Does Georgia Need Highly Educated Workers?

The ISET Economist, a blog about economics in Georgia and the South Caucasus by the International School of Economics at TSU (ISET)

A pleasant surprise awaited me on my first day as a student of Tbilisi State University’s Business and Economics Faculty. Thanks to my performance in the national admission exam (ერთიანი ეროვნული გამოცდები), I was inducted to the so-called “Elite Group”, piloted by TSU in an effort to attract Georgia’s best and brightest. There were 50 of us in the group, mostly from working class families, and none feeling like they belong with any kind of “elite”.

In the end, I really enjoyed my “elitist” status. Not because I could assert dominance over “mere mortals”, but because it was fun to be surrounded by likeminded guys, learning together, and having a positive impact on each other’s motivation. The education we received was only marginally better than the rather pedestrian TSU business and economics standard, but the majority of us looked beyond TSU, taking part in student exchange programs, seeking out (and finding) opportunities for further education abroad.

Being part of the “elite” was not exactly a rose garden. Often, students from other groups would make sarcastic comments. Some of the TSU faculty not selected to teach us would try to teach us a lesson in modesty by attempting to lower our self-esteem. Soon enough, a “class conflict” evolved, and within just a few years, the elite group concept was ditched in favor of a more egalitarian approach to education.

ABILITY-GROUPING: PROS AND CONS

TSU’s attempt at merit-based selection of students into an “elite group” represents something known in the literature as “ability grouping,” one of the most controversial topics in general education over more than 70 years. Its effects on student achievement have been extensively studied over that time period, suggesting that it primarily benefits the group of high achievers. Meta-analysis conducted by Adam Gamoran in 1992 concluded that ability grouping typically leads to more inequitable outcomes: high-track students are gaining, and low-track students are falling farther behind. In the end, overall achievement at the school level may not improve.

The pros and cons of ability grouping were summarized by Slavin (1990) as follows:

Of course, ability grouping is just one possible response to excessive standardization in the traditional model of mass education. Alternative pedagogical approaches, such as the Montessori method, completely obviate the need for segregation into ability (or age) groups by doing away with standardization. If every child or student is offered a choice of activities and is allowed to develop according to her motivations, innate talents and abilities, the whole idea of segregation into rigid ability groups goes by the wayside.

Still, given that there is only one Montessori school in Georgia and what the vast majority of Georgian students are offered is standard mass education, the question of ability grouping loses none of its relevance. How much importance should Georgia attach to promoting academic excellence at the top? Is it socially optimal to invest in a small number of high achievers or should the entire thrust of Georgia’s education policy be on closing social and cultural gaps?

IT DEPENDS…

How much academic excellence a country needs (and can afford) may depend on its level of economic development. This is a key insight from Michael Porter’s theory of stages of development, as practiced, for example, by the World Economic Forum in its Global Competitiveness report.

According to this theory, at low levels of economic development (as measured, for example, by income per capita), a country’s progress mainly depends on its factor endowment, such as unskilled labor, land and natural resources. Companies sell basic products e.g. raw agricultural products and commodities, competing primarily on price. Maintaining competitiveness at this stage hinges primarily on the availability of an inexpensive, healthy and basic-skilled workforce.

When a country exhausts its cheap labor reserves, wages start rising, forcing companies to invest in more capital-intensive technologies, substituting machines and highly skilled machine operators for low-skilled labor. At this intermediate stage of development, economies progress depending on how successful they are in making more efficient use of available factors and, in particular, upgrading the skill endowment of their workers. Companies now focus on adding value, processing raw materials, assembling garments, vehicles and electronic equipment. With quality and efficiency becoming the name of the game, competitiveness increasingly depends on the availability more productive, middle-skilled workforce.

Finally, as a country’s income per capita continues to increase relatively to the rest of the world, its labor becomes too expensive to be competitively engaged in the mass production of standard goods (that can be produced in cheaper jurisdictions). At this stage, any routine operation that can be outsourced overseas gets outsourced. Companies are forced to focus their domestic operations on high-end services (e.g. financial), highly automated manufacturing, R&D and product innovation, posing very high qualification requirements for their workers and offering higher compensation in return.

Importantly, countries at any stage of development need workers of all three qualification levels. However, they don’t need them to the same extent.

HOW MANY IT ENGINEERS CAN GEORGIA TRAIN AND PRODUCTIVELY EMPLOY?

Having been recently upgraded by WEF to the group of efficiency-driven economies (the second, intermediate category on Porter’s list above), Georgia does not stand out when it comes to the performance of its education system. Far from it. Judging by Georgia’s performance in the internationally comparable PISA tests in math, science and reading (most recently available data are from 2015), Georgia’s schools produce about the “right” number of high achievers, slightly less than 1% of total student population. This is, of course, far below top performing countries, such as Singapore, but ok for our level of development. Likewise, with slightly more than 50% of Georgian students qualified as “low achievers” in PISA, our performance in this regard is also roughly in line with that of other members of our club. Yes, Russia and Bulgaria are doing much better, but they also have much higher levels of income per capita and lesser shares of rural population.

PISA RESULTS FOR GEORGIA AND A GROUP OF EFFICIENCY-DRIVEN ECONOMIES

*countries belong to the group of efficiency driven economies in 2017, according to the WEF classification

**Students who are able to creatively and autonomously apply their knowledge and skills to a wide variety of situations (PISA test, 2015)

As Georgia ponders its future education strategy, it faces a stark choice.

First, it could try to do more to promote excellence at the top by encouraging private investment in schools, universities and colleges, creating “elite” ability groups within its public schools and universities, and removing bureaucratic hurdles for those willing to create the new and different in education.

The alternative is to continue enforcing certain minimum standards of education as a means of closing social gaps and cultivating a cadre of middle-skilled workers: steady, responsible and hard-working, able to speak a foreign language and operate computers or machines.

The first strategy, while appealing to the proud Georgian ego, is wrought with risks. First, it may not be feasible given the dearth of high quality instructors and institutional capacity to innovate and nurture talent. Second, it may not be affordable from the purely financial point of view – high quality instruction comes with significant costs, including faculty compensation and infrastructure. Third, even if Georgia were to educate hundreds of world class IT engineers, it may not be in a position to retain its top talent. When it comes to wages, availability of venture capital for startups and career prospects in established companies, Georgia is simply no match for more development competitors in Western Europe, North America or Russia. Thus, overinvestment in high-end education may result in brain drain, rather than faster development.

Tamta Maridashvili