What would ensuring every child obtains universal basic skills mean for world development?

Investing in universal basic skills could boost the global economy by $718 trillion, new research finds.

Report by CAGE Research Centre Intern Umar Hamid

Universal basic skills are fundamental competencies that individuals need to effectively participate in modern economies and societies. These skills encompass literacy, numeracy, critical thinking and problem-solving. Despite the significance of basic skills, global statistics reveal widespread shortcomings. According to the study, at least two-thirds of the world's youth, lack proficiency in basic skills, posing a significant global challenge. Analysis suggests that the present value of lost world economic output due to missing the goal of global universal basic skills amounts to over $700 trillion over the remaining century.

In the pursuit of inclusive and sustainable global development, ensuring that every youth possesses basic skills is not just a goal but a foundational necessity. Embedded within the United Nations' Sustainable Development Goals (SDGs) is SDG 4, which places emphasis on the importance of quality education for all (UNESCO, 2021). While the challenge of low learning levels has been well-documented in certain low-income countries, there is a lack of comprehensive international data on the global shortfall. In Global Universal Basic Skills: Current Deficits and Implications for World Development, researchers Sarah Gust(1), Eric A. Hanushek(2) and Ludger Woessmann(3) set out to address two intertwined questions: How close are we to reaching the foundational goal of basic skills for all? And what would it mean for world development to reach global universal basic skills?

Leveraging individual-level test data from various international and regional student assessments, the researchers developed reliable cross-country skill measures. This extensive dataset enabled a detailed examination of skill deficits across diverse regions and income levels on a global scale. A key aspect of the methodology involved combining disparate international tests to create a common standardised achievement scale. Specifically, student-level achievement from different tests was transformed into a ‘PISA’ equivalent score, maintaining minimal constraints on underlying score distributions. This harmonisation of scores allowed for reliable estimates of skill deficits, even in countries with limited assessment data.

The Programme for International Student Assessment (PISA), serves as a cornerstone of this methodology. PISA assesses the performance of 15-year-old students in mathematics, science, and reading literacy, providing valuable insights into educational outcomes on a global scale. Countries participating in PISA, along with those in regional tests such as TIMSS, TERCE, and SACMEQ, contribute to the robustness of the study's findings. To ensure data reliability, the researchers categorized information into five layers of decreasing reliability, reflecting varying degrees of certainty and precision in comparability.

Overall, the researchers found that two-thirds of the world's youth fall short of basic skill levels. Regional disparities in skill attainment are also stark. The researchers note six key findings:

1. At least two thirds of the world’s youth do not obtain basic skills
2. The share of children not reaching basic skills exceeds half in 101 countries and rises above 90% in 36 of these countries.
3. Even in high-income countries, a quarter of children lack basic skills.

4. Skill deficits reach 94% in Sub-Saharan Africa and 89% in South Asia but also hit 68% in Middle East and North Africa and 65 percent in Latin America.

5. While skill gaps are most apparent for the third of global youth not attending secondary school, fully 62% of the world’s secondary-school students fail to reach basic skills.
6. Half of the world’s youth live in the 35 countries that fail to participate in international tests and thus lack regular and reliable foundational performance information

When addressing the question of what it would mean for the world to reach a global universal basic skill level, the paper offers three strategies with analysis based on historic growth patterns to estimate their impact on GDP.

• Scenario I estimates the impact of equipping all current students with basic skills, striving to establish a minimum quality standard across all schools (PISA Level 1). By uplifting those currently lagging, this scenario directly addresses income-equalising objectives while bolstering overall economic development.
• Scenario II estimates the impact of achieving full participation in school at the current quality levels, with a particular emphasis on reaching children who do not currently attend school. While broadening access to education, this scenario does not address quality standards of schools.
• Scenario III estimates the impact of combining both scenarios, aiming for full secondary school participation with every student attaining basic skills. This scenario offers a holistic approach to addressing skill deficits and fostering inclusive economic growth, targeting both quality and participation.
  

The projected outcomes of these reform scenarios are significant, with each scenario anticipating substantial economic gains over the coming century. Notably, the benefits from improving the quality of education in schools for those children currently attending, ie, achieving PISA Level 1, are twice as large as Scenario II, which aims to enrol all children in schools at current levels of achievement. The fact there are greater returns from improving standards in education for those who currently attend rather than striving for universal attendance suggest that attendance at low-quality schools will not solve the problem of missing basic skills. The estimated gains from each scenario are as follows:

• Scenario I - all current students attain basic skills could yield an added world GDP of $356 trillion, equivalent to 2.6 times the current annual world GDP.
• Scenario II - full school participation at existing quality levels presents a slightly lower value at $176 trillion.
• Scenario III presents the most substantial gains, where all children are in schools that are delivering at least universal basic skills, could boost future world GDP by $718 trillion, over five times the current annual GDP.
  

The economic case for achieving global universal basic skills is staggering. The projections reveal that the world stands to gain an astonishing $718 trillion in added GDP over the remainder of this century if it can bridge the skill gap. This figure, equivalent to over five times the current annual world GDP and 11% of discounted future GDP, dwarfs the $161 billion in Official Development Assistance provided in 2020.

While the analysis offers the first global picture of the distribution of basic skills, there remains significant uncertainty, particularly for the neediest countries that do not participate in international testing. These nations lack crucial information about their current skill levels and whether their schools are improving or not by international standards. Implementing a regular, internationally standardised test for representative student samples in the Global South could provide policymakers with the data needed to devise suitable policies, much like PISA has done for richer countries.

The COVID-19 pandemic has further exacerbated the challenge, significantly disrupting educational outcomes for current student cohorts. Learning losses from school closures and reluctance to return to the classroom are likely to persist, with mounting evidence suggesting disproportionately severe impacts on poor children in both developed and developing economies. Recovering from these setbacks adds urgency to the reform mandates outlined in the research. Achieving global universal basic skills is not just a moral imperative but an economic necessity. With potential gains surpassing $700 trillion, the case for investing in skill development and closing the global education gap has never been stronger. Through its analysis CAGE working paper 643 underscores the immense economic benefits that await if the world can rise to this challenge.

References:

Gust, Sarah, Eric A. Hanushek, Ludger Woessmann (2024). Global Universal Basic Skills: Current Deficits and Implications for World Development. Journal of Development EconomicsLink opens in a new window 166: 103205.https://doi.org/10.1016/j.jdeveco.2023.103205Link opens in a new window

UNESCO (2021). Global Education Monitoring Report 2021/2: Non-State Actors in Education - Who Chooses? Who Loses? Paris: United Nations Educational, Scientific and Cultural Organization.