Transcript Presentation

Skills and Development: Beyond
the 2008-9 Crisis
Shahid Yusuf
World Bank Institute
June 8th, 2009
Post Crisis Scenarios and Questions
• For some, a reading of the tea leaves suggests
that recovery from the current crisis could be a
slow process.
• Others see green shoots and believe that the
world economy could revert to recent trend rates
of growth within the next 18 months.
• Is such a rebound likely? Even if it does occur,
how might it affect the demand for skills? Could
skill shortages constrain growth?
• If growth is slow, can investment in skills
stimulate economic performance?
International Economic Performance:
1980 - 2000 and 2001 - 2007
Region
World
Dev. countries
Region
World
Dev. countries
Region
World
Dev. countries
Avg. Trade Growth Rate
1980-2000
7.2
7.3
Avg. Trade Growth Rate
2001-2007
12.0
16.7
Avg. GDP Growth Rate
1980-2000
2.9
3.5
Avg. GDP Growth Rate
2001-2007
3.1
6.1
Avg. p.c. GDP Growth Rate
1980-2000
1.3
1.7
Avg. p.c. GDP Growth Rate
2001-2007
1.8
4.7
What Accounts for the "Golden Age of
Growth"
• High levels of investment.
• New general purpose technologies (computerization, the
Internet).
• Low energy, food, and resource costs.
• Trade liberalization and global market integration.
• Rapid growth of manufactured goods trade, especially that
of electronics and electronic components.
• Cycles of outsourcing production (of goods and services)
from the advanced countries starting in the 1970s.
• Strong demand from the U.S. and the EU, in recent years
supported by high rates of credit creation.
Anti-growth Factors:
Short term and Long
• Adjustment and higher rates of saving in the U.S. and more
inward oriented development in China and possibly India.
• Excess production capacity in many industries.
• 'Murky' trade restrictions and a retreat of globalization.
• Costs of slowing global warming and coping with shocks
associated with climate change.
• Energy and food price hikes.
• Water scarcities.
• No apparent “high growth” export goods and services.
• Could the shortages of skills become an additional
constraint?
Is the Developing World Moving
towards More Skill Intensive
Production Systems?
Manufacturing, value added (% of GDP)
Country Name
Bangladesh
Brazil
Egypt, Arab Rep.
Jordan
Kenya
Korea, Rep.
Malaysia
Pakistan
Singapore
Taiwan, China
Tanzania*
Thailand
* denotes data is for year 2006
1995
15
19
17
15
10
28
26
16
27
25
7
30
2007
18
18
16
19
11
28
28
19
25
24
7
35
Are Exports from Low and Middle Income
Countries Becoming More Skill Intensive?
Top 5 Exports of Pakistan: 1995 and 2007
Product name
Cotton yarn
Cotton fabrics, woven, bleached
Linens and furnishing articles
Cotton fabrics, woven, unbleached
Synthetic fabrics, woven
Trade value 1995
(millions of US$)
1,587
557
536
516
502
Tech.
class
LT1
LT1
LT1
LT1
MT2
Product name
Linens and furnishing articles
Cotton yarn
Cotton fabrics, woven, bleached
Rice, semi-milled or wholly milled
Commodity not classified
Trade value 2007
(millions of US$)
2,318
1,406
1,226
1,145
1,007
Tech.
class
LT1
LT1
LT1
PP
Are Exports from Low and Middle Income
Countries Becoming More Skill Intensive?
Top 5 Exports of South Africa: 1995 and 2006
Product name
Diamonds,unwork.cut/otherwise work.
Other coal,whether/not pulverized
Ferro-alloys
Gas oils
Chemical wood pulp,dissolving grade
Trade value 1995
(millions of US$)
2,320
1,564
1,141
396
388
Tech.
Class
RB2
PP
MT2
RB2
RB1
Product name
Platinum and other metals
Other coal,whether/not pulverized
Passenger motor cars
Diamonds,unwork.cut/otherwise work.
