1. Growth
Economic growth has raised the living standards of many, but social and environmental sustainability remain a challenge. Education can foster adaptability in a changing global economy and encourage reflection on the type of future we want to build. This chapter explores these issues through five themes:
Growing prosperity: highlights how economic growth has improved living standards and reduced extreme poverty.
A new source of growth: presents a new driver of economic growth: investment in intangible assets.
Demographic pressures: examines the pressures of population ageing on fiscal and social sustainability.
A growth revolution?: contrasts the shift towards renewable energy with increasing energy consumption and reliance on fossil fuels.
To infinity and beyond: illustrates the potential benefits and challenges of the growing space economy.
These trends are linked to education and its future through a series of questions and scenarios. Potential implications of COVID-19, both immediate- and longer-term, are discussed.
Global economic growth has lifted millions out of poverty and raised living standards worldwide. Yet despite increasing affluence, socio-economic inequalities are widening. Rising production and consumption of products and services requires more energy, and the unsustainable use of resources, both natural and human-made, is straining our environment. As we reach for the stars to conquer new economic opportunities, channelling life on Earth towards a path of social and environmental sustainability becomes increasingly urgent. Education can be key to strengthening our versatility for an evolving global economy and providing space for us to collectively imagine the future we want to grow in.
For over 50 years, affluence has increased across the world, and in OECD countries in particular. Global economic integration and technological progress have contributed to a steep reduction of extreme poverty and the improvement of material welfare for many. However, not everyone has benefitted equally. Inequalities have been widening, and rising affluence globally obscures existing divides, within and across countries. By enabling social mobility, and cultivating the competences necessary for individuals to participate in the economy, education can benefit both social progress and economic development.
Source: World Bank (2021), “GDP per capita (constant 2015 US$)”, (indicator), https://data.worldbank.org/.
The world has witnessed significant economic growth over the past decades, as forces like international trade liberalisation and technological progress helped raise living standards worldwide. Global GDP per capita more than doubled from 1960-2019, and all OECD countries have seen their GDP per capita rise in the long run. The same forces that generated such growth have also helped reduce extreme poverty in recent decades through the creation of jobs, the rise of overall wage levels and the decrease in commodity prices. While the absolute number of people living in extreme poverty in 1820 (757 million) is similar to that of 2018 (764 million), once the exponential growth in the world population has been factored in, the share of people living in extreme poverty over the past two centuries fell, from 76% to 10%.
However, increasing global affluence masks inequalities across and within countries. A considerable per capita income gap persists between countries. In 2019, the GDP per capita for OECD countries was about USD 39 307, more than three times than the world average of USD 11 057. Moreover, within country income inequalities have also been rising in recent decades in many countries, as the benefits of economic growth increasingly concentrate in the hands of a few.
These trends matter: high and rising income inequality undermines education opportunities for students from poor socio-economic backgrounds, lowering social mobility and hampering skills development, all of which decrease countries’ ability to promote and sustain strong economic growth. Developing a high-quality and equitable education system is an investment in the future. Education has in fact the unique power of directly tackling the sources of inequalities affecting our societies. From early learning and care to adult education, education contributes to both economic development and social progress, supporting the development of citizens and helping distribute life opportunities more evenly across society.
Note: The data on extreme poverty for several Sub-Saharan African countries were included from 1950 onward.
Source: Moatsos M. (2021), “Global extreme poverty: Past and present”, in OECD (2021), How Was Life? Volume II: New Perspectives on Well-Being and Global Inequality since 1820, https:// doi.org/10.1787/3d96efc5-en.
Education contributes to equipping individuals with the skills needed to participate in society and the economy. Is there room to collectively imagine what these might be? Do education institutions, such as schools and universities, allow space for education stakeholders to reflect on the future they want to build together?
Strategic investments in education can help reduce inequality. How can educational resources be distributed to best serve those most in need? Do disadvantaged students have access to financial support for non-compulsory education, including non-formal education?
Education institutions are key anchor institutions for communities. How can they best contribute to local sustainable social and environmental development? What pedagogical approaches, partnerships and procurement policies are needed to make a difference?
