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A visit to Asia is always bittersweet. I am amazed and seduced by Asia’s enormous success. And to be honest, it also makes me a bit envious.
I am especially impressed by their focus on the quality of education.
On a recent visit to Japan, a University of Tokyo professor told me that one of the major differences between our countries is the attention paid to public higher-ed. He said that many Asian countries have not only invested in establishing public universities, but have also worked to ensure that this education is of the highest quality – according to national and international standards.
The professor in this story basically pointed out the sore spot of our differences.
In contrast to our international peers (especially Asian ones), the quality of universities in our region comes up short. Latin America has no schools listed within the top 100 universities of the 2012 Academic Ranking of World Universities. The region claims just 10 of the top 500 universities, whereas Asia has seven universities among the 100 best and 88 among the top 500.
In light of these dramatic figures, the success of Asian economies in the competitive global economy is not surprising, nor is their incorporation into the most productive value chains, especially technology.
So what is going on in our neck of the woods?
Let’s look at the good news first. In recent decades, Central American countries have managed to achieve macroeconomic stability and to reduce barriers to trade and foreign direct investment. As a consequence, the region has enjoyed moderate growth rates, with controlled inflation and a significant increase in exports.
Not enough jobs
But Central American countries have not achieved similar success in increasing the number of formal, productive jobs.
Currently, most of the jobs in the region are in the traditional sectors of manufacturing, services and low-productivity agriculture. Except for Costa Rica and Panama, growth in Central American exports since the 1990s has been sustained mainly by commodities requiring intensive, low-skilled manual labor.
The study Better Jobs in Central America finds that Central American countries need to increase production and export of value-added commodities to stimulate the generation of formal employment with high productivity and significant use of skilled manual labor. This brings me back to the University of Tokyo professor.
Central America’s response to this challenge involves increasing the supply of human capital with the necessary skills to take up those jobs. To this end, improvements in higher education are vital for the region’s progress.
Currently, educational achievement remains relatively low in Central America. The percentage of the population enrolled in higher education ranges from 15 percent in Guatemala and Honduras to nearly 50 percent in Costa Rica and Panama. However, all these countries have low graduation rates: almost half of students do not complete their studies.
Today the region has a small number of highly-skilled workers capable of adopting and adapting to new technologies in production processes. With the growing importance of technological innovation as a driver of productivity, scientific and technological knowledge has become indispensable in an increasing number of sectors, including construction, transportation, logistics, tourism and health.
Betting on the future
Central America needs to integrate science, technology and engineering into production processes across business –and not just the large ones. This can only happen if educational services in science and technology are expanded, including in cutting-edge fields such as bio- and nanotechnology. This should be Central America’s bet for the future.
In the region, there is a decisive interest in discussing the challenges associated with higher education. For example, participants at the conference “Engineering and Applied Sciences in Central America: How to Develop the Next Generation of Innovators?” saw the need for universities to establish partnerships and to participate in global university networks to strengthen educational services in science and technology.
But none of this will happen by itself. Complementary policies are also needed to help producers and workers move up the value chain, diversify the productive structure and bolster knowledge and technical capacities to make existing activities more productive. Here it is crucial to strengthen education quality, expand secondary education to increase completion rates and improve the quality, relevance and reach of vocational training for youth and adults.
In addition to increasing the level of human capital of the labor force, higher education offers substantial advantages for graduates. In all countries of the region, a worker who has completed a tertiary education earns about 200 percent more than a secondary-school graduate does.
By implementing policies to build a skilled labor force and to generate more and better jobs, Central America will take a step forward in its fight against poverty, inequality and exclusion.