Is Education Key to the Growth?

1
Is Education Key to the Growth?

• Motoo Kusakabe

2
Have we achieved a progress in Education?

• Improvement in last 30 years
• Primary Enrollment Rates nearly 100, except for
  Sub-Saharan Africa, (78)
• One in Four adults in developing countries are
  illiterate (47 in 1970 to 26 in 1998)
• Entire decrease in illiterate since 1990 has been
  achieved in East Asia

3
Still There are problems

• 110 million children are not in school, of these
  60 are girls
• In Sub Saharan Africa, 12 countries net primary
  enrollment rates are less than 50
• 15 countries declined enrollment from 1990 to 1997

4
Why Education so important to Growth?

• Increase the number of labors in efficiency units
• Different skill is needed for higher technology
  industries
• Contribution to technological progress
• Mothers education is important for the health of
  children

5
How to measure the economic impact of education?

• Micro
• Calculate the rate of return of education by the
  incremental life-time income divided by cost of
  additional education
• Macro
• Schultz Denison made a growth accounting
  estimation including the quality of labor
• Historically Growth is preceded by high literacy
  rate, (Japan, Korea)

6
What are the rate of return on Education?

• Rate of return on Education is much higher in
  developing countries (17 vs. 12 for secondary
  education)
• Rate of return on Primary education (26) is
  higher than that of secondary education(17)
  which is higher than that of university education
  (14)
• Private rate of return is higher than social
  return

7
Why investment in girls education so important?

• Increase the number and quality of labor force
• Lowers infant and child mortality rates
• Lowers maternal mortality rates
• Educated Mothers will give better education for
  their children
• Girls education gives higher rate of return

8
Does Human Capital actually increase Growth?

• Benhabib Spiegel Human Capital growth has
  insignificant and negative effect in explaining
  per capita income growth
• Pretchet Increase in educational capital had no
  positive impact on the growth rate of output per
  worker.

9
Why education has no growth impact?

• Schooling may not create real cognitive skills,
• Demand for educated labor is small and saturated
• Educated persons will engage in activities not
  contributing to economic growth