ECONOMICAL FACTORS AFFECTING EDUCATIONAL PLANNING

ECONOMICAL FACTORS AFFECTING
EDUCATIONAL PLANNING
BY QURAT-UL-AIN NAEEM, UOK.
Index
i. Introduction1
ii. Economic Factors1
iii. Educational Planning 1
iv. Economical Factor in Education Planning 2
v. Basic Economical Concept in Educational Planning 3
vi. Applications of the Concepts to Educational Planning5
vii. Importance of Economic in Educational Planning 5
viii. Some Characteristics of Education in Economic Analysis 7
ix. Weaknesses in the Economical Factor Influence 9
x. Economical Statistics Analysis in Educational Planning 9
xi. Related Researches 9
xii. Conclusion 10
xiii. Bibliography 11

1. INTRODUCTION
Education economists analyze both what determines or creates education and what impact
education has on individuals and the societies and economies in which they live. Historically at
the World Bank a great deal of emphasis has been placed on determining outcomes to
educational investment and the creation of human capital. The primary mission of the economics
of education group is to identify opportunities for improved efficiency, equity, and quality of
education and promote effective education reform processes; to help improve, knowledge of
what drives education outcomes and results; to better understanding how to strengthen the links
of education systems with the labor market; and to build and support a network of education
economists and build bridges to all those who are interested in their work.
2. ECONOMIC FACTORS
Stability of the economy across the globe, and trends such as consumer behavior, general
taxation issues, interest and exchange rates all impact upon every sector of society and education
is no exception.
According to JISC info Net (JISC info Net 2009),
“Economic factors are likely to include: funding mechanisms and streams;
business and enterprise directives; internal funding models; budgetary
restrictions; and income generation targets”.
The PESTLE investigation revealed that the current economic recession, together with increasing
consumerisation and international markets were the principal economic factors affecting the
educational sector.
3. EDUCATIONAL PLANNING
Educational planning is an activity which demands the deployment ofmany diverse skills. It calls
for the services of administrative officials, academic educationists and practicing teachers,
economists, sociologistsand statisticians and many other kinds of specialist. The value,the
feasibility and the ultimate success of any education plan willdepend largely on the team spirit
displayed by the planners.Educational planning is an activity which demands the deployment
ofmany diverse skills. It calls for the services of administrative officials,academic educationists

and practicing teachers, economists, sociologistsand statisticians and many other kinds of
specialist. The value,the feasibility and the ultimate success of any education plan willdepend
largely on the team spirit displayed by the planners.
4. ECONOMICAL FACTOR IN EDUCATION
PLANNING
Why does educational planning require any study of economics? Without meaning
to suggest that other subjects don't have relevance for educational planning‟s it
must nevertheless be said that without at least some familiaritywith economics it is
very difficult to plan education. Certainly one canplan much better knowing
something about economic concepts and techniques.Planning of any kind is
basically the endeavor to work out how toachieve the maximum possible with the
resources available. Fundamentally, economicsis the study of how people and
perhaps more important for ourpurposessociety.Choose to allocate the resources at
its disposal in orderto achieve its chosen objectives. The important point in
common between these two descriptions of planning and economics is that in both
cases wetalk about using limited resources to achieve certain objectives.
Thisobviously has the implication that there is something fundamental to both,and
we shall see how any kind of planning is only an especially disciplinedexample of
economic behavior. As there are unsatisfied objectives it is necessary tomake such
choices which are economic in character in order to achieve asfar as possible the
desired objectives. This economic characteristic of behavior applies not just to
financial matters but to all kinds of everyday behavior. The basic point here is that
economics is about scarcity andthe implications of this fact of scarcity for our
everyday behavior.The various reasons why government is interested in spending
moneyon education are well-known. There is public demand to be satisfied, thereis
the need of the economy for skilled and qualified manpower, and there isa built-in
momentum of the educational system itself, such that once it isestablished it has to

be maintained,All of this is true and it provides apowerful set of reasons for
spending money on educationWithin the educational system choices have to be
made in the firstplace between spending more on primary education and less on
secondaryor perhaps more on higher education, This is an economies choice
because, for example it is more expensive to expand secondary education by a
givenamount than it is to similarly expand primary education. Secondary
educationneeds better qualified teachers so they have to be paid higher wages
orsince more equipment is needed in a secondary school than in a primary school?
The school becomes more expensive. Also the educational system itself hascertain
built-in limitations. Thus secondary education can only be expandedas fast as
additional teachers can be provided for it and of course there islimited capacity for
teacher training, Here again another economic element comes into decision
making. However it is not only economic factors which affect this decision-
making. There is very strong public interest in education and the publicmay want
certain kinds of education and be perhaps less interested in others so this has to be
taken into account in making decisions on how todevelop the educational system.
Similarly, once educational facilities arein operation they usually have to be kept in
operation and this necessitatesrestricting part of the resources allowed for
education to maintaining what already exists, therefore there is less available for
futureexpansion and this in turn is another limitation on the freedom of decision,
on the economic choices
This comes down to recognizing that although it is not only economicinfluences
which affect our educational choices all these decisions on education these
planning decisions, partake of the basic characteristic of economics namely, the
need to make choices within the limitations of scarceresources, Thus it can be said
that planning is only a specially disciplinedtype of economic decision where we
have particular objectives inmind.

