 31 Paragraph 4. Investment in human resource development is a long process and to support the success of such planning, education and training should be used as a benchmark to build a country. But the study described as a horse-drawn carriage, which means that the success of the educational process is the contribution of labor across sectors, namely industry, economy, culture and so forth.
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