Over recent decades, investment started to shift from traditional tangible assets like machinery and buildings to intangible assets. Intangibles have no physical form; they are knowledge-based resources like intellectual property and data. While this shift towards intangibles continues to gain momentum, their unique characteristics have major economic and social implications. For instance, the scalability of intangible assets and their tendency to develop valuable synergies with each other have enabled great wealth to concentrate among a small number of intangible rich firms, feeding into rising inequalities. As the economy shifts, the skills that markets value shift with it. How can education best support a future-fit workforce?
Note: Data for the China office from 2015-2019 were unavailable.
Source: WIPO (2020), World Intellectual Property Indicators 2020, https://www.wipo.int/.
Investment in intangible assets has grown gradually over the past 40 years. This investment centres on assets like data, software, skills, new organisational process and intellectual property, like attributed designs and patents. Trademarks are another example of intangible assets that fall under the category of intellectual property. Applications to register trademarks have been increasing since the 1980s, especially for Brazil, China, India, Korea and the United States, the top five offices in terms of the number of trademark applications received. Trademark applications filed at the United States office have more than doubled since the mid-1990s, reaching almost 500 000 applications in 2019. China now leads in trademark activity, exceeding the United States in 2001 and increasing its trademark applications by more than 3 000% between 1990-2014.
Intangibles like intellectual property and brand strategies are key in today’s economy. An example of their power is the growth of a few tech companies compared to the declining revenue of the traditional companies that dominated the Fortune 500 decades ago. While Amazon’s revenue increased by over 4 000% from 2005 to 2020, Exxon Mobil’s decreased by about 50%.
Unlike tangible assets, intangibles can be used repeatedly and in multiple places at the same time. Such scalability helps explain how firms like Apple, Amazon and Google grew so rapidly in just 15 years, generating over USD 180 billion in revenue in 2020 alone. However, these large firms’ investment in intangible assets contributes to increasing market concentration, which stifles competition and threatens long-term growth and innovation by widening the productivity gap between these frontier firms and their lagging competitors. As intangible assets are increasingly valued, education’s role in developing individuals’ technical and soft skills to innovate new products and business processes will grow in importance.
Source: OECD (2019), An Introduction to Online Platforms and Their Role in the Digital Transformation, https://doi.org/10.1787/53e5f593-en; companies’ annual reports; and https://macrotrends.net.
What competences are needed for participating in an increasingly intangible economy? For generating new ideas and products? Organising and governing new ways of working and producing?
A skilled population that is ready to meet the demands of a rapidly evolving economy characterised by technological change renders lifelong learning increasingly necessary. What is the role of new technologies in facilitating adult and mid-career education and training?
Big tech firms are becoming important players in education, especially through the provision of digital education platforms and services. What are the implications for education governance? What kinds of (public-private) cooperation and leadership are needed to deliver public value?
Across the OECD, the elderly population is growing and fertility rates are falling. While population growth comes with its own set of challenges, so does population decline. Pension and healthcare system needs, especially in long-term care, will exacerbate fiscal pressures and raise concerns about economic growth. How can we ensure social and fiscal sustainability in response to this ongoing demographic transition? Integrating older workers in the workforce and improving labour efficiency through means including technological innovation holds the potential to offset negative effects. In this context, the provision of high-quality education, as well as the redistribution of learning opportunities over the lifecycle, is part of the solution: upskilling, reskilling and retraining can build the capacity for all citizens to contribute to society, no matter their age.
Note: Historical data used from 1960-2020. Projections are from 2021-2060.
Source: OECD (2021), “Population age structure”, Demographic references (database), https://stats.oecd.org/; OECD (2021), “Population projections”, Population Statistics (database), https://stats.oecd.org/.
Thanks to better health care and rising living standards, a greater proportion of the world population is living longer. On average across OECD countries, the share of the population aged 80 and older is expected to double, from 5% in 2020 to over 10% in 2060. This raises concerns for fiscal and social sustainability. As pension systems depend on the working population to help pay for the elderly, a reduced share of working-age population places these systems under strain. Health and social protection, including old age pensions, already comprise the largest areas of social spending in OECD countries, accounting respectively for about 8% and 13% of GDP across the block.
