Working Paper Series: Special Edition of 2016 to 2018 Interns

education. These benefits occur at the micro and macroeconomic levels and interact in a multiplicity of ways.

The prospect of education achieving the desired economic outcomes rests crucially on a number of factors such as quality (linked to the efficiency of expenditure in the sector), the percentage of educated that joins the labour force (linked to the demand for labour and the brain-drain phenomenon), and wage levels, among others. The first two hold particular relevance for this study given the dynamics of the education sector and economy of St Vincent and the Grenadines, which has evolved from a largely agrarian composition. A 2009 European Commission Study on the efficiency of public spending on education using a two-stage semi-parametric methodology and stochastic frontier analysis found that public spending on tertiary education is more effective in achieving improved productivity when that spending is efficient. In Bangladesh, Azad (2010) found that the higher the efficiency in education both in secondary and tertiary sectors, the higher is economic growth. In the Caribbean, Jules (2009), di Gropello (2003), and Miller, Jules and Thomas (2000) have all spoken (at least in part) to the importance of efficiency in education with respect to realising development objectives. Mankiw, Romer and Weil (1992) argue that in the absence of technological progress, to maintain positive growth in the long run, the educational attainment of the population must increase continuously. Studies have investigated this relationship both from a theoretical and empirical basis with mixed results. Lim (1996) notes that education contributes to economic growth in six ways: (i) improving the quality of the labour force by imparting skills and work knowledge; (ii) increasing labour mobility and therefore promotes the division of labour; (iii) enabling new information to be absorbed faster and unfamiliar inputs and new processes applied more effectively; (iv) improving management skills which leads to a more efficient allocation of resources; (v) removing many of the social and institutional barriers to economic growth; and (vi) encouraging entrepreneurship by promoting individual responsibility, organisational ability, risk-taking in moderation, and planning over the long-term.

202