Human Capital and Growth: The Recovered Role of Education Systems
22 Pages Posted: 20 Apr 2016
Date Written: July 1, 1999
July 2001 When investments in education in developing countries do not produce higher growth, the problem may be the quality of the schooling - of the education infrastructure, of the initial endowment in human capital, and of the system's ability to equitably distribute educational services. The consensus to support and emphasize public primary education for all (rather than secondary education for the few) - typically found in the most egalitarian societies - is most likely to increase the contribution of human capital accumulation to growth.
Recent empirical studies question conventional wisdom about the importance of education to growth. These results partly reflect how international differences in the quality of education systems - defined by the systems' ability to produce one marginal unit of productive human capital - are not taken into account.
Dessus estimates neoclassical growth models on panel data in which the elasticity of human capital depends stochastically on different characteristics of the education system. Among characteristics that explain differences in quality are education infrastructure, the initial endowment of human capital, and the ability to distribute educational services equally among potential students.
Giving priority to primary education for all rather than secondary education to a few is more likely to foster growth (for the same fiscal burden). But parallel actions are also probably needed - for example, promoting institutions that motivate skilled workers to spend time on growth-promoting activities and encouraging the inflow of foreign technologies to maximize the social return to public investment in education.
This paper - a product of the Social and Economic Development Group and Social Development Group, Middle East and North Africa Region - is part of a larger effort in the region to better understand the role that education has on human capital accumulation and growth. The author may be contacted at firstname.lastname@example.org.
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