With ageing societies, this spending is predicted to continue to increase. Furthermore, the number of elderly people in need of care is projected to increase by 100 million worldwide between 2015 and 2030, exacerbating the challenge of recruiting and retraining enough long-term care workers to satisfy growing demand.
One potential way to alleviate pressure on public finances is through labour market reform. For instance, lifting employment rates and increasing legal retirement ages could help offset the strain on public budgets. Growth in labour productivity could also offset consequences of an ageing population. Technological innovation driven by research and development (R&D) spending and a highly-skilled workforce could spur such an improvement in productivity. Education and lifelong learning can be key in engaging older individuals in the workforce and equipping people for jobs that maintain countries’ productivity levels and growth in the face of a smaller workforce.
Note: Baseline OECD projections, devised under a no-policy-change assumption, highlight that population ageing may negatively affect growth in living standards. However, improvements in labour productivity can help offset this effect and lift GDP per capita growth.
Source: OECD (2021), “The long game: Fiscal outlooks to 2060 underline need for structural reform”, https://doi.org/10.1787/a112307e-en.
Productivity is key to sustaining growth in living standards, but is encouraging higher levels of formal educational attainment the best way to promote a more productive workforce? Which factors are key to influencing productivity, and how could education adapt to better promote them?
Employers tend to rely on traditional signs of skills attainment (e.g. degrees, reputation of education institutions). Is this likely to change? If so, how? What could this mean for education (e.g. shorter schooling careers? The end of traditional degree programmes?) and for society?
Falling fertility rates will pose new challenges for public services, including education. At the same time, what opportunities might they offer? Smaller class sizes and/or lower student to teacher ratios, for example? Opportunities for the eldest seniors to re-engage with education? Others?
Throughout history, humanity has been able to adapt to societal challenges through ingenuity and technological innovation. In the face of climate change we are once again put to the test. An environmentally sustainable path towards economic growth exists potentially through green technological advancements and sustainable practices. However, some question if “green growth” can truly offset our growing consumption and waste generation. The increasingly urgent pressure to address climate change underlines the importance of preserving the well-being of the planet and the livelihoods associated with it. How can we reconceptualise growth, to reconcile prosperity and environmental sustainability? Will education enable people to develop agency and co-agency as well as a better appreciation of the connections between the present and the future, between different parts of the world and across different groups of people, which are necessary for building a sustainable future?
Source: IEA (2020), Renewable Energy Market Update: Outlook for 2020 and 2021, www.iea.org; IRENA (2021), Renewable Power Generation: Costs in 2020, https://www.irena.org/.
Renewable energies are called upon to play a key role in achieving a model of economic development that is more sustainable. As demand for renewables has increased significantly and their technology has improved, the costs of renewables have fallen, especially for solar photovoltaics and wind energy. For instance, the real cost of solar photovoltaic systems fell by almost 80% since 2010, in tandem with rising solar photovoltaic annual installation reaching almost 135 GW in 2020.
Harnessing these increasingly affordable technologies can foster green growth. Such growth can, in turn, help mitigate climate change and decrease air pollution while enhancing job creation and the resilience of the overall energy system. However, faster scaling of renewable energy is needed to achieve global net zero emissions as soon as possible, to keep the goal to limit the increase in global average temperature to 1.5°C within reach and meet climate targets based on net zero emissions by 2050.
While the availability and affordability of renewables have increased, fossil fuels like oil and natural gas continue to comprise the largest shares of total final energy consumption globally. In 2018, oil accounted for about 41% of total final energy consumption, while natural gas accounted for 16%. The shift towards renewable energy has not kept pace with rising worldwide energy demand driven by a growing world population and consumption patterns. Fossil fuels continue to be burned at an unsustainable rate, highlighting the need to accelerate the growth of renewables and reduce global CO2 emissions.
