Transcript Economics of Education Network

Knowledge Economy Forum, 19-22 February 2002
Miracles do happen
The story of recent Irish economic
growth
Tom Healy
(Department of Education and Science,
Ireland)
Key points

Late development

Economic-political-social-institutional
“fundamentals”

Simple policy formulae do not apply
Trade, Investment & Convergence

Foreign Direct Investment

Importation of latest technology

Spillovers

Supply of graduates

Nature of FDI
European Union

AIFTA - EEC (1973)

Income and capital transfers (ESF …)

Geographical isolation no longer vital

Gradual change in mentality
Demographic factors

Late developer

Youthful population

Changes in female labour force participation

Return migration

Construction boom
ANNEX TABLE Changes in annual average growth rates in Output per workingage person (1981-89 to 1989-97) broken down into various components
Country
Change in
growth rate
of GDP per
capita
(1980s1990s)
Due to changes in
(ranked by unexplained residual)
Investment
share
Human
capital
Population Variability
growth
of inflation
Government
consumption
Trade
exposure
Unexplained
residual
Ireland
1.21
-.17
.54
-.75
.35
.13
.46
2.71
Finland
-.90
-.91
.44
-.03
.05
-.13
.33
.86
Denmark
.34
.1
.20
.03
.07
.01
.22
.84
Netherlands
.97
-.04
.43
.32
.07
.1
.25
.69
UK
.01
.08
.44
.05
0
.03
.25
.37
Portugal
-.15
.25
.32
.02
.42
-.20
.53
.21
Sweden
-.64
-.19
.42
-.05
-.20
.02
.33
.12
Austria
-.23
.37
.31
-.07
.12
-.02
.37
-.06
Belgium
.37
.37
.45
.17
.26
.06
.24
-.06
France
.04
.01
.35
.27
.23
-.02
.42
-.30
USA
-.19
.19
.07
-.06
.13
.07
.65
-.70
Spain
.46
.33
.90
.46
.25
-.12
.67
-.94
Greece
-.06
0
.57
.09
-.12
-.05
.54
-.47
Multi-factor productivity

Traditional explanations don’t work so well

mushrooms or leaven effects?

quality of investments, policy combinations,
institutional and social partnerships
The role of formal education

“free” secondary education 1968

Regional Technical Colleges (1970- )

University under-graduate intake

high output of S&T graduates

Relatively more is spent on HE
Beyond formal education

Limitations of formal education and training

Return migration

Intel & Microsoft story

business start-ups and technology transfer
Social Partnership

Very difficult to assess/quantify

Painful adjustments + working together ethos

National Wage agreements (“Social Wage”)

Bi-partisan political approach

local area partnerships
Social Capital

The mystery of the “unexplained residual”

0.8% more growth for 10 point increase in
general trust (Knack and Keefer)

reducing transactions costs

sharing knowledge and “communities of
practice”
Policy issues

More is not necessarily better

general but applied education to 18?

Informal learning partnerships

foster learning communities and organisations

quality of teaching practice

all good things take time
Policy issues

don’t put all your eggs in one basket

give attention to social inclusion as a priority
before, during and after economic lift-off

foster synergies - FDI, training, high-skill
mobility, flexibility, less red tape ….
Questions for the Irish

Will it last?

What about social and natural environments?

What about GNH?

What about the poor and excluded?

What about the future in a larger EU?

How to use “learning partnerships” for LLL