The Impact of Educational Expenditure on Economic Growth in the UAE
Economic growth is the rise in the inflation-adjusted market value of commodities produced in a given economy over a given period. It is, therefore, the percentage increase in real Gross Domestic Product (GDP). The percentage change in the GDP per year is adjusted for inflation effects during the year, and the results represent how much the economy grew. Economic growth is significant as it helps estimate how much the living standards improved over time (Bouhajeb et al., 2018); if an economy grows, the demand for commodities increases and thus, the producers’ ability to create more employment increases.
Budget & UAE Economic Growth
Budget is the financial plan for a specified period; usually, one year, showing the revenue streams during the period and the substantial expenditures made. An organization such as a government, a company, a non-profit organization, or family or an individual can prepare a budget as a resource-oriented strategic plan for the specified period. The United Arabs Emirates’ government allocates a substantial proportion of its annual federal budget to the education system, which is evident over the past few years.
In 2020, AED 10.41 was allocated to education, approximately 14.8 percent of the annual budget. An almost equal amount was allocated in 2019, AED 10.146 billion, about 16.8 percent, while in 2018, 20.5 percent of the annual budget was allocated to education, which amounted to about AED 10.4 billion. Therefore, it is clear that even though the annual budget in the United Arabs Emirates has been increasing over the past few years, the amount allocated to education has remained constant (Ashour, 2020).
However, this budget has been able to meet the countries education needs, in terms of the wage bill, other recurrent expenses, for example, the increase needs for consistent sanitation as a result of the COVID-19 pandemic and the acquisition of the necessary education apparatus and other assets.
Education has been a significant priority in the UAE, something that was emphasized in 2021. This has increased the number of resources available for qualitative improvements of the overall education systems, for example, by the effecting of smart learning programs, revised code for teachers, and improved evaluation system like the teaching curriculum (Alsharari, 2018). Over the past few years, the cumulative effect of the budget allocations facilitated homeschooling and online learning during the COVID-19 pandemic. Education is likely to occur in a hybrid system with physical class hours and online learning, which will require additional allocation in the future.
Before the improvement of the allocation to education along with the launch of the United Arabs Emirates Vision 2021, in 2010, the education system, especially the public schools and institutions of higher learning where the government was not providing comprehensive education such that one can learn form kindergarten to graduate school free. For example, before the new school model 2010, learners were accustomed to memorization while the new system focuses on active learning, participation and learning skills. The public education system had little to no emphasis on English proficiency, something that has been rectified in the new system whereby bilingual teachers are encouraged (Alsharari, 2018).
UAE Education System Reforms
The recent reforms in the United Arab Emirates education system will be reflected in the economic growth in future due to the impact of education on the human capital. Given the expected impact of the education reforms on the individual and their level of knowhow, increasing the level of education increases the people’s ability to improve the technology used in the production of goods and services. With the increased level of technology in the country, the output or productivity is expected to improved with the same level of capital as before (Alsharari, 2018). Given the same level of capital, producers can produce more due to improved human capital.
UAE Economic Growth Reference
- Alsharari, N. M. (2018). Internationalization of the higher education system: an interpretive analysis. International Journal of Educational Management.
- Ashour, S. (2020). Quality higher education is the foundation of a knowledge society: where does the UAE stand?. Quality in Higher Education, 26(2), 209-223.
- Bouhajeb, M., Mefteh, H., & Ben Ammar, R. (2018). Higher education and economic growth: the importance of innovation. Atlantic Review of Economics (ARoEc), 1(2).