However, transitions are challenging; the policies that facilitate green transitions are often accompanied by trade-offs, such as demands for citizens to alter some of their behaviours (e.g. driving a polluting car) and job losses in polluting industries. By fostering the development of “green skills”, education can support a greener and more inclusive economy that addresses distributional impacts and skills gaps.
Note: Other includes heat, solar thermal and geothermal energy.
Source: IEA (2020), Key World Energy Statistics 2020, https://www.iea.org/.
Skill shortages could hinder the development of a “greener” economy. Which tools could prevent such shortages? Apprenticeships, VET, and other forms of work-based learning? Career guidance? In your system, are there programmes in place supporting current workers and industries to adapt to changing standards and requirements?
How can education develop students’ environmental awareness as well as encourage them to translate such knowledge into sustainable attitudes and behaviours (individual and collective)?
Rethinking economic growth requires technical skills as well as creative and critical thinking. How might content and curricula be adapted to encourage greater intellectual diversity and address the cross-disciplinary challenges for sustainable growth?
Humanity’s reach is expanding even in outer space, as we revisit old targets like the moon and aim for new destinations like Mars. The space economy is growing fast: along with a rising number of satellites in orbit, projects on space mining, interplanetary habitation and space tourism are underway. However, all this activity is not consequence-free. The remains of satellites and rockets increasingly litter Earth’s orbit, colliding with other objects and threatening future space missions and functional satellites. While technological advancements have enabled our expansion into space, innovation must also help ensure the sustainability of growth and extra-planetary endeavours. Equipping individuals with the right skills will thus be key for humanity to keep expanding its horizons.
Source: Adapted from OECD (2019), The Space Economy in Figures, https://doi.org/10.1787/c5996201-en.
In 1957, the Soviet Union launched the first satellite, Sputnik 1, into space. Since then, the number of countries participating in space activities has increased dramatically. Between 2008 and 2021, for example the number of countries with registered satellites increased from 50 to 87. Increasing affordability and accessibility of technology have facilitated the surge of satellites in space, with, for example, low-cost small satellite technology permitting the exponential growth of small satellite deployment.
In this context, private sector actors are increasingly participating in the space economy to take advantage of the vast opportunities it has to offer. Satellites, for instance, are associated with diverse research and commercial opportunities including space exploration, climate research, navigation and telecommunications, which all play an important role in societies’ functioning and economic development. Satellite filings, which reflect existing plans to launch new satellites in the coming years, suggest that there could be several tens of thousands of operational objects in orbit by 2030.
However, space activity also creates space debris. Since 1958, the amount of space debris increased almost 11 000 times. By the start of 2021, around 22 000 debris-related objects were in orbit. Debris moving at high speeds threaten to wreck functioning satellites and spacecraft, potentially disrupting weather forecasting, climate research and military missions. This can have social costs, as remote and rural communities would suffer disproportionately from a loss in satellite connectivity, which is essential to their digital access. Technological innovation will be crucial to ensuring debris removal and sustainability of future space activities.
Just as importantly, space-based technologies can support sustainable terrestrial growth, for instance, by monitoring climate change factors including sea levels, ice sheet flows and air pollution. Yet expanding the sector requires expanding its workforce. Education will be key in addressing the skills shortage of the space sector and preparing innovators who can promote sustainable development through space-based technologies, on Earth, to infinity, and beyond.
Source: NASA (2021), Orbital Debris: Quarterly News, https://orbitaldebris.jsc.nasa.gov/.
Preparing people for emerging jobs often involves training them to use state-of-the-art technology. Are education institutions equipped to meet this goal? If not, what is needed? New partnerships for apprenticeships or programmes? Greater investment in digital training, simulators and virtual reality? What is the role of non-formal learning in this process?
Increasingly, the space economy offers cost-effective, ubiquitous and easy to deploy solutions to improve connectivity in rural and remote areas. As they evolve, can satellites play a bigger role in bridging digital divides, ensuring adequate broadband speed and quality to all students, from the youngest child to the oldest senior?
Space science is a fascinating and inspiring subject and can spark interest in STEM subjects. Can it foster greater interdisciplinary learning? For instance, could students design a constitution for human life on Mars (considering the many constraints this may be under)?
