A true catastrophe is unfolding in Ukraine's education system, according to Alexey Kusch.

Two years of pandemic, three years of war.

We are witnessing a genuine catastrophe in the higher and secondary education systems.

This is a systemic issue, even generational.

Independent international testing revealed the scale of the problem last year: 60% of students fall short of the basic knowledge level in mathematics, natural sciences, and text comprehension.

For instance, they struggle to add fractions with different denominators or even to simplify a fraction.

German economist Bruno Knauss wrote in 1963 a book titled "The Role and Importance of Vocational Education in Development Planning."

The key idea, which later became a modification of the "vicious cycle of poverty" theory, is approximately as follows:

"…a backward economy does not allow for the allocation of sufficient funds for the development of education and vocational training and retraining, leading to a low skill level of the workforce, a constant shortage of specialists, which in turn results in low labor productivity, thereby further contributing to the backwardness of the economy, which cannot allocate sufficient resources to overcome the existing trend."

This is roughly one of the "circles of poverty" that has closed in Ukraine, which I wrote about even before the war.

Any education system is about preparing human capital in accordance with the internal demand from the real sector of the economy.

For whom are we training engineers, technologists, aviators, and scientists if our factories are closing and scientific institutions are being reduced?

At the dawn of independence, the Ukrainian economy ranked in the top 40 in terms of complexity (data from the Economic Complexity Lab by Hausmann and Hidalgo), surpassing its neighbors.

Now we have dropped below 50th place and fall behind nearly all regional competitors.

And it will get even worse, as we have not been moving towards a model of national industrial policy and the renovation of the industrial core, but rather towards a model of "simple solutions and even simpler results."

We lack correlation between state economic policy and educational demand and the structure of applicants. Between the demand for professions from businesses and the supply of professions from universities.

To put it more accurately — there is a complete imbalance.

The education system in successful countries is based on cluster development. This is its success.

Every university must be a generator of knowledge and innovation flow.

This can only happen if it is one of the elements of a technological cluster alongside enterprises in the real sector and research institutions.

Universities form human capital, science generates innovations, and industry creates demand for them.

The best clinics in the West are university-based.

As centers for the transfer of innovations to ensure their diffusion in the economy, both state and market mechanisms play a central role in the cluster development model.

From the state side — innovation and knowledge transfer centers.

From the business side: business angels and mentors.

The Polish economic miracle, for example, is based on innovation transfer centers and cluster development.

Then intersectoral flows of knowledge and innovations are formed, as seen in the interaction of clusters in the Netherlands.

However, in a service-resource economy, smart people are indeed not needed.