Does Schooling Influence Productivity? The Case of Ethiopian Manufacturing Enterprises

An empirical investigation was conducted to verify whether schooling influences productivity in the Ethiopian Public Manufacturing Industries. The results indicate that schooling influences the productivity of manufacturing enterprises significantly; viz, the higher the proportion of the labour force with a high level of schooling in an enterprise, the higher is productivity. This implies that increasing the proportion of social wealth expended on education is paying and that the education system in Ethiopia seems effective in translating skilled manpower into services. This, in turn, implies that not only broadening schooling in terms of quantity, but also deepening schooling by fostering quality could increase the productivity of manufacturing enterprises. Thus, government has to intervene in supplying skilled manpower since there is a serious risk of private under-investment in training at a firm level. However, for successful industrialisation to take place, any government move to supply these resources should involve the beneficiaries in order to balance demand and supply; give emphasis to tertiary education as strongly as basic education; and synchronise with other supportive schemes since human capital investment on its own cannot lead to the industrialisation of a country.