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INTRODUCTION

Before dwelling into the topic of which is the biggest blocker of a country’s economic
development, let us take into consideration first, the definition and concept of development. Economic growth
is the amount of development that takes place in the economy or on the operations cycle on a particular period
of time. It is the set of measures and plans that many individuals who make decisions seek to take within the
borders of the state. These decisions are important and vital decisions that raise the economic level in general,
as well as improve the conditions of citizens and individuals who reside in that specific country. This leads to
improving the economy in general and improving all aspects of life. In short, economic development is
everything that individuals and groups living in society do in order to improve economic conditions and
generate income and money within the country's borders, for example, all business investments, and projects
as well as internal and external commercial activities that are carried out inside the country bring financial and
good economic returns to the state.
It is possible that the economic development process will face some difficulties and obstacles,
and some changes may occur in all the plans that are developed. There are many things that happen to the
economy that negatively affects it but they are unpredictable or even minimized. Economic development is
considered one of the matters and criteria that may change with the surrounding circumstances and also may
not proceed according to the decreed plan. The development of the economic state may face many obstacles
and barriers that limit its evaluation and growth. These barriers make it difficult for a firm to enter a given
market. From this standpoint, successful plans usually take into account the economic barriers, as well as
place them at the forefront and work to find solutions to confront them by exploiting successful means to
overcome and control them. These economic obstacles hinder the progress of societies and nations. Some of
the most significant obstacles that economies may face today include high population growth rates, high
illiteracy rates, poor infrastructure, human capital inadequacies, foreign currency gap and capital flight, unsafe
water supplies, inadequate housing facilities, ethnic and religious conflict, corruption, poor governance, poor
health services, primary product dependency, and/or declining terms of trade.
In this paper, the reason and mechanism on how low literacy rate of a nation’s citizens can be
the biggest hindrance towards the achievement of country’s economic growth will be expounded. Given the
wide variety of the factors and indicators that we can look into, this was chosen as the major deal knowing how
education could have a big and significant impact in one’s life. In a bigger picture, education may also be the
one to move nations and fuel its engine towards achieving economic growth and development. Education is a
complex concept with a wide range of definitions and interpretations but to put it simply, education is a
powerful tool that empowers and provide knowledge to people about their obligations to their families, friends,
and most importantly, to the society. Education begins at home when kids are taught how to act, what to eat,
what to wear, and many other life skills. Therefore, they receive their early education from their parents and
then attend elementary school, where they are instructed in various subjects, manners, and what is and is not
an appropriate behavior. People receive education in a variety of ways throughout their entire lives, and an
uneducated society does not have a future in this world. Stability in our lives is a result of education. People
have to work for their job goals and education is the best way to achieve that. More so, education also has the
advantage of ensuring financial security. Higher qualified people acquire the dream career they’ve wanted
since they were young. So, with education, one’s future is secured. One person being employed could be a big
push to economic advancements. The government invests a lot of money in education so that their people can
get an education and contribute to developing their nation’s economy. A nation’s Gross Domestic Product or
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GDP is based on the number of employed citizens, and since most jobs require a college degree. Education
helps the economy thrive. People benefit their society and their country by educating themselves, their kids,
and others as every country aspires to an educated society in the future.
Now that we have already knew the extent or impact that education could possibly bring in
one’s life, it is important to keep in mind that the lack of it would surely result to serious and massive
downsides. One of its negative effects is that it could bring tremendous impact to our country’s economic
standing. To further elaborate the point in more cohesive, comprehensive, and detailed way, this paper was
subdivided to different parts, each showing us different sides and perspectives to consider and ponder on.

How do literacy and education propel economic growth and at the same time, how the devastating data that
may result from it would be its biggest blockage