5. BASIC ECONOMICAL CONCEPT IN
The basic point is to show how economics isprimarily interested in studying the question how we
can make better useof the resources available in education and also to recognize that planning is
aparticular technique for carrying this out, we begin toexamine some of the fundamental
economic concepts which are relevant tothe problem of making choices when we try to behave
economically. In particular we are going to look at savings and investment and also weshall have
occasion to refer to the concepts of production and consumption.
Investment
In economics investment refers only to net capital formation,i.e. the act of increasing of the
community stock of productive capacity. Thus an important aspect of investment is that it always
involves some kindof innovationIn the case of government the motives for educational
investment may be somewhat moreobscure and diverse. For example, much of government
investment is indeveloping educational services. These do not produce a physical product to
besold in the market, but they can contribute to the productive capacity ofthe community, e.g.
education expenditure potentially increases the skillof the labor force. This can help the
economic policies of the governmentand in turn improve its political position so we can see that
there is awide variety of possible motives for the government to choose to invest ineducational
system.
Saving
The concept of saving has a restricted meaning in economics by whichit excludes hoarding and
simply postponing consumption. We only count assaving that which involves withholding from
current consumption in order tohave more future consumption.In this case of educational sector
thereis an obvious motive for such savingrelating to the motives we have referred to in their
choosing to invest forincreased future profits.
Consumption
The concepts of consumption and productionsince these also have some importance in
educational planning.Consumption is a term about which not much needs to be said because
economistsuse the term consumption in much the same way as it is used in

everydayconversation, Consumption simply represents the disposal of the rest of income apart
from that which is saved, It is important to note that hoardingis included In consumption since
hoarding is only delaying the purchase ofgoods and services for current satisfaction, as explained
earlier.
Production
Production in the economic sense is the total output of goods andservices resulting from previous
investment.Taking example of this complexity from education, one of the objectivesof the
educational system is to produce trained teachers who can hence be regarded as part of the output
of the educational system. But trainedteachers are also a very important input in the educational
system because they help in the production of the qualified school leavers who are
anotherimportant output of the educational system. The point to be made here isthat it is
comparatively easy to assess the gross production of a countrybut it is much more difficult to
calculate the net production, since this involves excluding all products which are used in further
production asinvestments, because to establish net production it is only necessary to count the
value added at each stage of production.
6. APPLICATIONS OF THE CONCEPTS TO
Among the economic considerations of most importance for the preparation of an education plan,
are the following: Gross national and per capita income, by major economic sectors; Government
income and expenditure at all levels, showing sources of revenue and types of expenditure;
Retail price and other economic indices; Rate of production growth for the economy as a whole,
for the main economic sectors, and if possible, for different branches of activity; and by sectors
and branches; labor and trained personnel; personnel requirements and openings for employment
by levels of education. Volume of public and private investment, in total Manpower resources:
shortage or surplus of The foregoing data should be supplemented by a study of the objectives
and rate of execution of the national plan for economic and social development, and analyses of
selected special studies carried out for the purposes of economic planning which may provide the
answers to many of the considerations listed. Though close co-operation between economists,
educationists and sociologists is certainly desirable and productive at all stages of planning, this
is undoubtedly one of the phases at which it is most necessary, and mutual consultation,