Filtering & purifying mach.for liquids
Trade value 2006
(millions of US$)
8,012
3,090
2,718
2,426
2,406
Tech.
class
PP
PP
MT1
RB2
MT3
Are Exports from Low and Middle Income
Countries Becoming More Skill Intensive?
Top 5 Exports of Bangladesh: 1995 and 2007
Product name
Shirts,men's,of textile
Crustaceans and molluscs
Trousers,breeches etc. of textile
Other outer garments of textile
Under garments,knitted of cotton
Trade value 1995
(millions of US$)
644
283
207
170
158
Tech.
class
LT1
PP
LT1
LT1
LT1
Product name
Under garments,knitted of cotton
Trousers,breeches etc. of textile
Jerseys,pull-overs,twinsets, etc
Other outer garments of textile
Shirts,men's,of textile
Trade value 2007
(millions of US$)
2,358
1,878
1,300
885
841
Tech.
class
LT1
LT1
LT1
LT1
LT1
Are Exports from Low and Middle Income
Countries Becoming More Skill Intensive?
Top 5 Exports of Brazil: 1995 and 2007
Product name
Oil-cake & other residues
Coffee, roasted or not
Iron ore and concentrates
Sugars,beet and cane
Chemical wood pulp, etc
Trade value 1995
(millions of US$)
2,040
1,970
1,700
1,450
1,450
Tech.
class
PP
PP
RB2
RB1
RB1
Product name
Petrol.oils & crude oils
Iron ore and concentrates
Soya beans
Passenger motor cars
Poultry,dead & edible
Trade value 2007
(millions of US$)
8,910
7,110
6,710
4,650
4,360
Tech.
class
PP
RB2
PP
MT1
PP
Are Exports from Low and Middle Income
Countries Becoming More Skill Intensive?
Top 5 Exports of Egypt: 1995 and 2007
Product name
Petrol.oils & crude oils
Fuel oils,n.e.s.
Cotton yarn
Cotton (other than linters)
Aluminium and its alloys
Trade value 1995
(millions of US$)
719
462
306
152
150
Tech.
class
PP
RB2
LT1
PP
PP
Product name
Petroleum gases etc
Petrol.oils & crude oils
Rice semi or wholly milled
Bars & rods,of iron/steel
Polyethylene
Trade value 2007
(millions of US$)
3,040
1,050
400
294
249
Tech.
class
PP
PP
PP
LT2
MT2
Are Exports from Low and Middle Income
Countries Becoming More Skill Intensive?
Top 5 Exports of Kenya: 1995 and 2007
Product name
Trade value 1995
(millions of US$)
Tea
362
Coffee, roasted or not
292
Cut flowers and foliage
68
Sheets,plates,of iron etc
66
Fruit otherwise prepared etc
54
Tech.
class
PP
PP
PP
LT2
RB1
Product name
Trade value 2007 Tech.
(millions of US$) class
Tea
698
PP
Cut flowers and foliage
390
PP
Other fresh/chilled vegetables
232
PP
Coffee, roasted or not
165
PP
Cigarettes
94
RB1
Are Exports from Low and Middle Income
Countries Becoming More Skill Intensive?
Top 5 Exports of Malaysia: 1995 and 2007
Product name
Electronic microcircuits
Parts and accessories for 7512,752
Palm oil
Petrol.oils & crude oils
Parts of apparatus of division 76--
Trade value 1995
(millions of US$)
9,850
4,690
3,590
2,680
2,330
Tech.
class
HT1
HT1
RB1
PP
HT1
Product name
Electronic microcircuits
Parts and accessories for 7512,752
Petrol.oils & crude oils
Petroleum gases etc
Palm oil
Trade value 2007
(millions of US$)
21,800
10,400
9,760
8,780
8,240
Tech.
class
HT1
HT1
PP
PP
RB1
Are Exports from Low and Middle Income
Countries Becoming More Skill Intensive?
Top 5 Exports of Tanzania: 1997 and 2007
Product name
Trade value 1997 Tech. Product name
Trade value 2007 Tech.
