Globalisation, Education and Development: The Case of East Asia

1
Globalisation, Education and DevelopmentThe
Case of East Asia
National University of Tainan 18.5.07

• Andy Green
• Institute of Education
• University of London

2
Research Project

• Globalisation, Education and Development
• Funded by DFID
• (Department for International Development)
• Published by DFID in May 2007
• Green, A., Little, A., Kamat, S., Oketch, M. and
  Vickers, E.
• Education and Development in a Global Era
  Strategies for Successful Globalisation

3
Scope of IOE Project

• A Review and Synthesis of the Literature on
  Globalisation, Education and Development with
  respect to
• Education, Globalisation and Economic Development
• Globalisation, Skills, Qualifications and
  Livelihoods
• Education and Social Cohesion
• Based on
• General International Literature
• Literature Specific to China, Kenya, India and
  Sri Lanka

4
Aims of Research

• To assess the role of education in promoting
  successful engagement with the Global Economy.
• By successful we mean ways of engaging with
  globalization which lead to economic growth with
• Reduction in Poverty
• Increasing income equality
• Social Improvements (including greater social
  cohesion)
• Growth with Equity

5
The Importance of Globalisation

• Globalisation
• understood as the rapid acceleration of
  cross-border movements of good, labour capital
  services, information and ideas
• Changes the terms of development

6
Theories of globalisation and development

• There are many theories of globalisation
• Hyper-globalisation theory (Ohmae et al)
• Sceptics (Hirst and Thompson)
• Transformationalists (Held)
• How you view globalisation will determine how
  you view the possibilities for development.

7
Different emphases 1 Convergence or divergence?

• If you view globalisation as an inevitable,
  linear, convergent and uncontradictory process of
  dissemination of free market capitalism then
  there is only one road for development
  (Washington consensus model).
• 2. If you view it as contradictory and uneven
  then alternative modes of development are
  conceiveable.

8
Different emphases 2 Role of the state

• 1. If you see the role of the national state
  under globalisation as increasingly marginalised
  then the state has a limited role in development
  best to leave the markets to work without state
  intervention and just give aid (Sachs)
• 2. If on the other hand you regard states as
  important to development (failed states as
  hindering/developmental states as promoting)
  then you are likely to judge the role of the
  state as highly important.

9
The Contradictions of Globalisation

• Globalisation is an uneven, contingent and
  contradictory process, creating greater global
  wealth but also increasing global inequality in
  the distribution of wealth.
• Some Regions (Europe, North America, and East
  Asia) have clearly benefited more from global
  engagement than others (such as Latin America and
  SSA)

10
Successful gobalisation

• Because globalisation is contradictory and
  uneven and state-dependent there are different
  possible responses to it.
• Success in engaging with the global market
  depends on the
• Terms of engagement which each country can
  achieve.
• Some countries are able to negotiate better
  terms than others

11
Globalisation and Development

• Changes the nature of world markets and what it
  takes to be competitive in them
• Changes the nature of the national state and the
  relations between states and other levels of
  governance
• Alters the possible paths of development

12
Globalisation is changing the dynamics of
development

• In terms of the factors promoting economic
  development globalisation increases the
  importance of
• international trade (and thus the need for
  export-oriented economies)
• Knowledge, skills and technology transfer for
  development in the global knowledge economy.
• MNCs and FDI in knowledge and technology transfer
• education and skills (as argued in endogenous
  growth theory)

13
The Conditions for Late Development (Amsden)

• Late industrialising countries countries
  can develop more rapidly in a global era due to
• the global disaggregation of production and
  services industries the global division of
  labour
• Increased possibilities for knowledge and
  technology transfer from
• - increased investment flows
• - increasing codification of knowledge and
  skills
• - advances in ICT

14
The Role of Education

• Education can play major role in promoting
  successful engagement with the global economy by
  six key processes
• Providing skills which attract inward investment
• Assisting in knowledge and technology transfer
• Upgrading the economy
• Reducing inequality
• Promoting social cohesion
• Strengthening state capacity

15
The East AsianCase(s)

• East Asian economies have proved to be
  exceptional in negotiating favourable terms of
  engagement with the global economy.
• Partly because of the role education has played
  in promoting the six key processes.