Trends allow us to consider what current patterns might mean for the future. But what about new patterns, shocks and surprises that could emerge over the next 15 to 20 years?
Building on the OECD Scenarios for the Future of Schooling, this section encourages readers to consider how growth could connect with education to evolve in multiple ways. Two vignettes illustrate possible stories: the Reader is invited to adapt and create new ones as desired. The next page sets out some key questions for education, and a set of potential shocks and surprises that could impact education and learning in unexpected ways. The descriptions of each scenario can be found in the Introduction of this volume.
Relevant sources
Bajgar, M., C. Criscuolo and J. Timmis (forthcoming), “Intangibles and industry concentration: supersize me”, OECD Science, Technology and Industry Working Papers, OECD Publishing, Paris.
Corrado, C., et al. (2021), "New evidence on intangibles, diffusion and productivity", OECD Science, Technology and Industry Working Papers, No. 2021/10, OECD Publishing, Paris, https://doi.org/10.1787/de0378f3-en.
Guillemette, Y. and D. Turner (2021), "The long game: Fiscal outlooks to 2060 underline need for structural reform", OECD Economic Policy Papers, No. 29, OECD Publishing, Paris, https://doi.org/10.1787/a112307e-en.
Haskel, J. and S. Westlake (2018), Capitalism without Capital, Princeton University Press.
Undseth, M., C. Jolly and M. Olivari (2020), "Space sustainability: The economics of space debris in perspective", OECD Science, Technology and Industry Policy Papers, No. 87, OECD Publishing, Paris, https://doi.org/10.1787/a339de43-en.
IEA (2020), Renewable Energy Market Update: Outlook for 2020 and 2021, International Energy Agency, Paris, www.iea.org.
IEA (2020), “World total final consumption (TFC) by source” (indicator), Key World Energy Statistics 2020, https://www.iea.org/reports/key-world-energy-statistics-2020/final-consumption (accessed 7 May 2021).
IRENA (2021), Renewable Power Generation: Costs in 2020, International Renewable Energy Agency, Abu Dhabi, https://www.irena.org/.
NASA (2021), Orbital Debris Quarterly News, Vol 25/1, https://orbitaldebris.jsc.nasa.gov/quarterly-news/pdfs/odqnv25i1.pdf.
OECD (2021), How Was Life? Volume II: New Perspectives on Well-being and Global Inequality since 1820, OECD Publishing, Paris, https://doi.org/10.1787/3d96efc5-en.
OECD (2021), “Population age structure”, Demographic references (database), https://stats.oecd.org/ (accessed 25 June 2021).
OECD (2021), “Population projections”, Population Statistics (database), https://stats.oecd.org/ (accessed 25 June 2021).
OECD (2021), “The long game: Fiscal outlooks to 2060 underline need for structural reform”, OECD Economic Policy Papers, No. 22, OECD Publishing, Paris, https://doi.org/10.1787/b4f4e03e-en.
OECD (2019), An Introduction to Online Platforms and Their Role in the Digital Transformation, OECD Publishing, Paris, https://doi.org/10.1787/53e5f593-en.
OECD (2019), The Space Economy in Figures: How Space Contributes to the Global Economy, OECD Publishing, Paris, https://doi.org/10.1787/c5996201-en.
OECD (2017), OECD Science, Technology and Industry Scoreboard 2017: The digital transformation, OECD Publishing, Paris, https://doi.org/10.1787/9789264268821-en.
OECD (2015), Towards Green Growth?: Tracking Progress, OECD Green Growth Studies, OECD Publishing, Paris, https://doi.org/10.1787/9789264234437-en.
World Bank (2021), “GDP per capita (constant 2015 US$)”, (indicator), https://data.worldbank.org/ (accessed 15 June 2021).
WIPO (2020), World Intellectual Property Indicators 2020, World Intellectual Property Organization, Geneva, https://www.wipo.int/.
Glossary
CO2 emissions: Carbon dioxide released into Earth’s atmosphere from the burning of fossil fuels. Carbon dioxide is an invisible and odourless gas that contributes to climate change by trapping more heat in the atmosphere.
