Transcript Rural development in developing economies under

The Role of School
Education in the
Economic Catch-up of
Developing Economies:
A perspective from
East Asia
Yujiro Hayami
Foundation for Advanced
Studies on International
Development
Empirical studies of histories of
advanced economies show:
Accumulation of human capital (skill and
knowledge embodied in humans) accounted for a
dominant portion of modern economic growth
A new paradigm
= “Investment in human capital rather
than in physical capital is the engine of
economic growth.”
catch up in education → economic catch-up

19th century catch-up of Germany & USA
with UK
 Compulsory elementary education system
 Agricultural/engineering colleges
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
East Asian Economic Miracle
Three waves of globalization
under Western hegemony:
1st wave:
late 15th – early 19th Century
Merchant capitalism based on navigation/military technology
Monopoly trade/plunder of precious metals,
natural resources & humans
2nd wave:
late 19th – early 20th Century
Industrial capitalism based on manufacturing technology
Free trade & foreign direct investment
Industrialization of West + De-industrialization of
non-West
Specialization in:
Manufacture
3rd wave:
Primary (agriculture/ mining)
late 20th –
Knowledge capitalism based on IT, life sciences, etc.
Free trade & foreign direct investment
De-industrialization of West + Industrialization of 3
non-West
East Asian Economic Miracle
∥
success of Industrial technology borrowing
∥
Factory system:
Division of labor within a workshop
organized around large automatic
machineries under the supervision of
hierarchical management
Mass production of standardized products
workers capable to perform
standardized tasks according to work
schedules
able to understand production manuals
regimented to rules & schedules
 Scientists, engineers and managers who
can translate foreign technologies into
local production layouts

●
●
Mass education in schools
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International comparison of the average
number of years of schooling, 2000
14
(E)
US
Average schooling (years)
12
Ko
10
Ja
Ar
Pe
8
UK
Fr
Ch
6
In
Th
Ke
4
Et
2
0
Br
Is
Pa E = -14.3 +2.42lnY, r = 0.93
Ba
(t=4.1)
(Y)
Increase in average schooling
1965-2000 (years)
GDP per capita converted by exchange rate (US$)
(GE)
7
Ko
6
5
4
Pe
Ar
3
In
Ke US
1
0
Ba
Et
Th
Ch
Fr
UK
2
Is
P
Br
Ja
GE = 1.93 + 0.35GY, r = 0.55
(t=2.4)
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(GY)
Growth rate of GDP per capita, 1965-2000 (% per year)
The Japan/USA and Korea/USA ratios in
average schooling, per-capita GDP,
and capital-labor ratio
110%
100%
(USA=100)
90%
80%
Japan/USA
ratio
average schoolinga
70%
60%
per-capita GDP
50%
40%
30%
20%
capital-labor ratio
b
10%
0%
100%
90%
Korea c/USA
ratio
80%
70%
(USA=100)
60%
average schoolinga
50%
40%
per-capita GDP
30%
20%
10%
capital-labor ratio b
0%
1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000
a. Average number of years of schooling per person in the total working-age (15 to 64
years old) population.
b. Labor is measured by total employment. Capital is measured by gross nonresidential
fixed capital (excluding that for military use). GDP is measured in PPP 1990
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US dollars.
c. Data for Korea in the postwar period are for the Republic of Korea.
Source: Godo (2004).
Implications
The experience of Japan and Korea is consistent with the
investment in school education
is the key for developing economies to catch
up with the advanced.
consensus view that
developing
economies cannot expect quick harvesting of
fruits from education. They must be prepared to endure the
However,
it
also
implies
that
heavy burden of investment in education relative to their income level for
many years before the stock of human capital together with physical
capital reaches a sufficiently high level for rapid economic catch-up.
It is still likely that education may prove to be the investment
the return
might not be quite so attractive in the short
run for political leaders in developing
economies, relative to their high discount
rates.
outlet of the highest economic return in the long run. Yet,
The hard choices that policy makers have to make are:
(1) What would be an optimum investment mix
between human and physical capital?
(2) What forms of education (such as primary versus
higher-level education and general versus vocational
education) should be given priority considering their
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different investment gestation periods?