16
East Asian Development 1960 -1990 The East
Asian Miracle

• East Asian economic growth between 1960 and
  1990 was the fastest on record for any region
• It took Britain 58 years to double real pc
  income after 1780
• USA 47 years from 1839
• Japan 34 years from 1900
• Korea 11 years from 1966
• In 1960 S. Koreas GDP equalled Sudans and
  Taiwans Zaire. (Morris, 1995). These are now
  amongst the worlds developed countries

17
East Asian Growth 1965 - 1990

• 23 economies in East Asia grew faster than
  all other regions at 5.3 pa, mostly due to rapid
  growth of 8 high performing Asian economies
  (HPAEs) Japan, the four tigers (S. Korea,
  Taiwan, Singapore and Hong Kong) and the East
  Asian NICS Indonesia, Malaysia and Thailand.
• Average growth pa
• HPAEs 5.3
• East Asia minus HPAEs 2.3
• OECD 2.3
• Latin America 1.9
• Sub-Saharan Africa 0.1
• (World Bank East Asian Miracle, 1996))
• Growth rate of Japan and tigers during 25
  years from 1960 was over 8 pa on average (Wade,
  1990). Growth rate of S. Korea 1962-1979 averaged
  18.4 (Amsden, 1992)

18
Growth, Distribution and Well Being

• Between 1960 and 1998 real income pc in Japan and
  tigers increased x 4
• Life Expectancy in HPAEs grew from 56 years in
  1960 to 71 in 1990
• Proportions living in absolute poverty declined
  between 1960 and 1990 from 58 to 17 in
  Indonesia and from 37 to 5 in Malaysia
  (compared with 54 to 43 in India)
• HPEAs also achieved low and often declining
  levels of income inequality, particularly in
  Japan and Taiwan but also, until the 1980s, in S.
  Korea and Singapore.

19
Explanations of Rapid and Equal Development

• Rapid Development in East Asia is, to some
  extent, a regional phenomenon.
• Explanations have focused on
• Culture
• Geopolitics
• Timing
• Policies (including education)

20
Culture

• Cultural explanations of EA development include
  theories about Confucian Capitalism
• Strong states and Confucian paternalism
• Mobilization of national identity
• Family Basis for Welfare
• Use of Diasporas and Flying Geese pattern
• Importance of Education
• However, theories are generally insufficient
  to explain dynamics and timing of development
• East Asia is highly diverse in ethnicity and
  religion
• Culture cannot explain why now

21
The Importance of Geography and Geo-Politics

• Proximity to sea lanes and historic trade routes
• Advantages of island and peninsular states
  coastal towns
• Cold War stimulus to investment
• US and British investment high in Japan,
  South Korea, Singapore, Hong Kong and Taiwan
  through period of Korean and Vietnam wars.
• Between 1953 and 1958 US aid to Korea was 15 of
  GDP and war requisitioning helped to kick start
  the Chaebols. Singapore benefited from UK and US
  requisitioning.
• Up to 50 of finance for Taiwans infrastructure
  in early years came from US aid
• Geopolitics can only be part of the story. Some
  states which benefited did not develop
  (Philippines) and others (Malaysia, Thailand)
  developed rapidly later, without similar levels
  of cold war investment.

22
Timing

• The timing for the first wave of East Asian
  growth (second phase for Japan) was highly
  propitious.
• Buoyant global economy in 1960s
• Flexible trade regimes
• US cuts in Japanese imports helped tigers
• Conditions for rapid growth now less good
• Slower world economic growth
• More NIC competitors
• WTO limitations to trade policies which arguably
  helped tigers
• Globalisation restricts use of capital controls
  which may also have helped tigers

23
Factors favouring egalitarian development

• Weakening of old landed and Zaibatsu elites in
  Japan as result of WW2 and subsequent land reform
• Land reform in 1950s in Taiwan and S. Korea
  (prompted by US!) redistributed landed wealth and
  removed anti-modernising elites
• Agricultural improvements in EA states with
  agricultural economies reduced disparities or
  rural and urban incomes
• Rapid improvement in access to education reduced
  growth inequalities (countering the usual Kuznets
  effect)
• Developmental states overcame entrenched class
  interests?
• Redistributional policies of governments ie
  Malaysia pro Malay business policy, Singapore and
  Hong Kong Housing programmes etc

24
Policy Explanations of Growth

• Neo-classical economics
• Market friendly neo-classical
• economics (WB East Asian Miracle)
• Developmental state theory (Amsden, Wade, Johnson
  etc)

25
Neo-Classical theory

• Neo-classical economic explanations argue that
  East Asian states got the basics right and left
  the rest to the market
• Private domestic investment and rapidly
  increasing human capital were principal engines
  of growth
• High domestic savings sustained high investment
  (typically savings at over 30 of income)
• Increased agricultural productivity
• Effective public administration
• Good macro-economic management (low inflation and
  borrowing stable exchange rates etc
• Openness to trade
• Export led growth

26
Developmental State theorists

• DST does not disagree with view that human
  capital and investment were important and that
  export led growth was central.
• However, they argue that the conventional
  account ignores the degree of state intervention
  in growth and the use of neo-mercantilist
  policies which deviated very substantially from
  free trade.
• With the exception of Hong Kong, Japan and the
  tigers all had highly state-led development
  programmes. They developed at a much faster rate
  than the Malaysia, Indonesia and Thailand which
  were less interventionist.

