Successful development models around the world (South Korea and Singapore, for example) demonstrate how successful education policies aligned with the development model were a decisive factor in achieving their economic growth and enabling them to become effective players in the industrial and services sectors on the map of the global economy.
Despite this, many emerging economies continue to suffer from gaps between what their education policies produce and the needs of their economies, or between the capabilities of their economies and their educational outputs. These gaps impede the course of economic development in those countries. Some of the most important forms of these gaps may be examined: the first and second gaps represent conventional challenges and can be discussed briefly, while the third will be addressed in some detail, as follows:
The Dropout Gap: This is a phenomenon associated with failing to complete the basic stages of education for reasons that may be economic or social. What concerns us in this context is the presence of a segment within one of the most important components of the economic fabric – labour – that lacks the minimum level of education needed to acquire the skills necessary to add value to the economic component, in addition to being the group most likely to raise unemployment rates. The economic impact is not limited to that; it extends to making this group an inactive segment within the system of consumer demand for sectors with a technological component, whose products require a minimum level of education to use and acquire. This segment thus becomes an economic and social burden requiring redoubled effort to integrate it into the national economy.
The Labour-Market Needs Gap: This represents the conventional model, in which the skills acquired through educational outputs do not match the actual needs of the labour market. In this case, it amounts to a waste of the economic resources invested and spent on graduates throughout their educational journey. This leads this segment of graduates to resort to options ranging from joining the ranks of the unemployed, to taking jobs unrelated to their academic qualifications, or attempting to emigrate in search of a job opportunity and an income.
The Egyptian government and the Egyptian business community have recognised this gap, and efforts are indeed being made from several angles. These include introducing new academic specialisations into the education system that correspond to labour-market needs, activating the role of the Supreme Council for Technological Education, and the domestic private sector’s establishment of technical schools and academies that simultaneously adopt a dual education and training approach, guided by the wealth of international experience in this field, foremost among them the German experience.
The Talent-Drain Gap: If the previous gap represents a mismatch between educational outputs and labour-market needs, the talent-drain gap represents precisely the opposite: national industries are not sufficiently aligned with educational outputs in the form of talent in specialised and modern fields linked to innovation and knowledge production. This represents a paradox in the human-resources landscape within the economic system. While the National Strategy for Higher Education and Scientific Research (in Egypt, for example) seeks to help support the economy by providing a climate conducive to the localisation and production of knowledge and by linking knowledge and innovation outputs to national priorities, and while universities succeed in graduating qualified young talent in Fourth Industrial Revolution specialisations, the “national industrial base” capable of absorbing the results of massive government investment in education and in building capacities related to the ability to innovate, produce knowledge and develop products is absent. This occurs amid a focus on localising technology (which is necessary) without producing and developing it, as well as on labour-intensive projects (which are also necessary), with labour intensity preferred to brain intensity.
The gap created by the absence of a national base for producing knowledge and technology and developing products capable of absorbing the output of an education system that has produced creative talent consequently leads this talent to seek alternatives, including:
Emigrating abroad to work for companies that match their skills, or establishing private companies in markets where there is demand for their innovations.
Migration from within the country (to the outside), either by working for international companies within emerging economies (where the added value and profits are transferred to the parent company abroad, and companies outside the national economy benefit from the innovations of these minds), or by working remotely from inside the country for companies in competing economies abroad.
There is no doubt that wasting these educational resources affects efforts to move the national economy from a stage limited to consuming knowledge and localising technology to the stage of producing knowledge and innovation. This represents the take-off stage for any economy seeking to establish an international presence and compete globally, and consequently to acquire the two elements of robustness and resilience in the face of recurring economic challenges.
If economic policies are adopted to benefit from this knowledge-based talent, the national economy will benefit in several ways. These include maximising the return on human capital for the benefit of the national economy; overcoming the technology gap; improving the national economy’s Economic Complexity Index (a pivotal tool for measuring the degree of diversity and development of countries’ knowledge and productive bases); helping to attract knowledge-based investment that strengthens the shift towards national industries based on diversity and innovation, without being limited to investment in imported technology.
They also include upgrading national industry and moving from a model of “manufacturing for others” to “innovating the national product”; addressing export stagnation and its organic connection to near-static productive sectors, rising and falling with them; and geographically diversifying markets through products with technological content that are more capable of entering new and dynamic markets which are difficult to penetrate with the traditional export structure, thereby reducing the risks of the geographical concentration of exports.
Other benefits include strengthening economic identity by building a global reputation for quality and innovation and moving into the ranks of higher-income countries, so that the national economy takes its place on the map of active industrial powers in the global economic system.
The current changes in the global economic context constitute a catalyst for benefiting from the outcomes of education policies in innovation, knowledge production and product development, and for repositioning qualified economies as alternative manufacturing hubs in light of the re-engineering of global trade and the current disruption of global supply chains.
Based on the foregoing, policy-level remedies are required for these three gaps – at the level of education, training and learning in relation to the first and second gaps, and at the economic level in relation to the third – so that these policies serve the national economy. In this context, several points should be taken into account, foremost among them:
Studying and addressing the structural causes of dropping out of education, a phenomenon that inevitably affects the national economy’s capacity for production and consumption.
Continuing and expanding training and learning efforts, as well as reviewing academic specialisations and educational methods, with the aim of combining education and training in a way that keeps pace with rapidly accelerating developments in the domestic and international labour markets.
Benefiting from educational outputs in the field of knowledge production and innovation, so that these fields become part of the governing criteria for selecting priority sectors in the national economy. Egypt’s National Industrial Strategy (2026-2030) addressed this criterion under the heading “Complexity and Diversification: Level of Technology Used and Product Complexity”, alongside other criteria.
Finally, it should be noted that these gaps are reflected in the state of knowledge in these economies. In the case of the education-dropout gap, there is a phenomenon of absence of knowledge; in the case of a gap between education and labour-market requirements, there is stagnation of knowledge; in the case of relying solely on educational outputs from abroad, there is a phenomenon of importing and consuming knowledge; and in the case of a shift to domestic innovation, there is a phenomenon of producing knowledge from within. As noted, this requires an economic base from which the national economy can benefit; otherwise, investment in education turns into a phenomenon of exporting knowledge (without compensation) for the benefit of other economies.
Published in cooperation between the Egyptian Center for Strategic Studies, Al-Ahram Weekly, and the English-language portal Ahram Online