discussion and exchanges of information should be arranged so that, when the time comes to
work out the answers, the necessary agreement can be achieved with relative ease.
7. IMPORTANCE OF ECONOMIC IN EDUCATIONAL
PLANNING
Education can be treated as both consumption and investment ifconsidered from the individual's
point of view. When someone receiveseducation it fits him in a wide variety of ways for what
can be called to use the simplest term a better life. He has greater access to culture, he can read
newspapers and so on, and this represents an increase in hisconsumption possibilities. But also
from this individual's point of view such education is an investment in that it provides him with
better qualifications for employment or better capacity to absorb further training. Inthis way he
can develop his future earning capacity and potentially hisliving standards as well. This is
considering education only from theindividual recipient‟s viewpoint, but investment in
educational developmentis also very important from the national point of view for economic
growth,mainly because of the possibility offered of increasing the supply of qualifiedmanpower.
These general comments on investment and consumption in relation toeducation are fairly self-
evident, but in going beyond them it is necessaryto recognize that the detailed application of
these concepts in educationalplanning has not been entirely successful so far. It has created a
greatmany problems for educational planners which are still far from solved. These concepts are
difficult to measure when used in relation toeducation, Thus although education has both
investment significance and aconsumption significance it is very difficult in practice to identify
onepart of education as having primarily the investment effect and anotherpart primarily the
consumption effect. Thus in making a choice betweendeveloping different types of education we
might ask what are the relativecontributions to economic growth of emphasizing technical and
vocationaleducation or emphasizing general secondary education. To put emphasis ontechnical
and vocational education may mean immediately a better supply ofcertain types of skilled
workers. But emphasizing general secondary educationmay improve pupils' capacity for and
their receptivity to furthertraining. In this way it may be possible to create a greater flexibilityin
the future labor force than if we only endeavor to train people veryspecifically for certain
technical positions. This indicates a fundamentaldifficulty in human resource development.The
significance of the production concept in educational planningrefers to our earlier example of the

characteristics of teachers in theeducational programmed, in that they are both an input and an
output. This can be extended to a further level if we consider the need to produce peoplewho will
staff teacher training colleges. They are an output of the educationalsystem but then they are also
an input which in turn will help create something else teachers, which is again both an input and
an output of thesystem. Thus the question of gross and net production can become quitecomplex
even within the educational system.This concludes our illustration of the applicability of some
basiceconomic concepts to the study of educational planning problems.
8. SOME CHARACTERISTICS OF EDUCATION IN
ECONOMIC ANALYSIS
Some special characteristics of education which affect its economicanalysis are:
a) The direct economic impact of education is upon the quantity andquality of occupational
skills, labor usually accounting for somethree quarters of national output, and education
being a major sourceof the productivity of labor. Education also has a direct impact on
the economy through increasing the stock of knowledge and ensuringits diffusion.
b) It can also have many indirect effects. It may raise the level of initiativeand inventiveness
of the population; it may improve consumptionpatterns, and may promote economic and
social mobility. The educationalsystem can serve also as an instrument of selection by
which asociety finds its leaders, entrepreneurs, administrators and techniciansand
improves their quality.
c) The demand for education may be divided for the purposes of analysisinto two parts: one
for production purposes, and the other forconsumption. W e uses our education to earn a
living, and we use it toenjoy the fruits of living. It is not easy to make this distinction
inpractice and we have also to note that both the individual and societyuse education as a
means of preserving and developing their valuesystems-a function which does not fall
under either production orconsumption in the economic sense.

d) The role of education as an item of consumption, and the fact thatit is treated as a social
item in national accounting has obscured thepart it plays as an economic investment.
Some economists haveattempted to distinguish between investment in technical
education asproductive and expenditure on general education as consumption.This
overlooks the fact that general education is a necessary prelude totechnical education, and
underestimates the role of the educationalsystem as economic infrastructure. Trade is
important as well asproduction, and grades such as clerks and accountants as well
asengineers are needed for economic development. It would seem thatthe whole of that
part of national expenditure on education whichresults in the raising of income can be
regarded as an economic aswell as a social investment.
e) Education requires a relatively long-term span for its returns to accrue, but it has a lower
rate of obsolescence than most physicalcapital. For planning purposes a time span of ten
to twenty years hasto be envisaged for the educational system as a whole. Quicker
resultscan of course also be achieved by influencing the students already inthe
„pipelines‟. Examples are special training facilities to youngpeople already in the
educational system; temporary adjustments ofcurricula and teaching methods; programs
of re-schooling byre-capturing people who have already passed out of the
educationalsystem. These can be effective provided the attraction of suchshort-term
yields does not result in neglect of the basic long-termfunctioning of the education
system since quality as well as quantityhas to be watched at all times. Choices have to be
made betweeninvestments in the various educational levels based on long-termcriteria in
respect of both quantity and quality.
f) The educational system is interlocked functionally with the socioeconomicenvironment.
The expansion of education is linked to theemployment situation, since people expect to
earn a living commensuratewith their educational attainments. And, being large
consumersof budgetary resources, educational systems are dependent upon thenational
administrative and fiscal systems within which they operate. Only by integrating
educational planning with over-allplanning can it be hoped to avoid the problems of „the
educationalunemployed‟ on the one hand and the shortages of trained cadreson the other.