27
The Crucial Role of the State

• Britain, America, Germany, France all used a
  strong state for development through national
  economies in early stages of growth.
• Free Trade Policies only favour the strong
  and even then have only been applied selectively.
• Alexander Gerschenkron noted the key role of
  the state in late development.
• Under globalisation there has generally been
  huge capital flows from the South to the North
  except in East Asia where the state is powerful
  enough to to control capital flight and direct
  the economy efficiently. Naom Chomsky

28
Developmental Paths

• Each country followed similar development path
• import substitution and agricultural improvement
  (late fifties)
• export of cheap manufactured goods (early
  sixties) (textiles toys shoes etc) based on low
  cost labour
• development of capital intensive goods (late
  sixties /early seventies) (variously Steel,
  Shipbuilding Petro chemicals etc) and electronic
  consumer goods
• shift to higher value added manufacturing
  (1980s)
• Singapore and Hong Kong relied heavily on FDI
  since they had small domestic markets and little
  domestic capital
• Japan, Korea and Taiwan initially prefered
  foreign loans and technology transfer through
  licensing but gradually moved towards allowing
  joint ventures and since 1997 foreign MNCs.
• Korea copied Japan - large private conglomerates
  working closely with state bureaucracy as engines
  of growth. Taiwan maintained larger SME sector
  but created many state owned large companies.

29
Developmental Policies in Japan and Tigers

• A range of policies used to stimulate economic
  growth
• To protect home industries
• Tariffs and import quotas to protect infant
  industries
• Tariffs, protectionist standards regulations and
  high taxes on luxury and other goods to
  discourage unnecessary consumption, encourage
  saving and to allow exporting manufacturers to
  reclaim losses on marked down foreign sales
  through high domestic prices.
• To encourage exports
• Export subsidies export targets preferential
  loans for exporters tariff reduction on imported
  inputs for exporters low exchange rates (which
  helped exporter) export processing Zones

30
Developmental Policies in Japan and Tigers 2

• Industrial Policy building up priority sectors
  through
• Preferential loans for companies to develop in
  certain sectors
• Directing credit through Govt banks or
  regulation on private banks
• Encouraging sector rationalisation through
  forcing market exit or forced mergers of failing
  companies.
• Tax subsidies and infrastructural development for
  R and D in favoured sectors.
• To Encourage FDI
• Setting up one-stop-shop of Economic Development
  Boards in Singapore and Korea
• To encourage savings
• Post Office Saving Accounts (Japan and S. Korea)
• Mandatory providential fund savings (CPF in
  Singapore)

31
Effects of Interventions

• Most economists agree that market-governing
  measures were widely used in Japan and three
  tigers in first stage of development although
  countries later liberalised. The argument is
  about what effect the interventions they had.
• Neo-classical economists say growth would
  have happened anyway without these policies.
  Developmentalists say they were generally
  beneficial to growth and key to success.
• All agree that pre-conditions for market
  governing intervention working was that
• Firms were forced to remain competitive
• Interventions were carefully monitored so that
  subsidies removed from firms not achieving
• Measures required competent and honest
  bureaucracy.

32
Role of Education

• General view education played major role in
  East Asian Miracle
• WB from growth accounting estimates far and
  away the major difference in predicted growth
  rates between HPAEs and sub-Saharan Africa
  derives from variations in primary school
  enrolment rates. (EAM p. 54)

33
Different Theories of Educations Role

• Writers on East Asia differ on how they
  understand the role of education in rapid growth.
  Three theories
• Human capital theory (WB)
• Developmental Skill Formation (Ashton and Green)
• Education and State Formation (High skills
  Project)

34
Human Capital Account

• Skills contributed significantly to
  productivity growth and technology transfer.
• Educational development was successful because
  it largely followed the market and was informed
  sound policies
• HPAEs had high initial levels of literacy
  (although so did Sri Lanka and Philippines in
  1960s)
• Investment focused initially on universalising
  primary education which had highest rate of
  return
• Secondary and higher education were developed
  sequentially when growth and higher rates of
  return to higher levels encouraged private
  investment
• Growth, private investment and declining birth
  rates (earlier and sharper than in other
  developing countries) allowed increased in per
  capita spending and higher enrols in education
  without excessive public cost.

