Dina Powell, Global Head of Corporate Engagement, Goldman Sachs, Op-Ed in Yomiuri Shimbun: Education Holds the Key to Economic Growth
Education Holds the Key to Economic Growth
By Dina Powell, Global Head of Corporate Engagement, Goldman Sachs
As a financial institution, Goldman Sachs is focused on economic growth. Even in our approach to philanthropy, we remain committed to aligning our social investments with community engagement and long-term economic growth. As part of those efforts, we have been focusing on education, as we believe education holds the key to improving the quality of people’s daily lives, boosting income levels, reducing inequality and ultimately creating more prosperous communities and countries. As an investment bank, we fully recognize the importance and significance of this multiplier effect that education has on facilitating economic growth.
This was the thinking behind our 10,000 Women initiative, which we launched in 2008. Leveraging the network of educational experts which I had worked with during my tenure as Assistant Secretary of State for Educational and Cultural Affairs, we created a program to provide women entrepreneurs in emerging markets with access to business education. By providing women business owners with training in marketing, accounting, strategic business planning and accessing capital, we hoped to help them boost their productivity, increase employment and bring their businesses to a new level. The program has graduated more than 7,000 women to date, and already we have seen dramatic results, with 82% of graduates increasing revenues. Nine out of 10 women serve as mentors in their communities.
In 2005, our chief Japan strategist Kathy Matsui published an eye-opening report titled “Womenomics: Japan’s Hidden Asset,” which showed that by raising Japan’s female labor participation rate to the same level as that for men (80%) would provide a significant boost to the nation’s gross domestic product.
Another one of our reports found that the powerful connection between women and economic growth is amplified in emerging markets, where economic improvements, such as higher wages and increased jobs, would be accompanied by improvements in the mortality rate and health conditions. According to our calculations, a one percentage point increase in female education raises the average level of GDP by 0.37ppt and raises annual GDP growth rates by 0.2ppt on average.
In Japan, surprisingly, the poverty rate among children is surprisingly high. According to a 2006 study by the Organization of Economic Cooperation and Development (OECD) the rate, especially among single-parent households was one of the worst among the 30 member nations. The study also noted that there was a risk of poverty being handed down among generations through the lack of access to high-quality education among children in low-income households. Government data shows that the percentage of children from orphanages who advance to college averaged 11% as of March 2012, compared to the nationwide average of 54.3%.
To break this cycle, Goldman Sachs has been providing educational assistance to children of various ages living in orphanages, through donations and through volunteer work by our employees. We hope this will help pave the way for a brighter future for the underserved children of Japan. With Japan’s population rapidly ageing and shrinking, Japan can not afford to squander its existing resources.
In this way, education is an effective tool in spurring necessary changes in society. But providing equal educational opportunities to everyone is not something that can be done overnight. That is why we need to raise awareness of these issues on a broader, more social level. By making society more receptive to necessary change, we can create an environment where companies can come up with truly effective ways to give back to their communities, or to “invest” in society, in a way that will have measurable impact on economic growth.