What does better education have to do with economic gains? A country’s economic growth is
dependent on the skills of its workers. It turns out that math and reading proficiency are good predictors of the
skills that lead to growth. Without basic numeracy and literary abilities, people don’t have a strong foundation
for more advanced knowledge that leads to more productive work. For instance, during the past century, the
United States grew quickly because they embraced universal education earlier than other countries resulting in
a relatively more skilled workforce. But over the years, its educational advantage has slowly declined and
disappeared. International test scores put their math and reading proficiency around 30th in the world
signifying a possibly low future economic growth. Even students with college-educated parents who would be
expected to do well actually don’t compare to student in other countries. Let us take for example, the
neighboring country, Canada. Canadians’ math and reading level which is higher than Americans’ with a
significant margin would lead to a more productive workforce adding trillions to the economy in the long run
and boosting every worker’s pay and wages check. Through improving literacy and education, it doesn’t
guarantee that the economy would be fixed overnight but it would immensely improve the lives of future
generations. Usually, the government have set and established different policies and plans in improving their
nation’s economy but no matter what they choose, only one thing is clear- if students become more proficient
in literacy and numeracy, then long-run economic growth will follow and will be on our hands.
On the other hand, low literacy rate could and would be a major problem in achieving growth
and development of our economic state. Low literacy in individuals stems from different, generally inter-related
causes which, together, create a series of often insurmountable barriers for those concerned. It is important to
note that it is not only the lack of intellectual quotient that affects low literacy rate but also learning disabilities,
lack of a role model in a family, poverty and the need to focus on survival means and needs rather than
studying in school, violence and fear in the community, migration or difficulty in transferring schools and child
labor. One of the consequences of low literacy rate is that it negatively affects individuals in their daily lives and
can jeopardize their future. The issue also has a significant effect on society, both socially and economically.
The unemployment rate could be 2 to 4 times higher among those with little schooling than among those with
bachelor’s degrees. Low-literate adults who are employed often turn down promotions or advancement
opportunities because they fear the paperwork that will be required. In short, low literacy rate result to lower
income and lower-quality jobs among adults. It is a great disadvantage since employment rate and salary-
wages levels are being considered in indicating if an economy is developed, developing or underdeveloped. In
the long run, this may cause to reduced access to lifelong learning and professional development and
precarious financial position and instability that would obviously affect the economy over the years too. Since
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literacy is an essential tool for individuals and states to be competitive in the new global knowledge economy,
many positions remain vacant for lack of personnel adequately trained to hold them. Additional costs to
taxpayers due to increased unemployment compensation and welfare payments. With this, the higher the
proportion of adults with low literacy proficiency is, the slower the overall long-term GDP growth rate is.
With the elaboration above, it can be concluded that a good level of literacy rate brings positive
impacts to the economy in terms of employment and income that affect the country’s GDP while lower levels
result to negative outcomes. Moving on, let us take a look back at the past and examine the correlation of our
country’s education system from previous administrations and the state of our economy that time.

History and background of the education system in the Philippines from various administrations and how it
correlated with the past economic standing of our nation

The Philippines has embarked on significant education reforms for the past three decades to
raise the quality of education at all levels and address inclusion and equity issues. The country’s “AmBisyon
Natin 2040” (word play of “The Vision”) or the national vision for a prosperous and healthy society by 2040 is
premised on education’s role in developing human capital through quality lifelong learning opportunities.
Education governance is handled by three government agencies overseeing the broad education sector of the
country. At the same time, regional initiatives relating to ASEAN commitments are also witnessed in the sector.
However, despite the mentioned education reforms and initiatives, the education system remains beset by
challenges. This section of the position paper will provide an overview of the education system of the
Philippines through an account of its historical context and its main providers and programs together with the
key reforms and issues within the economic sectors. Moreover, this paper examines if there is any significant
connection with the educational system and the economic state while basing in on numbers, figures, and data
from Philippine statistics from the past years and presidential terms.
Prior to World War I, the literacy rate in the Philippines was at a dismal 20%. But it was one of
the countries that experienced rapid school expansion in the late 1930s, according to UNESCO in 2006.
Literacy rates rose to the middle range during the 1950s with 35% up to 75%, and these literacy transitions are
linked to educational expansion. By 2000, organizations inside and outside of the Philippines measured youth
literacy rates between 95% and 96.6%. This is due to the government’s provision of continuous support to
teachers and other personnel critical to the reading program in schools. For example, the Department of
Education provides training, support materials, and guidelines on how to operationalize early literacy
programs. As more people get a better education, the Philippines’ literacy rate has improved. Together with the
efforts of the government as the new administration was proclaimed to position, and the cooperation of the
citizens, the literacy rate in forthcoming years had achieved its real-time highest.
Between 2010-2015, the literacy rate was highest in the year 2015 and lowest in the year 2012.
The average literacy rate reached 99.27% in between those mentioned years. From 2010 to 2015, the literacy
rate of the Philippines increased by 1.4%. On a year-on-year basis, the literacy rate increased by 0.03%. The
literacy rate shows how well primary education and literacy programs are working generally, instills
fundamental literacy skills in the populace, puts these abilities to use in daily life, and makes it possible for
people to master written language and stay in touch. The ability to read and write indicates the potential for
greater intellectual development as well as society's economic and socio-cultural advancement. It can be
noted that the head of the state during this time was the late President Benigno Simeon C. Aquino III. During
his reign, the gross domestic product (GDP) grew by an average of 6.5 percent from 2010 to 2015. With the
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population growth rate of around two percent per year during this period, per capita output has grown by 4.5
percent. This is a substantial record of per capita growth for a sustained period in Philippine economic history.
The high rate of employment and income levels during these times were the biggest contributors and affecters
on how we were able to come up with such figures and numbers. Such record of growth in current years has
been outstanding during the same period in East and Southeast Asia which was still reeling from the effects of
a world recession. The Philippine performance was a bright spot in a fairly depressed economic world in this
decade. The period wherein our country has recorded its highest data so far in terms of literacy rate is
simultaneous as the time where our nation is experiencing fair economic state despite the financial crisis that
the world had undergone that time. It is not a mere coincidence or pure luck but this signifies that a good level
of literacy rate indeed brings favorable outcomes to the economy.

