JOHN MARONE, KYIV
WHEN ARE UKRAINIANS GOING TO LEARN?
Ukraine is expected to continue enjoying solid growth in GDP and a healthy inflow of foreign direct investment, as its economy continues to mature. That’s the forecast for the near term. But the country’s long-term economic prospects will depend a lot on how it develops its education system. It’s nice to see standards of living and salaries increase, at least in the capital Kyiv. Skyrocketing sales of new automobiles and apartments have led some observers to herald the arrival of a middle class.
A middle class, however, is defined as much by its values and level of education as it is by its spending power.
In the Soviet Union, coal miners were well paid, but they weren’t middle class, a term used as a pejorative by Bolshevik leaders.
Ukraine’s gleaming growth statistics have largely been a function of continuing high demand for all the things that Ukrainians couldn’t buy or afford in the first decade after independence. Easier credit from the arrival of more and more foreign banks will keep the demand curve high. Nevertheless, sustained growth and, more importantly, stability are not just about consumption.
A stable economy has to be diversified, which means production as well as services.
Western economies, which Ukraine has used as its benchmark, have for decades been switching over from manufacturing and heavy industry to services.
This transformation has been made possible by higher levels of education for a greater percentage of Western countries’ populations.
More importantly, Western education has developed in close synchronization with these markets, churning out accountants and IT specialists as well as scientists and engineers.
Ukraine’s economy is largely dependent on exports of steel, chemicals, machinery and agricultural products. With many of the country’s production assets firmly in private hands, owners have already begun seeking Western investment to upgrade facilities in order to better compete on the world market.
And, as has happened in other countries, greater industrial efficiency will mean less labor needs and thus more Ukrainians being employed in the services sector.
The transition should also lead to greater economic stability, as the country won’t be as seriously dependent on good harvests or world steel prices. In terms of microeconomics, working as a financial analyst is a lot more profitable than a collective farm laborer.
Going from one profession to the other, however, takes a commitment to education, on the part of the state and the individual.
The state’s difficulty in developing education stems from the same old problem – insufficient funds in the budget. The Ministry of Education is still struggling to buy books for school children or heat school buildings, much less transform higher education.
But the public also has to transform and take responsibility. Cheating on college entrance exams and bribe taking by university professors is endemic to the system. A recent poll conducted by the Ministry showed that one in five Ukrainian students would not be above paying a bribe to an instructor for a better grade. Corruption in the education system goes back to Soviet times and reflects a larger problem of cultural attitudes. All too many Ukrainians see higher education, free or otherwise, as something to get by rather than to use as a career tool. The inadequate quality of faculty and facilities, many of which have been severely under-funded since independence, only facilitate cynical attitudes.
There is also an element of denial, with students and teachers stubbornly continuing to believe that Ukrainian education is better than education abroad. Even if one acknowledges, for example, that physical sciences are taught better in Ukraine – which is by no mean a given – that doesn’t mean that the country’s economy needs a surplus of theoretical physicists.
In theory, the public should eventually catch on to what education they really need in order to attain higher levels of status and income. After all, education is just another service offered on a free market of changing tastes and demands.
However, a large part of the population is not going to be able to afford private education for a long time to come. Those who go abroad for it are either members of the country’s limited so-called elite or the talented and energetic who end up oversees, depriving Ukraine of badly needed professionals.
Clearly some assistance by the state will be needed to spur the transition along. This will require political will and vision. As it stands now, multinational companies operating in Ukraine often have to take the best raw talent from among job applicants and train them themselves.
But Ukraine isn’t the only place for multinationals to set up shop.
With larger markets like India and China eager to offer their workforces to companies looking for a cheaper production site, Ukraine cannot afford to sit on its hands. Steel mills and farms will need less Ukrainian employees, but producers of other more high tech products are already eying Ukraine as an alternative to the bureaucratic bound EU and authoritative Russia. It’s not enough for the state to straighten out its regulations and tax codes if it wants to reel in production and capitalize on shifts in world labor markets. The higher the population’s education, the more sophisticated production skills it will be able to attract and absorb for the benefit of individual workers and the country at large.
A large middle class of educated managers, technocrats and countless other professionals is a country’s best resource. Unlike the scientists, engineers, bureaucrats and intellectuals of Soviet times, Ukraine's new educated will have to find their own place in a changing and competitive market. But the state can ease that search by retraining teachers and funding better facilities across the country. If it doesn’t, the country’s consumer craze will eventually cool, making the economy increasingly and dangerously dependent on export markets. Ukraine is already vulnerable to political instability. By investing in education it could better secure its economy and political system.
Unlike its eastern neighbor, Russia, Ukraine cannot afford to rely on a wealth of raw materials such as oil and gas. In fact, Ukraine is a large importer of energy resources, making its economy vulnerable to price hikes from Russia and Central Asia.
Lacking Western capital and technology, and Russian natural resources, Ukraine’s going to have to learn how to survive, and the country's education system is a good place to start.
John Marone, Kyiv Post Journalist, based in Ukraine.
July 30, 2007
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