Secondary analysis of macro-economic data from the World Bank is conducted in order to investigate the role of tertiary education in promoting economic development in India since the neoliberal economic reforms of the 1990’s. Globalisation Theory provides the theoretical framework to analyse the economic rationale for expanding Higher Education (HE), by incorporating a greater role for the private sector and directing a greater proportion of public funds towards specialised Institutions, as an instrument through which to realise economic growth and emerge as a key player in the global knowledge economy.
Comprehensive background analysis reveals that globalisation manifests itself in HE through commercialisation, privatisation and capitalisation which are driven through financial considerations rather than a coherent strategy for improving education. The de facto privatisation of HE in India, which emerges against a background of reduced government investment, appears chaotic and unplanned. In 2005 the government belatedly began to recognise knowledge as the key driving force in the 21st Century and the National Knowledge Commission it created has helped influence educational policy by emphasising the importance of HE not only in contributing to economic development but also social progress and political democracy (NKC, p62, 2009).
Statistical analysis reveals significant correlation between enrolment in HE and economic growth over the period but cautions that HE is only part of socioeconomic policy and that additional research is required to prove causation. Establishing HE as a necessary, but not sufficient, precondition for economic growth, an education production function is developed which incorporates other precipitant factors, such as digital communications infrastructure, innovation, and a business friendly regulatory environment. Only by considering investment in HE in consort with these other components of socioeconomic policy prescription, and in conjunction with action to address market failure in the sector through the introduction of a credible and universal system of quality assurance, can India seek to maximise the contribution of HE to economic development.