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Putting Higher Education to Work: Skills and Research for Productivity and Growth in East Asia

October 13, 2011

Despite impressive gains, higher education could contribute even more to Mongolia’s development agenda.

Mongolia is projected to be one of the world’s fastest growing economies over the next decade, but maintaining growth and climbing the income ladder will be enormously challenging without significant improvements in productivity. Higher education 1 is critical in this regard because it provides the high-level skills and research to apply current technologies and to assimilate, adapt, and develop new technologies, two drivers of productivity. It can thus be a key driver of growth. Individuals with at least a few years of higher education score higher on measures of skill competencies than individuals with no higher education. And academic, technical, thinking, and behavioral skills and productivity are shown to be positively related. Several indicators of innovation also support the need for higher education: an innovative firm is associated with an increase of about 25 percentage points in its share of workers with more than 12 years of schooling. And countries that have more science and engineering graduates and that engage in more higher education research tend to have better innovation outcomes.

Quality deficiencies among higher education graduates have contributed to a skills mismatch.

Employers expect workers—particularly those with higher education—to possess the technical, behavioral, and thinking skills to increase their productivity and growth. They need science, technology, engineering, and math skills (STEM). They also need problem solving and creative skills to support a higher value added manufacturing sector and the business, thinking, and behavioral skills for a higher productivity service sector.

The supply of new higher education graduates is high compared to the regional average in Mongolia 2, but several indicators point to gaps in these groups of skills among higher education graduates. Fairly high unemployment rates co-exist with significant time (almost 6 weeks) needed to fill professional vacancies with suitable graduates. This suggests that graduates may not have the skills desired by employers. This is confirmed by the limited range of higher education options (notably too few technical and vocational institutions) and employers and employees’ complaints about skill shortages in English, leadership and communication skills. There is a strong unfulfilled demand for technology and engineering vocational skills as employers, particularly those in the mining, infrastructure and manufacturing sectors, report to be unable to hire the skills they need. Additionally, students do not often get the education that would enable them to have broad-based knowledge, be able to make connections, to think creatively, to develop the skills to learn on their own, to be able to communicate well with others, and to be entrepreneurial in their future career.

Research outputs from Mongolian universities remain extremely limited.

Higher education also needs to do a better job of providing the type of research needed to boost innovation. Universities can produce ideas for the business community, contributing to knowledge and technological innovation through basic and applied research and technology transfer, but the Mongolian higher education system is not yet providing research of adequate quality. Even university involvement in technology adaptation and upgrading is limited. Enterprise surveys show, for instance, that universities are mentioned as having a leading role in acquiring technological innovations (in a broad sense) by only 1–2 percent of firms. Few Mongolian faculty in universities have PhD degrees, and for the large majority, their primary job function remains teaching, with no research responsibility. This is also the result of heavy workloads for existing faculty because of high student-faculty ratios. Clearly, beyond simply providing skills, Mongolian universities need to do more to support innovation through research and technology.

Policy Priorities

For Mongolia to continue its rapid growth and achieve continued technological deepening, two immediate priorities are evident:

  • addressing skills gaps by providing higher quality higher education and dealing with the quality/quantity trade-off in higher education, and
  • start building research capacity relevant to economic needs in a few universities or departments

Among the policy levers the Mongolian government can use to address these priorities, it can:

  • initiate or complete the process of granting further autonomy to universities and university boards;
  • consider strengthening technical and vocational education and training as an alternative tertiary education;
  • support stronger incentives for providing high quality private higher education;
  • increase public funds for STEM areas;
  • increase and better target public spending on R&D; encourage selected university - industry linkages to improve

1Defined broadly to include all public and private formal institutions of learning that take place beyond upper secondary education.

2Whereas in 1992, there were only 20,000 students enrolled in higher education, this number increased almost eight-fold to 149,915 in 2007.