Government+Education+Funding

TITLE OF EXTRACT: Government to Raise Education Spending to 4% of Nation’s GDP SOURCE: China Daily DATE EXTRACT WAS WRITTEN: March 6, 2012 DATE CURRENT EVENT WAS WRITTEN: March 6, 2012 EXPLANATION OF THE ECONOMIC THEORY RELATED TO THE ARTICLE: The government’s plan to raise the education spending to 4 % of the nation’s GDP has been a prolonged goal that has just recently been accomplished. This percent equals to around 2 trillion Yuan (311 billion dollars) assuming that China’s GDP growth rate is around 7.5. In 2010 the education spending was 3.66% of China’s GDP and has since experienced a 0.34% increase. The government will now provide subsidy to the education system to benefit the public’s interest. This has both positive and negative effects regarding opportunity costs and quantity supplied. The main goal for the increase in education spending is to make schools systems in china more equal to close the gap between the rich and the poor. This means greater funding for the western rural areas. However the difference in tax revenues throughout China has caused unequal quality in education. The resources that will be provided from the education funding will increase quantity supplied. By the end of this year, China hopes to make efforts to ensure that schools of the same kind possess the same facilities.

VOCABULARY TERMS AND DEFINITIONS: Opportunity Cost: The loss of potential gain from other alternatives when one alternative is chosen. Resource Allocation: assign the available resources in an economical way, considers both resource availability and time. Subsides: Monetary assistance granted by a government to a person or group in support of an enterprise regarded as being in the public interest. Quantity Supplied: The amount of product that producers wish to sell in some time period

GDP: Gross Domestic Product. The total value of goods produced and services provided in a country during one year.

DIAGRAMS: EVALUATION The increase in percent of GDP education funding has both negative and positive effects. There is a benefit for education systems and a loss for other aspects that need government funding such as agriculture or industrial needs. The subsidies that would have gone to help companies and increase GDP will be given to the education system. The government should continue the increase in education funding because 311 billion dollars will not be enough to cover all expenses for education. China should focus more on quality and quantity of education versus GDP growth. The future of China is dependent on the young generation, thus education is vital to the assurance of China’s future.