Despite the growing emphasis on STEM (Science, Technology, Engineering, and Mathematics) education and its potential for economic prosperity, evidence from emerging economies suggests that high production of STEM graduates does not necessarily lead to economic prosperity or high-paying job creation. Countries like India, Indonesia, Bangladesh, and Brazil are witnessing high unemployment rates among STEM graduates, challenging the assumption that a strong STEM workforce naturally fosters economic growth. Hence, the purpose of STEM education is now questioned in these countries.
1. STEM Education Growth vs. Economic Output: A Global Discrepancy
Many less-developed countries have expanded access to STEM education to enhance their economic potential. Countries like India and Brazil have invested in education infrastructure and promoted STEM fields to their youth, aiming to produce a highly skilled workforce that can drive technological advancement. However, despite a larger pool of STEM talent, these countries have not achieved commensurate economic growth or a boom in high-paying job opportunities. For instance:
- India has become one of the world’s largest producers of engineering graduates, with approximately 1.5 million engineers graduating annually. However, the employability rate among these graduates is shockingly low. According to a study by the employability assessment company Aspiring Minds, only around 20% of engineering graduates are suitable for employment.
- Brazil has similarly promoted STEM fields but faces a gap between graduate output and job creation. The Organization for Economic Cooperation and Development (OECD) reports that only around 8% of Brazilian tertiary education students are in science fields, a rate that matches developed countries; yet, unemployment among Brazilian STEM graduates remains high.
2. Mismatch Between STEM Skillsets and Market Demands
A fundamental issue in many emerging economies is the lack of alignment between STEM education and industry needs. One may say that many STEM programs focus on traditional subjects like mechanical or civil engineering without equipping students with skills relevant to the digital economy or newer, high-demand fields like data science, AI, or advanced biotechnology. Consequentially, there may be an argument that this misalignment limits the employability of STEM graduates, even as companies in these fields report talent shortages.
However, more importantly, the policy of importing capital machinery for pursuing import substitution or export-oriented manufacturing, creating a replication-based industrial economy, has been a significant cause of the limited demand for STEM competence to create Wealth. Besides, the lack of focus on scaling up grassroots Innovation has also been a limiting factor in the low demand for STEM competence to drive economic prosperity. Labor-centric industrial economy strategy and policies have been hindering the creation of local STEM competence markets. On the other hand, STEM education and R&D have been following the curricula of the top global schools instead of linking to scaling up the local industry through STEM-based idea flow. As a result, the correlation between STEM indicators and Economic Growth has been suffering in these countries.
- India faces a severe talent mismatch: while demand for digital skills like software development and AI is rising, many graduates are skilled only in traditional engineering. The resulting skills gap has led to high unemployment rates among STEM graduates, even as tech companies struggle to fill roles requiring modern technical skills. More importantly, due to strategy and policy barriers and management incompetence, traditional industries have not been pursuing their Reinvention or incremental advancement through locally available STEM competence.
- In Indonesia, STEM graduates also encounter challenges in employment due to a skills gap. As industries in Indonesia look to adopt more digital solutions and automation, there could be an argument that there’s a lack of graduates with the advanced technical skills required for these transitions. As a result, a sizable portion of graduates remain unemployed or underemployed. However, why are industry and academia failing to collaborate to address this gap? The underlying reason could be the barrier created by strategy, policy, and management competence guiding the industry and academia.
3. The Role of Infrastructure and Innovation Ecosystems
A successful correlation between STEM graduates and economic growth often depends on a supportive innovation ecosystem that includes strong industry partnerships, government policies, and infrastructure. In less developed economies, weak infrastructure and a lack of innovation-friendly policies hinder the impact of STEM education. For example:
- Brazil lacks an innovation infrastructure that could absorb a high volume of STEM graduates into productive roles. The country’s limited investment in R&D (at only 1.2% of GDP compared to an OECD average of 2.4%) and slow bureaucratic processes prevent it from creating startup ecosystems or R&D-driven industries that absorb STEM talent and foster innovation-driven economic growth.
- In India, while there is an active tech industry, challenges such as inadequate public infrastructure and bureaucratic barriers prevent the full economic absorption of STEM graduates. Infrastructure and resource constraints in the educational system also prevent many STEM students from gaining hands-on experience, which is crucial for innovation.
There is no denying that the infrastructure and innovation ecosystem matter. However, if they are improved through borrowing and giving contracts to foreign firms, will economic prosperity spar, creating millions of high-income jobs for STEM graduates in these and many other less-developed countries? Highly likely, it will not happen. Hence, what else has been missing is a question to be investigated.
4. STEM Employment Quality and Wage Disparities
For STEM education to contribute to economic prosperity, STEM jobs must offer competitive wages and growth potential. However, it is often in low-paying or contract-based roles in many less developed countries, even when STEM graduates find employment. This undermines the idea that a STEM degree guarantees a high-paying job and, by extension, economic prosperity. STEM graduates have been facing such a reality due to the limited success of turning STEM competence into economic prosperity. Notably, focusing on replicating industrial goods through imported capital machinery offers little or no scope for turning STEM competence into economic outputs.
- The tech industry’s high demand for low-cost labor in India leads to numerous low-wage STEM jobs. Many engineers work in positions that pay less than $300 per month, limiting their ability to contribute to broader economic growth. Furthermore, most STEM job opportunities are concentrated in urban areas, while rural regions continue to struggle with poverty.
