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Sustainable trade

Education in trade and sustainable economic development

Published 07 May 2024

Educational attainment can influence the trade environment by driving the formation of human capital, knowledge capital, and social capital. Private philanthropy can play a unique and significant role in closing the education gap between high-income and low-income economies by providing funding, expertise, advocacy, and networking opportunities.

Education can influence economic development and trade by shaping the skills, knowledge, and capabilities of individuals in their societies. Countries with higher average years of schooling tend to have higher per capita incomes. For example, the US with one of the highest mean years of schooling (13.6 years) also had one of the highest GDP per capita of US$76,348 in 2022. 

The Hinrich-IMD Sustainable Trade Index include indicators measuring the attainment and quality of education and trade participation of 30 economies. Educational attainment can influence the trade environment by driving the formation of human capital, knowledge capital, and social capital. The US, Australia, and UK ranked as the top three economies in educational attainment have favorable trade environment that facilitates the conduct of business and trade. 

Educational attainment is a key determinant of human capital and knowledge capital formation. By providing access to quality education, countries can equip their workforce with the skills and knowledge required to produce high-value goods and services, and to compete in the global market. Education also fosters creativity and problem-solving abilities, which are essential for innovation and technological advancement.

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Higher levels of education are associated with improved living standards, enhanced social mobility and political stability. Education empowers individuals to access better job opportunities, higher incomes, and improved quality of life. Moreover, education promotes social cohesion and political stability by fostering a more informed and engaged citizenry. It also reinforces the rule of law by raising the awareness of legal rights and civic obligations, prompting greater transparency, and accountability by the government. 1

The education gap between high- and low-income economies

Despite the benefits of education, the education gap is still evident in developing and emerging economies that face challenges in improving their education systems and aligning them with the needs and opportunities of global trade. High-income countries spend almost 150 times more per student than low-income countries on average and this huge disparity in education spending has significant economic and development implications for the integration of low-income economies in the global economy.2

High-income countries with more resources can invest more in the quality and quantity of education, especially at the tertiary level, which is crucial for developing advanced and specialized skills in trade. By contrast, low-income countries struggle to provide basic education to their populations, let alone higher education that meets the standards and demands of the global market. This creates a vicious cycle of underdevelopment, poverty, and inequality, as low-income countries are unable to produce and retain skilled human capital that can spur economic growth and innovation.

To address these challenges, developing countries need to invest more in education, especially in trade-related higher education, and to improve the quality and relevance of their education systems. This would entail enhancing physical and human resources, updating the curricula and pedagogy, strengthening the linkages between education and the trade sector, and promoting regional and international cooperation and exchange by involving various stakeholders, including governments, private sector actors, educational institutions, and civil society organizations.

Private philanthropy and trade education

Among these stakeholders, private philanthropy can play a unique and significant role in advancing trade education, by providing additional financial resources, technical expertise, advocacy, and networking to better complement the efforts of public and private actors. Trade education encompasses a broad range of disciplines and topics, such as economics, law, business, logistics, and trade policy. These can be delivered at various levels, from vocational training to higher education, and through various modalities.

Providing scholarships, grants, and fellowships

One of the main ways that private philanthropy can support trade education is by offering scholarships, grants, and fellowships to students, teachers, and researchers from developing countries who want to pursue trade education or conduct trade-related research, either in their own countries or abroad. This can help increase the access and affordability of trade education for underprivileged groups and foster talent development and knowledge exchange. While the World Trade Organization (WTO) does not operate as a private philanthropy, its Chairs Program provides financial and technical support to academic institutions in developing and least-developed countries to enhance their teaching, research, and outreach activities on trade policy and WTO-related issues.

Advocating the importance and value of trade education

Another way that private philanthropy can support trade education is by advocating for the importance and value of trade education among policymakers, businesses, educators, and the public, and influencing the policy agenda and the allocation of resources for trade education. This can involve conducting and disseminating research, organizing events, supporting the development and delivery of high-quality and relevant trade education programs, engaging stakeholders, and building coalitions.

A case in point of how private philanthropy can support trade education by advocating for the importance and value of trade is the Hinrich Foundation, a unique Asia-based philanthropic organization that fosters sustainable global trade. The foundation initiates research on various trade-related topics, such as trade policy, digital trade, and sustainable trade and disseminates findings and recommendations through newsletters, webinars, and engages with policymakers, trade experts, academics, journalists, and the public to enhance awareness and facilitate dialogue on trade issues. The foundation also supports trade education by offering scholarships, internships, and career development programs to students and professionals who aspire to pursue careers in trade by collaborating with various universities and establishing a network of trade leaders and alumni.

Facilitating the creation and strengthening of linkages and partnerships

A third way that private philanthropy can support trade education is by facilitating the creation and strengthening of linkages and partnerships between trade education institutions and the trade sector, both within and across countries. This can help enhance the relevance and impact of trade education, and create opportunities for collaboration, innovation, and mutual learning. For example, the Global Alliance for Trade Facilitation, a public-private partnership supported by various governments, foundations, and businesses, works with governments and businesses in developing and least-developed countries to implement trade facilitation reforms, such as simplifying customs procedures, reducing trade costs, and improving trade efficiency. The alliance also provides trade facilitation training and capacity building to various stakeholders, such as customs officials, trade associations, and private sector representatives, and facilitates the exchange of knowledge and best practices among its members and partners.

Trade education is a vital component of sustainable economic development, as it equips people with the skills and knowledge to participate in and benefit from global trade. However, there is a significant gap in trade education provision and access between high-income and low-income countries, which hinders the potential of trade to reduce poverty and inequality. Closing the education gap between high-income and low-income countries is essential for promoting inclusive and sustainable development, and for creating a more balanced and fair global trading system. Various stakeholders including private philanthropy can play an important role in supporting trade education by providing funding, expertise, advocacy, and facilitating partnerships to help developing countries build their human capital, knowledge capital, and social capital, and enhance their participation and competitiveness in global trade.

[1] The World Bank. (2018). World development report 2018: learning to realize education's promise. World Bank Publications . 
[2] The World Bank. (2023). The adequacy of public expenditure on education and the needs post covid-19.

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Jia Hui Tee

Jia Hui Tee is Senior Trade Policy Analyst in the Trade Policy program at the Hinrich Foundation specializing in research on international trade, digital trade and development economics.

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