Recent data and figures on Filipinos’ literacy rate and its interconnection with the current Philippine economy

The World Literacy Foundation reports in their recent findings that the problem of illiteracy costs
the country's economy an estimated P258 billion or $4.72 billion every year. In its newly released report called
“Economic Cost and Social Impact of Illiteracy”, the international organization said they found that the impact
of illiteracy cuts across different aspects of social welfare and the economy. Its impact on personal income
varies but it is clear earning potential is limited. Illiterate people earn 30%-42% less than their literate
counterparts, around the world. The study also reported that people who cannot read or write struggle to find
opportunities to increase their earnings due to the absence of basic literacy skills needed for vocational
education or training. Illiteracy has led to lost earnings and limited employability and lost business productivity
around the world. Surprisingly, it also showed that the effects and costs of illiteracy apply equally in both
developed and developing nations.
It turns out that “literacy” is an umbrella term that refers not only to academic knowledge
learned through formal, informal and non-formal education, but also being literate in real life situations or being
“street smart”. Financial literacy or the knowledge of finance, banking, investments, and money savings is also
one if its subcomponents. People struggling to read and write can also miss out on "wealth creation"
opportunities due to the comprehension skills required of individuals applying for a loan or investments in
various financial instruments. For instance, a family in a developed country will purchase a home using a
mortgage and work many years to pay off the house but such homeowners do not understand the bank loans
they take out although they sign legally-binding documents to get them, in most cases. People struggling with
literacy will also struggle to establish a "personal financial plan" or evaluate financial investments to provide
themselves with a retirement income, among other means of generating income.
The devastating impact of the COVID-19 pandemic also affected Philippine education system in
a massive way as schools had no choice to adapt to a new learning modality that would be flexible for both
teachers or learners. Schools were under blended/modular/online class setting just a year ago before recently
switching back to face-to-face classes. Andrew Kay, the World Literacy Foundation Chief Executive Officer and
co-author of the report explained that early data shows a drop in literacy rates post-pandemic, justifying the
need for urgent literacy programs. In the Philippines, at least nine out of 10 children aged 10 struggle to read
and write simple text, according to the World Bank’s latest statistics on learning poverty in 2021. The country
also ranked lowest among 79 countries that participated in a 2018 international reading literacy assessment. It
can be concluded that the educational environment and literacy rate of the nation and the citizens is in an
alarming and concerning state in the current time. And as we can observe, the country’s economy seems to be
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struggling too with recent reports in inflation or the sudden increase in the price of prime commodities like food,
water, and medicine, as well as industrial products like fuel, gas, oil, and other manufactured goods.
The underwhelming level of literacy rate and the seemingly-failed education system mirrors the
not-so-good state of our economy for the past five years. Duterte’s most troubling legacy was setting back an
economy that was on a promising track before he arrived in 2016 (back in Aquino’s time where the literacy
rates are acceptable and the economy is thriving- though not at its best or at peak but no also on the deepest
bottom). For all the spin about Duterte making the Philippines great again, the clear evidence is that the
economic renaissance he inherited has ebbed away on his watch.

Factors and issues affecting citizens’ literacy rate and government efforts in combatting these problems
towards the aspiration of improving our country’s economy.
 
