The contemporary world is in a rapid flux as knowledge gradually replaces physical capital as the primary source of achieving progress, prosperity, and development. In these contemporary times, the origins of global wealth are no longer confined simply to the availability of machinery, tools, land, and factories. Rather, knowledge and skilled labor force have acquired critical position in the prospects of progress for the present and future economies. Technological advancements and innovations especially in the fields of communications, information technology, and biotechnology are at the forefront of ushering in some of the most remarkable changes in the social, political, organizational, and economic spheres of human existence. With the rising significance of knowledge in today’s world, higher education has also acquired critical importance due to its ability to produce competent knowledge workers for the global knowledge economy.

In early 2000, UNESCO in collaboration with the World Bank convened a Task Force on Higher Education and Society (TFHES), in order to bring together experts from thirteen different countries to analyze the future role of higher education specifically in the developing countries. The final report of the task force rendered important results and recommendations by emphasizing the importance of higher education for achieving economic growth and prosperity in the globalized world economy. The report categorically stated that national competitiveness in the present globalized world largely depended upon the production, quality, and availability of knowledge to the various sectors of the national economy as knowledge has become a vital area of advantage. To signify the importance of higher education for the present epoch, the report quoted the following lines from Malcolm Gillis:

“Today, more than ever before in human history, the wealth—or poverty—of nations depends on the quality of higher education. Those with a larger repertoire of skills and a greater capacity for learning can look forward to lifetimes of unprecedented economic fulfillment. But in the coming decades the poorly educated face little better than the dreary prospects of lives of quiet desperation.” Malcolm Gillis, President of Rice University, 12 February 1999 (TFHES, 2000, p. 15)

According to the recent estimations, more than eighty percent of world’s population resides in the developing world, and in the absence of adequate access to more and better higher education, countries of the developing world will not be able to participate and take advantage of global knowledge-based economy. Generally, all type of education is linked with higher productivity, superior skills, and higher standards of living, along with enhanced human capacity for personal growth and achievement. However, higher education, in particular, allows people to have greater intellectual independence and to enjoy an enhanced ‘life of mind’ coupled with socio-economic benefits. According to various scholars, higher education not only plays important role in the formation of strong nation states, it also contributes towards promoting internationalism.

Developing higher education capacities have also been found to be significantly related to the improvement in a number of important social development indicators such as, Human Development Index, Gender Development Index, Gender Empowerment Index, life expectancy, infant mortality rate, total fertility rate and poverty reduction. Recent body of knowledge regarding the contribution of higher education towards improvement of development indicators has pointed out that it is a determinant as well as a result of income, which can potentially produce public and private benefits. Some authors have also claimed that higher education may produce increased savings and investment, lead to greater tax revenues, and pave the way to a more entrepreneurial and civic society. Moreover, it has been claimed that improved education can contribute towards reducing population growth, improve development of technology, and has significant impact on the quality of governance. On the other hand, various publications have succeeded in showing a strong correlation between higher education development and GDP growth through human capital formation, technology dissemination, and social reforms.

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