That's because in the 60s and 70s with a less educated population, paper qualification becomes the only effective measure of competence. So this idea worked during those period. But as decades went by, information reaches the digital age, variety of education increases, industries experience shifts again and again. Paper qualifications is no longer the only method of determining competence. Professional certificates, objectives driven performance indicators, advanced efficient management of resources, competition all come into the equation. But the chronic problem of passive thinking continue to plague government sectors and Government linked companies. The act of thought deferment to the next higher rank can damage the route for continual improvement. Insularity of job security adds on top the complacency so this idea remains. That's why you often hear about people encouraging the toxic idea of accepting status quo rather than improvement, questioning diligence and innovation rather than encouraging them. The MNCs on the other hand faces real competition daily. You get ousted if you don't transform and catch up (nokia and kodak are good examples). So they are on their toes daily ready to take your market share at the slightest opportunity. Also, without the protection of a thick resource drawn from the country, every cent counts, every project matters. This drives the employees to do well and prosper or screw up and lose out. With an open market, anyone who can contribute moves up. That paper is meant to help you do better, not a guarantee to be better. If you don't have that paper, there are other avenues to meet the same objective too. Whatever it takes to meet the target.