Education at the forefront of India’s rising complexity
Economist Ricardo Hausmann suggests that prosperity arises from economic complexity and economic development is like a game of Scrabble. The private sector provides the letters (more of which enable more and longer words), and the government provides the vowels. Higher wages for workers arise from more words (more firms competing for talent), longer words (high-productivity firms and sectors) and more vowels (effective public goods). We make the case that our economic complexity, popularly associated with 5 million software jobs, will leap in the next five years as 12 million new jobs in engineering, telecom and healthcare combine with the human-capital fuel of the National Education Policy (NEP) to accelerate India’s transition to higher growth, complexity and wages.
Unemployment is a weak measure of our labour market health; the poor cannot afford to be unemployed, so they selfexploit in farming, self- or informal employment. Shrinking these low productivity labour warehouses needs policy help: Civil services reform, lower employer regulatory cholesterol, decentralization of power, etc. But the coming jobs in engineering, telecom and healthcare are leading indicators of our primary labour market distinction shifting from farm versus non-farm employment to export production versus domestic consumption. Nobel Laureate Arthur Lewis suggested that development involved ending the gap between a narrow ‘modern’ sector that uses advanced technology and a larger ‘traditional’ sector with very low productivity. Prosperity for India@100 depends on raising the productivity of all firms and citizens irrespective of fulfilling domestic or global demand, or delivering services or manufactures.
Our national goal is to raise per-capita GDP and the economy has emergent properties that can help drive prosperity;
e.g., domestic markets have attained critical mass and half of all foreign direct investment since 1947 has come in the last five years. Our research suggests domestic demand-driven engineering, telecom and healthcare now employ 42 million people (9% of our workforce). We expect this to expand rapidly in the next five years; engineering to 38 million from 30 million, telecom to 6 million from 4 million, and healthcare to 9.5 million from 7.5 million, all of which would have many new roles and job profiles on offer in a variety of sub-fields.
India’s economic complexity has suffered because poor infrastructure, uneven skills and excessive regulatory cholesterol (the Factories Act has more than 700 jail provisions) kept manufacturing at 11% of employment. But we expect this to rise to 17% with better infrastructure, ease-of-doing business reforms, rising domestic demand and production-linked incentives increasing factories for phones, IT hardware, electronics, telecom equipment, medical devices, precision parts and much else.
Large hiring requirements in telecom arise from mobile virtual network operators, 5G and white space spectrum, and reliable remote work set-up needs. The hiring of network engineers doubled last year. Finally, covid has forced an overdue review of
healthcare employment, with expansion brought forward by decades. Nobody knows whether high-wage jobs or human capital come first, but both must dance together for mass prosperity; in 1951, even the colonialist Winston Churchill recognized that empires of the future were empires of the mind. Mahatma Gandhi highlighted human capital earlier (his 1934 speech on Nayi Taalim). Yet, our education policy—the 1948 Radhakrishnan report, 1968 Kothari panel and 1986 New Education Policy— created islands of excellence but had below-average results on mass reach, multi-disciplinarity, basic literacy, numeracy and creativity.
Today’s NEP is an overdue revolution in preparing us for the 21st century. It moves policy from being prescriptive and directive to empowering and enabling, by giving the federal structure a key role, with states ultimately setting their curricula. It aims to soften hard lines between ‘art’ and ‘science’, ‘academic’ and ‘vocational’, and ‘curricular and ‘extra-curricular’. It emphasises analytical and creative thinking, rather than rote learning, apart from speaking, writing and lifelong ‘learning how to learn’. It makes the holistic development of our children’s intellectual, social, physical, ethical and emotional capacities the aim of education.
The NEP is well timed because workers now compete with a technology tsunami of machine learning, robots automation, artificial intelligence, etc. The NEP recognizes the problems of education systems that deliver and measure cognitive quantity (how much you know) rather than the quality of thinking, learning and emotional engagement with others. The book Humility is the New Smart by Edward Hess and Katherine Ludwig suggests that the human advantage over algorithms is our ability to think critically, be creative and relate with others.
They frame humility not as self-effacement, but self-awareness vis-a-vis technology; acknowledging that nobody can have all the answers, remaining open to new ideas and committing to lifelong learning. India’s prosperity depends on raising the productivity of our regions, cities, sectors, firms and citizens. As hot sectors employ millions more, the NEP represents a bold move to accelerate complexity by rebooting education. This virtuous cycle of formal jobs and effective education is India’s new tryst with destiny. It’s an appointment we must keep.