Extreme poverty: The most severe type of poverty, characterised by the deprivation of basic human needs including food, clean water, shelter and education. The international community often defines it as living on an income below the international poverty line set at $1.90 per day. In this chapter, extreme poverty is measured by the “cost of basic needs” approach pioneered by economist Robert Allen. Here, poverty lines are calculated separately for every year and every country, using the different levels of consumption at which basic needs can be met, rather than a single global poverty line.
Frontier and laggard firms: Frontier firms include the most productive firms in each industry and year. Laggard firms include those that are not counted as frontier firms. In recent years, the gap in productivity levels has been widening between laggard firms and frontier firms.
Globalisation: The widening, deepening and acceleration of connections across national borders, especially the internationalisation of markets for goods and services, the means of production, financial systems, competition, corporations, technology and industries.
Gross domestic product (GDP): Standard measure of the value of the goods and services produced by a country. Gross means that no deduction has been made for the depreciation of machinery, buildings and other capital products used in production. Domestic means production by the residents of the country. Since many products in a country are used to produce other products, GDP is calculated by summing the value added for each product.
GDP per capita: A metric for a country’s economic output per person. It is calculated by dividing a country’s GDP by its population. GDP per capita is the primary indicator of a country’s economic performance and is often used as a general measure of countries’ standard of living.
Intangible assets: An item of economic value that is not physical in nature yet holds long-term value for a firm. Examples include data and proprietary software, patents and trademarks, human capital and organisational know-how.
Market concentration: The extent to which market shares are concentrated among a small number of firms. Increasing market concentration in recent years has been used to argue that the intensity of competition between firms is decreasing.
Net zero emissions: The elimination of emissions derived from the combustion of fossil fuels. Many countries have set a goal to achieve net zero emissions by 2050.
Patent: A type of intellectual property granted by the government that legally permits an inventor to exclude others from making, using or selling their invention for a limited number of years, in exchange for public disclosure of the invention.
Registered satellites: Machines registered by a national administration that are sent into Earth’s orbit to collect information or relay signals for telecommunications. These satellites may involve little national expertise, as they can be purchased on the international market or developed in local universities.
Research and development (R&D): Research and creative work conducted by either the private and/or the public sector to develop new goods, techniques and services, and to increase the stock of knowledge and the use of this knowledge to devise new applications.
Renewable energy: Energy generated from hydro (excluding pumped storage), geothermal, solar, wind, tidal, wave and biomass sources. Renewable energy is naturally replenished on a human time-scale, so it never depletes.
Scalability: The ability of assets to be used repeatedly without limit, in multiple places and at relatively little or no cost. Intangible assets are highly scalable in nature. For example, a phone app is highly scalable. While it requires upfront costs to develop the app software, producing additional units once it’s developed has little to no cost.
Skills gaps: The qualitative mismatch between the skills required by the labour market and the skills possessed by the workforce. Skills gaps may hinder the ability of employers to find adequately trained employees and of job seekers to find employment.
Space debris: Non-functional and man-made objects and their fragments, which accumulate in Earth orbit. These fragments are derived from the launches of satellites and spacecraft, as well as from fragmentation-events like collisions and explosions in orbit. As space debris move through space at high velocities, they risk colliding with functioning satellite and spacecraft.
Tangible assets: A physical item of economic value owned by a firm. Examples include buildings, inventory and machinery.
Trade liberalisation: The removal or reduction of trade barriers, like tariffs and quotas, to facilitate the exchange of goods between countries. Benefits include countries’ improved ability to harness their comparative advantage, keep prices low and promote greater competition, while disadvantages may include the crowding out of domestic industries and job outsourcing.
Total final energy consumption: The total amount of energy that is readily consumed by end users, which include households, transportation, industry and agriculture. Final energy consumption excludes the energy used by the energy sector to transform resources into energy that is ready for consumption.
Trademark: A unique combination of letters, words, sounds, or symbols that distinguishes the goods and services of a company from those of its competitors. Trademarks are considered a form of intellectual property.