(millions of US$) class
(millions of US$) class
Cotton (not incl. linters)
104
PP Gold,non-monetary
554
LT2
Coffee, roasted or not
101
PP Ores & concentrates of precious metals
201
RB2
Nuts edible, fresh or dried
67
PP Coffee, roasted or not
116
PP
Tobacco,not stripped
49
PP Tobacco,wholly or partly stripped
86
PP
Fish fillets,frozen
39
PP Fish fillets,fresh or chilled
82
PP
Are Exports from Low and Middle Income
Countries Becoming More Skill Intensive?
Top 5 Exports of Thailand: 1995 and 2006
Product name
Peripheral units,incl.control & adapting
Natural rubber latex; nat.rubber &
Crustaceans and molluscs
Parts and accessories for 7512,752
Footwear
Trade value 1995
(millions of US$)
2,590
2,460
2,410
2,290
2,090
Tech.
class
HT1
PP
PP
HT1
LT1
Product name
Peripheral units,incl.control & adapting
Electronic microcircuits
Natural rubber latex, etc
Parts and accessories for 7512,752
Goods Motor vehicles
Trade value 2006
(millions of US$)
8,400
6,310
5,430
3,730
3,680
Tech.
class
HT1
HT1
PP
HT1
MT1
Are Exports of the Leading East Asian Tiger
Economies Becoming More Skill Intensive?
Top 5 Exports of Korea: 1985 and 2006
Product name
Ships,boats etc
Footwear
Synthetic fabric woven
Jerseys,pull-overs,twinsets etc
Electronic microcircuits
Trade value 1985
(millions of US$)
4,949
1,534
886
837
760
Tech.
class
MT3
LT1
MT2
LT1
HT1
Product name
Passenger motor cars
Electronic microcircuits
Ships,boats etc
Radiotelegraphic & radiotelephonic
Parts of apparatus of division 76--
Trade value 2006
(millions of US$)
30,597
25,392
19,715
17,335
14,648
Tech.
class
MT1
HT1
MT3
HT1
HT1
Are Exports of the Leading East Asian
Tiger Economies Becoming More Skill
Intensive?
Top 5 Exports of Taiwan: 1990 and 2007
Product name
Trade value 1990 Tech. Product name
Trade value 2007 Tech.
(millions of US$) class
(millions of US$) class
Footwear
2,501
LT1 Electronic microcircuits
41,674
HT1
Peripheral units,incl.control & adapting
2,451
HT1 Optical instruments and apparatus
15,933
HT2
Parts and accessories for 7512,752
2,261
HT1 Other elect.machinery and equipment
11,572
HT1
Miscellaneous articles of plastic
1,749
LT2 Parts and accessories for 7512,752
8,179
HT1
Other sporting goods and fairground
1,666
LT2 Printed circuits and parts thereof
5,396
MT3
Are Exports of the Leading East Asian
Tiger Economies Becoming More Skill
Intensive?
Top 5 Exports of Singapore: 1985 and 2006
Product name
Motor spirit and other light oils
Gas oils
Fuel oils,n.e.s.
Electronic microcircuits
Peripheral units,incl.control & adapting
Trade value 1985
(millions of US$)
1,861
1,722
1,587
943
697
Tech.
class
RB2
RB2
RB2
HT1
HT1
Product name
Electronic microcircuits
Parts and accessories for 7512,752
Peripheral units,incl.control & adapting
Radiotelegraphic & radiotelephonic
Crystals, parts, nes of electronic components of 776
Trade value 2006
(millions of US$)
56,794
18,360
10,237
9,250
7,002
Tech.
class
HT1
HT1
HT1
HT1
HT1
Is the Demand for Skilled Workers
Rising in the United States?