The previous subdivisions of this paper have deeply expounded the weight of the importance of
literacy and education that is why it is really one of the top priorities that countries should consider and focus
on to reach for the summit of growth and development. In the Philippines, the ability to read and write is a
priority, so any effort to promote literacy by the government, organizations, or even private individuals is
recognized and renowned. “It is through literacy that one is empowered to interact in his community and
realizes his worth, what he can do and eventually make him do things that contribute in sustainable
development of his society,” said the 2014 Department of Education (DepEd) Literacy Coordinating Council
office-in-charge Dina Ocampo.
Vice President and Education Secretary Sara Duterte acknowledged the severity of the
country’s growing number of frustrated readers in the department’s first Basic Education Report back in
January of the present year. Teachers and other local education officials have highlighted how students’
inability to grasp complex material affects their performance in almost every other subject area, like language,
history and the social sciences. To address illiteracy, the report recommended governments around the world
to implement adult and parental literacy programs. The Department of Education has long detected several
frustrated readers in schools prompting the creation of several local and national reading programs through the
years. Education leaders have also come up with strategies to ensure students stay in schools, such as the
inclusion of vocational training and the construction of more schools to reach geographically isolated students
and more scholarships for financially insecure students.
The Philippines committed to Education for All (EFA) 2015 Goals at the World Education Forum
resulting in the Philippine EFA 2015 National Action Plan, “Functionally Literate Filipinos: An Educated Nation.”
This plan focuses on achieving wider access to education and life skills programs, a 50% improvement in
levels of adult literacy (age 15 and older), and remarkable learning outcomes in literacy, numeracy, and
essential life skills. On the other hand, DepEd is currently finalizing the policy on Learning Action Cell
implementation and strengthening which is a sustainable and cost-effective means of supporting teacher
development. The Learning Action Cells are group-based intervention toward improving teaching practice, and
that the reading program, especially in the K–3 stage, will benefit substantially from the intervention. The
aforementioned government agency also seeks to develop more reading experts from the ranks of teachers
through scholarships, long-term trainings, locally available or abroad, to help strengthen the reading programs.
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CONCLUSION

Literacy has been conceptualized traditionally as having a major role in developing a nation.
Literacy helps to spread awareness among the people of their rights. People with good literacy skills enjoy a
higher standard of living, have better opportunities of finding jobs, and are able to continue to learn new skills
that will help them in the workplace. A nation with high literacy rate is more likely to attract a large pool of
investors and entrepreneurs as well as the inflow of money which in turn have a great impact on the nation’s
economy. A society’s economic prosperity and literacy have great influence on each other as they jointly grow
together.
Human Capital Theory explains that investing in education has a payoff in terms of higher
wages. Investments in more able workers at any age generate higher returns than investments in less able
workers, and ability is formed at early ages. This is because of the concept of “neurogenesis” which states that
learning can continue into advanced ages. The relative costs and benefits to investments in older persons
compared to younger persons differs. Overall, an additional one (1) year of schooling raises earnings by 10
percent a year. This is typically more than any other investment an individual could make. The value of human
capital or the share of human capital in total wealth is 62%. That’s four times the value of produced capital
and 15 times the value of natural capital. Globally, the government, private sector, families, and individuals
spend more than $5.6 trillion a year on education and training. Countries spend 5% of GDP on education or
20% of their national budget. Education employs about five percent of the labor force.

To promote success in today’s labor market, one needs to invest early on relevant skills.
Education systems that do well prepare children early on, reform continuously, and use information for
improvement and accountability. Countries need to improve quality, strive for excellence, and expand
opportunities, based on efficiency and equity. This means ensuring that disadvantaged youth enroll and
succeed. Education is truly one of the most powerful instruments for reducing poverty and inequality and it sets
the foundation for sustained economic growth. Nations should start investing in it more!
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LIST OF SOURCES AND REFERENCES

Online Books
Symaco, L.P., Bustos, M.T.A.P. (2022). Overview of Education in the Philippines. In: Symaco, L.P., Hayden, M.
(eds) International Handbook on Education in South East Asia. Springer International Handbooks of Education.
Springer, Singapore.

Educational Sites
Cristobal, L., (2015). “Literacy in the Philippines: The Stories Behind the Numbers”. International Literacy
Association. Newark, DE 19714-8139, US.

Global Data (2021). “Literacy Rate in the Philippines”. John Carpenter Street, London, EC4Y 0AN, UK.

Literacy Pittsburgh (2021). “Challenges of Low Literacy”. 411 Seventh Avenue. Suite 525 Pittsburgh, PA
15219.

Patrinos, H., (2016). Education for Global Development: “Why education matters for economic development”.
World Bank.

The Scientific World (2021). “What are the Barriers to Economic Growth and Development?”.

University of Potomac (2022). “Why Education is Important in our Life”. UOTP Marketing.

Yeoh, E. and Chu K.M., (2012). “Literacy, Education and Economic Development in Contemporary China”.
SSRN Product & Services. University of Malayu.

Online Newspapers and Magazines

Pesek, W., (2021). “Philippine GDP Masks How Duterte Is Undermining Country’s Economic Future”. Forbes
Asia.

Sicat, G., (2021). The Philippine Star (Philstar) Global. “President Noynoy Aquino and the PHL economy,
2010-2016”. Crossroads towards Philippine Economic and Social Progress.