Developed countries typically record a Gross Enrolment Ratio of around 50 per cent in higher education. This is often interpreted as a causal determinant of economic development. A more plausible interpretation is that a high GER is primarily an outcome of development rather than its cause. Advanced economies occupy higher segments of global value chains where value addition, productivity, and wages are relatively high. This structural position reduces dependence on low-skill and low-paying employment and enables a larger proportion of the population to remain in extended formal education.
The ability of these economies to sustain high levels of participation in higher education has historically been supported by persistent economic surpluses generated through technological leadership, market dominance, and control over intellectual property. Global value-chain theory suggests that such advantages are not static. As late-developing economies acquire industrial capabilities and move upward within value chains, high-return activities diffuse geographically. This diffusion is likely to compress margins in advanced economies and weaken their surplus-generating capacity. As a result, a greater share of routine, labour-intensive, or lower-return work may need to be undertaken domestically within these economies. In such circumstances, maintaining very high enrolment in long-duration and resource-intensive higher education becomes fiscally and economically more difficult. What currently appears as a stable feature of developed economies may thus prove contingent upon a historically specific configuration of global economic power.
For India, the implications are twofold. First, educational expansion must follow a deliberate sequencing aligned with developmental needs and labour-market realities. Universalisation of primary education remains foundational. This must be followed by systematic vocationalisation at the intermediate level to equip a large workforce with employable skills. Higher education, in turn, should emphasise selective specialisation and excellence rather than mass expansion. Treating higher education as an undifferentiated good risks weakening quality, misaligning skills with economic demand, and dissipating limited public resources.
Second, higher education must be viewed not only as an instrument of domestic capability building but also as a tradable service embedded in the global economy. Countries that host high-quality universities attract international students, generate export earnings, conserve foreign exchange, and extend cultural and intellectual influence. In this respect, the recent establishment of foreign university campuses in India is a positive development. Such initiatives reduce outward capital flows, introduce competitive benchmarks, and place performance pressure on Indian universities, both public and privately managed, to improve academic standards, governance practices, and global engagement.
Niraj Kumar Jha
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