35
School Enrolment at Primary Level Relative to
Estimated 5-14 Population in 1960

• Tigers
• Hong Kong 57
• Singapore 66
• South Korea 60
• Taiwan 67
• Others
• Brazil 45
• Chile 69
• Ethiopia 5
• Indonesia 40
• Kenya 49
• Pakistan 22
• Uganda 32

36
Average Years of Schooling Attained by
Population over 15

• 1960 1990
• Latin America
• and Caribbean 3.26 5.24
• M. East/ N. Africa 1.22 4.47
• SS Africa 1.73 2.93
• S Asia 1.51 3.85
• OECD 7.05 9.02
• HK 5.17 9.15
• Singpore 4.33 5.89
• South Korea 4.25 9.94
• Taiwan 3.87 7.98
• (Barro and Lee, 1996)

37
Public Expenditure on Education as of GNP

• 1960 1989
• HK - 2.8
• S. Korea 2.0 3.6
• Singpore 2.8 3.4
• Malaysia 2.9 5.6
• Thailand 2.3 3.2
• Indonesia 2.5 3.5
• HPAE av. 2.5 3.7
• Brazil 1.9 3.7
• Pakistan 1.1 2.63
• SSA 2.4 4.1
• (WB East Asian Miracle)

38
Developmetnal Skills Formation Critique

• Developmental skills formation theory (Ashton
  and Green) does not disagree with many of the
  human capital assertions. However, it claims they
  miss
• Importance and secondary, technical and higher
  education expansion in later stages of
  development
• The role played by the state in generating demand
  for skills
• The role played by the state in coordinating
  skills supply and Demand.

39
State intervention to increase the demand for
skills

• Through industrial policy to increase investment
  in high value added industries
• Through forcing MNCs to bring in more capital and
  skills intensive operations
• The classic example was the Singapore strategy
  for skills upgrading in 1980s

40
Second Industrial Revolution in Singapore

• Gary Rodan describes Singapore efforts in early
  1980s to shift to a high skill economy when it
  could no longer compete with NICs on low cost
  manufacture.
• Substantial increase in minimum wages
• Tax subsidies to MNCs for hi-tech investment
• Introduction of Skills Development Fund financed
  from a levy on employers of 2 of wage costs for
  all workers S750 or less pm
• Encouraging MNCs not wanting to upgrade to exit
• Strategy quite successful in increasing high
  value-added production in Singapore but had to be
  aborted in mid 1980s when labour costs rose to
  uncompetitive level.

41
Coordinating Supply and Demand

• Using manpower planning through high level
  inter-ministerial strategy committees (CPTE in
  Spore)
• Setting quotas for enrolments in Secondary and HE
  (S. Korea, Taiwan and S Korea till 1980)
  according to forward industrial planning
• Revising these when needed
• Brokering deals with MNCs (Singapore through EDB)
  to provide skills and for MNCs to provide
  training abroad and set up joint training centres
  in Singapore. French, Japanese and German
  technical institutes set up jointly with
  government.
• Upgrading technical education rapidly in line
  with planned economic strategy (setting up of ITE
  in early 1970s in Singapore)

42
Broader Contribution of Education to Development

• Education in Japan and the Tigers has
  contributed to development in various ways
• Through provision of skills
• Through inculcation of work discipline (one days
  leave a month in Korean factories in 1960s!)
• Through socialisation into survival national
  ideologies which have helped maintain political
  stability
• Through popularising meritocratic ideology that
  encouraged endeavour
• Through other educational policies designed to
  enhance equality and social cohesion

43
Commonalities of East Asian Schooling

• East Asian education and training systems differ
  in some significant ways
• Japan, Taiwan and Korea are highly egalitarian
  (Non-selective neighbourhood comprehensive
  schools mixed ability classes equal resource
  distribution between school) Singapore and Hong
  Kong are comparatively elitist
• Japan and Korea have extensive company based
  training in large firms. Singapore relies much
  more heavily on Govt funded workforce
  development
• However, they have a number of features in common
  (Cumings)

44
Commonalities of East Asian Schooling

• Highly centralised administration (although this
  is beginning to change now)
• Major stress on dissemination of basic skills
• Bias towards Maths and Engineering (20 get maths
  A level in Singpore and 40 of graduates are
  engineers)
• Major stress on Moral and Civic education (made
  possible by centralised control)

45
Benefits and Costs of Education Bias to Maths and
Engineering

• Has served growing manufacturing economy well
• Has also produced competent civil servants (In
  Singapore they say engineers make best civil
  servants)
• However, lack of creative education has not
  necessarily been good for producing creative and
  entrepreneurial talents. Singapore compensates
  for this by importing foreign talent, but all
  Japan and tigers all now complain of lack of
  creative skills in leading edge science and
  business innovation.

46
Importance of Socialisation

• Arguably the most important contribution of
  education to economic development in Japan and
  Tigers has been through effective youth
  socialisation
• Encouraging disciplined attitudes to hard work
• Generating national spirit of struggle and
  sacrifice in early generation (to encourage
  saving and effort and acceptance of overpriced
  consumer goods etc). Koreans went en mass to
  pubic collection centres to hand over their
  silverware during the economic crisis! Japanese
  have put up with over-priced Japanese rice for
  years because they have been convinced it is
  patriotic!
• Creating ability to work in teams (more notable
  in Japan and Korea than Singapore perhaps)