- Indonesia has similar issues with wage disparities. Indonesia’s tech and manufacturing sectors primarily employ STEM graduates at relatively low wages compared to developed economies. This disparity in pay diminishes the potential economic impact of a STEM-focused workforce on the broader economy
5. Globalization and “Brain Drain” Impact
Globalization has encouraged skilled labor migration, leading many STEM graduates in less developed countries to seek opportunities abroad for better wages and job stability. One may suggest that this “brain drain” depletes the talent pool in the countries that invested in training these graduates, limiting the positive economic impact of their education. However, suppose the strategy, policy, and management competence do not open the wind of turning STEM competence into high-value economic output. How could less developed countries drive economic prosperity by stopping the outmigration of their top STEM graduates?
- India and Brazil experience high emigration rates among their top STEM talent. Many graduates seek higher-paying opportunities in the U.S., Europe, or Australia, which offer better R&D infrastructure, innovation ecosystems, and financial rewards for STEM professionals. This trend has left many industries in the home countries with skill shortages, further exacerbating the mismatch between STEM education and local economic development.
- Indonesia faces similar challenges, with top talents opting for international opportunities that offer higher wages and better career advancement. As a result, Indonesia struggles to cultivate a robust local workforce capable of driving innovation-led economic growth.
6. Strategy, Policy, Management Competence, and Institutional Support: The Missing Link
Countries that have successfully leveraged STEM education for economic prosperity typically have solid institutional frameworks, strategy, policy, and management competence that support innovation, industry partnerships, and skill development. In contrast, less developed countries often lack the cohesive policy frameworks and institutional support necessary for STEM graduates to drive innovation by leveraging technology possibilities.
- South Korea and Singapore demonstrate how policy support can maximize the benefits of STEM education. South Korea’s focus on High-tech industries, backed by substantial government investment in innovation and infrastructure, has led to sustained economic growth. At the same time, Singapore’s skill-focused education system aligns closely with industry needs, resulting in a high employment rate among STEM graduates. It’s worth noting that demonstration of how to transfer STEM education and R&D outputs into advancing local production processes for outperforming global competition and subsequent scaling through management competence have played a vital role in linking STEM to economic prosperity.
- In contrast, countries like Brazil and India lack coherent policy frameworks to bridge STEM education with industry needs effectively. One of the notable policy gaps has been developing an industrial economy through capital machinery import-driven replication or imitation of foreign products. This gap results in a surplus of graduates with skills that are underutilized in their domestic economies, preventing these countries from reaping the full economic benefits of their STEM investments.
Conclusion
The cases of India, Indonesia, and Brazil illustrate that a high output of STEM graduates does not automatically translate to economic prosperity or high-paying jobs. Instead, the effectiveness of STEM education as a driver of economic growth depends on multiple factors, including alignment with industry needs, creating industry demand for advancing production processes and products, scaling up grassroots innovation, infrastructure support, policy frameworks, and an innovation ecosystem. Without these foundational elements, even the most robust STEM educational systems may fail to foster economic growth. Therefore, it is evident that while STEM education is vital, it requires complementary factors to fulfill its potential as a catalyst for prosperity in emerging economies.
Five key takeaways from the discussion on the relationship between STEM indicators and economic prosperity:
- STEM Education Alone Doesn’t Guarantee Economic Growth: The presence of a high number of STEM graduates does not automatically translate to prosperity. Countries like India, Indonesia, and Brazil demonstrate that STEM education alone struggles to drive economic success without adequate infrastructure, policy alignment, and industry needs.
- Mismatch Between Skills and Market Needs and Lack of Local Demand for Ideas: High unemployment rates among STEM graduates in many emerging economies reveal a critical mismatch. This gap highlights the importance of aligning education programs with industry demands, such as digital skills in software development, AI, or advanced engineering.
- Importance of Infrastructure and Innovation Ecosystems: Economies like South Korea and Singapore demonstrate that a robust innovation ecosystem, supported by government policy and R&D investment, is essential for maximizing the economic potential of a STEM-educated workforce.
- Impact of Globalization and “Brain Drain”: High-performing STEM graduates often migrate to developed countries with more robust economic opportunities, reducing the talent available to support growth in their home countries. This “brain drain” limits the positive impact of STEM education investments in less developed countries.
- Need for Comprehensive Strategy, Policy, and Management Competence Support: Countries that successfully leverage STEM for economic growth, such as South Korea, typically have policy frameworks and industry partnerships. In contrast, countries like India and Brazil lack the structured policy support to make STEM education an effective driver of prosperity.
Five potential research questions based on the topic of STEM indicators, job creation, and economic prosperity in less-developed countries:
- What factors contribute to the high unemployment rate among STEM graduates in emerging economies, and how do they differ from factors in developed nations?
- How do government strategy, policies, and management competence in less-developed countries influence the alignment between STEM education outputs and high-paying job creation?
- To what extent does “brain drain” impact the economic returns of STEM education investments in countries like India, Indonesia, and Brazil?
- How effective are national innovation ecosystems in translating high STEM indicators into economic prosperity across various levels of development?
- What role does industry collaboration with educational institutions play in enhancing the employability of STEM graduates in developing economies?
These questions could help explore the complexities around STEM education and its real economic impacts in diverse socioeconomic contexts.