Future of business education
Business education in Bangladesh has rapidly evolved in recent times. It happened in the context of increasing deregulation of the economy and the deepening of its integration with the world economy. Bangladesh economy is three times bigger than it was in 1991. Our per capita GDP has more than doubled during the period. Even the growth rate of per capita GDP accelerated from less than 2.2% to more than 4.9%. As Panel B in the graph implies, a declining population growth rate combined with a rising GDP growth rate is indicative of a deeper socio-economic transformation in Bangladesh.
Bangladesh economy has also deeply integrated with the world economy. Trade-GDP ratio increased from less than 20% to about 60%. Trade gap, though widened, did not cause any serous imbalance in our external sector. Increased flow of inward remittances helped to meet this gap. This is a remarkable development. Goldman Sachs, American Citi Group and many others prominent in global finance labeled Bangladesh as one of the New 11 (N-11) emerging economies. This article connects this development to the future demand for business education in the country. It will then draw some implications for the next generation of graduates.
Given that more than 50% of our growth acceleration arises from the service sector (broadly defined) and that the integration with the world economy is deepening, we will require a growing supply of graduates having transferable skills and ability. It further indicates that Bangladesh could turn out to be a knowledge economy over a much shorter period than the time many advanced economies needed to achieve the same in the 19th and early 20th centuries. That Bangladesh may have more than 100 private universities by 2015 is a validation of this conjecture. It requires little explanation that business education dominates in this rising trend.
Business education has a broader perspective though. The requirement that it must embody transferable skills will likely set the trend. Why the next generation of graduates will need transferable skills requires further explanation. We are accustomed to believing that production is a local phenomenon and is largely intended to serve local demands. This is not correct in a globalising world.
For example, take the case of the flagship apparel industry in our country. A large part of the gross value of apparel exports from Bangladesh represents the cost of intermediate inputs that are imported from China and other Asian countries. The apparel industry in our country is thus a part of global value chain that combines global suppliers (for example, Y2K & Li & Fung) in Asia to global retailers (for example, Carrefour, Gap, JC Penney and Wal-Mart) in the developed world. This pattern of global integration of production has given rise to the demand for graduates having professional skills that are both relevant and transferable.
The criterion of relevance will depend on one's ability to apply his/her skills to rapidly evolving business needs and to communicate effectively across people and organisations. The criterion of transferability will depend on one's ability to move across operations. Business education as it is in the developing world does not address either of them. A future graduate will thus face difficulty in positioning himself/herself in the job market. This challenge is growing everyday as labour market is becoming increasingly global. Many local firms are now hiring foreign professionals to meet their business needs.
A long-term strategy is that business schools incorporate the right kind of curriculum and teaching methods in their degree programmes and that they continue to invest for the development of human and physical capital in the universities. In the short to medium term, some proactive measures can help students circumvent this crisis. One such approach is that they choose business disciplines that can help them to become business professionals. For example, choosing accounting education at public universities (or even in some good colleges) would be sufficient for one to embark on a professional programme. Examples are chartered accountancy (CA), cost and management accountancy (CMA), chartered financial analyst (CFA) programme, and so on. A general perception of both the parents and students is that having spent five to six years for graduate education it is almost impossible to go for further professional education. This perception is wrong and uninformed.
A student's choice for further professional education should be based on his/her incremental return to education, which is the increase in the present value of lifetime earnings of the student. A reliable estimate of it is very feasible. Assume that you plan for a job after your graduate degree in business. Given that job opportunities are limited in the public sector, and those are relatively low paid, your temptation would be high to join the private sector. But it would certainly be a low-level managerial job. You will require at least 10 years to reach mid-level managerial position. And remember that your earning begins at the lowest level of the pay scale.
On the contrary, if you invest an additional two to three years for a professional degree, you begin with a salary comparable to the level you would be at after 12 years without a professional degree. It is just not the difference in level; there will be growth difference too in the way that your benefits and future career progress over time. Some estimates show that the incremental return of professional accounting education would be many times larger than the lifetime earnings without a professional degree.
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