The preferences of parents and pupils in the end governentry into the different available
types of education, however good theeducational guidance programmed may be, and it is
right that educationalplans should allow for the element of human choice as to thebest use
of one‟s talents. But it is necessary to provide incentives andladders to lead pupils into
priority occupations for the attainment ofthe development plan.
9. WEAKNESSES IN THE ECONOMICAL FACTOR
INFLUENCE
Economic factors are another major factor leading to school dropouts. The younger students
coming from the poor section of the society lacks the basic needs of livelihood, safety and
stability at home. Thus, many of them drop out of the school to support family and meet their
stomachs by the following means as:
Instability in family
Limited income or poverty
Price rise
Corruption
Lack of College Grants
Private Schools vs. Public Schools
10. ECONOMICAL STATISTICS ANALYSIS IN
The economic resources of a country are naturally of a decisive importance in all educational
planning. They are therefore extremely important for the integration of educational planning into
an overall economic planning for a country.
Gross national product, indices of economic growth.
Total public expenditure, by authority and purpose.
Institutions by level and type of education.
Teachers by qualification and length of service.
Number of teachers lost to the educational system each year for various reasons.

11. RELATED RESEARCHES
1. In 1958, the Inter-American Seminar on Overall Planning for Education, held in
Washington and sponsored jointly by Unesco and OAS in pursuance of the
recommendation of the meeting of Minister of Education, made a powerfully reasoned
declaration of the need for overall planning of education in America. Particularly
significant is the same Seminar Is recommendation that a Conference on Education and
Economic and Social Development in Latin America be held,
"In order to consider, on a basis of adequate scientific studies, the relationship
between education and social and economic development, the better understanding
of which will be a valuable contribution to the effectiveness of overall planning for
education”.
2. UNESCO convened a Regional Conference on Free and Compulsory Primary Education
in South Asia and the Pacific (Bombay, 1952) with two objectives:
(1) Locating the major needs and problems of this region in so far as the provision of
compulsory primary education is concerned.
(2) Mobilizing the resources of the Member States as well as of communities inside and
outside the region and enlisting the assistance of international organizations for meeting
these needs and solving these problems.
12. CONCLUSION
The above study reveals the significant aspect of the topic “economical factor affecting
educational planning”. It is concluded as from the economic point of view, it is essential to be
able to determine what priority education is to be given in the face of conflicting claims on
scarce resources. It is critically examined, how the capital concept used in economics can be
made use of in educational matters. Thus it perhaps gives more attention than is necessary to the
difficulties Involved. However, having recognized that there are considerable difficulties, this is
not to say that this type of approach should not be made use of in educational planning. It can be
so used, but this must be done with a proper sense of caution. It has been observed that economic
development programs do not achieve their expected results "because of a shortage of the skilled

.manpower to put capital to good: use, which in turn results in slowing down the programs and a
low level of productivity. For effective and adequate planning to enhance educational reform,
there is the need for adequate fiscal resources to develop it. The percentage of the government
budget always earmarked for education is too meager. Hence, there is hardly enough fund for the
planning unit of the educational sector to embark on serious educational reform and innovation.
Planning of any kind is basically the endeavor to work out how to achieve the maximum possible
with the resources available. Fundamentally, economics is the study of how people and perhaps
more important for our purposes society. Choose to allocate the resources at its disposal in order
to achieve its chosen objectives. The important point in common between these two descriptions
of planning and economics is that in both cases we talk about using limited resources to achieve
certain objectives. This obviously has the implication that there is something fundamental to
both, and we shall see how any kind of planning is only an especially disciplined example of
economic behavior. As there are unsatisfied objectives it is necessary to make such choices
which are economic in character in order to achieve as far as possible the desired objectives. This
economic characteristic of behavior applies not just to financial matters but to all kinds of
everyday behavior. The basic point here is that economics is about scarcity and the implications
of this fact of scarcity for our everyday behavior.
13. BIBLIOGRAPHY
Educational Planning At Grassroots By J.b.g.tilak
The economics of educational planning by Friedrich Edding
Economics of Education by Prof. Frank Levy
Education and development by Harry Joseph Robinson, Stanford Research Institute
Economic factors for planning by Jacksonville & South Jacksonville, Illinois
Socio-Economic Factors in Educational Development by P. K. Michael Tharakan
What is educational planning? by Philip H. Coombs
ESSENTIAL ECONOMIC CONCEPTS FOR EDUCATIONAL PLANNING by A.C.R Wheeler
The analysis of educational costs and expenditure by J. Hallak
Elements of Educational Planning by unesco.
http://www.ehow.com/info_7863720_economic-factors-education.htm
http://www.jrf.org.uk/publications/socio-economic-disadvantage-and-experience-higher-
education
http://ewds.strath.ac.uk/work-with-it/Home/PESTLE/Economic.aspx
http://www.jagranjosh.com/articles/Educational-Catastrophe-Economic-Factors-for-Dropouts-
1291203974-1
http://www.educationfactor.org/article.php?id=43

http://www.researchgate.net/journal/02727757_Economics_of_Education_Review

ECONOMICAL FACTORS AFFECTING EDUCATIONAL PLANNING

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