Percent change in employment
Network systems and data communications analysts
53.4
Personal and home care aides
50.6
Home health aides
48.7
Computer software engineers, applications
44.6
Medical assistants
35.4
Computer systems analysis
29
Custromer service representatives
24.8
Registered nurses
23.5
Postsecondary teachers
22.9
Educational requirements
Bachelor's degree
Short-term on-the-job tranining
Short-term on-the-job tranining
Bachelor's degree
Moderate-term on-the-job tranining
Bachelor's degree
Moderate-term on-the-job tranining
Associate degree
Doctoral degree
Is Manufacturing Becoming More Skill
Using?
• Not low-end light manufacturing or assembly operations.
Even processing industries are marking time.
• Higher end manufacturing is becoming more skill and in
particular IT and tacit knowledge intensive. But there is
relatively little hard data to validate this. Not much of such
advanced manufacturing has yet moved to developing
countries - with the possible exception of China.
• Skill and Technology intensive manufacturing industries
(and manufacturing more generally) registering steady
gains in productivity and generating few jobs. In fact, the
number of jobs in manufacturing is declining.
Are Services Industries Demanding
More Skills?
• Business and medical services have traditionally
required a high level of expertise.
• Services such as retail. wholesale and logistics have
absorbed a lot of IT which has increased the demand
for people with computer and associated skills but this
is also increasing productivity and decreasing the labor
coefficient of these activities.
• Personal services remain relatively low skill and labor
intensive.
• Growth of business and commercial services will raise
demand for skills, however, IT has the potential of
curbing the growth of demand for workers.
Are Skill Shortages and Mismatches a
Brake on Growth?
• Evidence from ICAs suggests that employers view
skill shortages as a problem. However, the
problem does not go away, nor is there rigorous
evidence that it is holding back growth. Could this
be a box all employers will routinely tick just like
access to financing?
• Continuing net brain drain from many low and
middle income countries suspends a question
over the extent of shortages. Why are labor
markets and training institutions so slow to
adjust?
Could an Increase in Human Capital
Raise Growth Rates?
• This is not happening in the OECD countries. The long-run growth
rate of the U.S. has been surprisingly stable at 1.8% p.a. even with
the increase in education attainment. Similarly for Korea.
• Findings from growth economics are mixed: Results depend upon
the measure of human capital, sample of countries and time
period, stage of development of countries, quality of graduates and
other considerations. Results subject to nonlinearities.
• Growth Commission presents an equivocal message on human
capital.
“Investments in human capital will generate opportunities for growth,
but these do not translate mechanically to growth. Other factors can
intervene.”
50
Per Capita GDP Growth and Labor Force with Tertiary
Education, US
40
$25000
$20000
$15000
20
30
$10000
10
$5000
$2500
1860
1880
1900
1920
1940
year
1960
1980
2000
real per capita GDP
predicted GDP
% of population with some post-secondary education
% of population with finished post-secondary education
Per Capita GDP Growth and Labor
Force with Tertiary Education, Korea
20
25
$25000
$20000
$15000
15
$10000
10
$5000
0
5
$2500
1960
1980
year
2000
real per capita GDP
predicted GDP
% of population with some post-secondary education
% of population with finished post-secondary education
Quality Might be More Important than
Quantity
• Causality running from quality of secondary
education to growth strongly supported by
some research.
• Quality likely to influence productivity, the
upgrading of products, technology absorption
and innovation.
How Can the Quality of Education and
Training be Raised?
• There are two not mutually exclusive approaches;
– Tackle the entire education production system from early childhood nutrition
through schooling to tertiary education, by strengthening each link in the
chain. This is an expensive and time consuming. Few success stories.
– Adopt a highly selective and tiered approach starting with upper secondary
schooling and university education. Devote resources to raise quality through
a coordinated application of policies, e.g. public provision of only STEM skills
at tertiary level, autonomy of institutions, competition between institutions,
teacher incentives, smaller class size, partnerships with employers and design
of curricula in consultation with employers etc.
• Will this be easy? No. And politically, limiting access to public institutions
is a hard sell. However, is there a viable alternative given resource
constraints in all countries and also the fact that social returns are no
higher than private returns for tertiary education? Diversified upper
secondary and tertiary education sector provided by the private sector is
one option to accommodate the rising demands for education services.
Thank You