POL 4410 Education and Globalization. Structure 1. Some Facts about Education 2. My Paper: Traders, Teachers, and Tyrants 3. Pritchett.

POL 4410Education and Globalization

Structure

1.Some Facts about Education

2.My Paper: Traders, Teachers, and Tyrants

3.Pritchett

Economics of Education

•Private returns vs. social returns

•Human Capital Theory

•Human Capital and Growth

•Education and Technology

•Signaling

Education Worldwide

•Net primary enrolment ranges from 56% in Sub-Saharan Africa to 97% in OECD.

•Public spending on education ranges from 0.5% of GDP (Eq. Guinea) to over 9% (Denmark, Lesotho).

•Completing grade 9: 12.9% in East and South Africa, 31% in East Asia, 83% in Europe

My Paper•Core arguments:

1.Democracy increases public education spending and decreases private spending.

2.Globalization increases overall education spending and does this more in autocracies and developing countries.

3.Higher education spending relative to primary education is higher in autocracies and autarkies

Logic of Democracy

•Elite don’t like education because it is costly (taxes) and reduces skilled wages of their children

•Masses like education since it bumps up their wages

•Even those who do not receive education might like provision since it increases relative scarcity of unskilled.

Democracy Graph

Logic of Openness•Elite dislike education since it

reduces the skilled wages of their children

•But what if domestic returns to skill were detached from supply?

•Then the elite may not hate education so much

•Globalization does exactly this

Openness Graph

b = 0

Openness and Technology

•A further impact of globalization is on the demand-side

•Globalization leads to technology transfer.

•Technologies are typically ‘skill-biased’

•Thus importing technology raises the demand for skills.

Targeted Education•The elite might prefer education

spending if they could target it to themselves.

•Higher education is largely accessed by the rich and in most states is publicly financed.

•So we have regressive taxation, which the elite like. Autocracies have higher education vis-a-vis primary education.

Targeted Education

•What about the effect of openness on targeted spending.

•Think about what Hecksher-Ohlin would predict. Countries will trade in goods in which they are abundant.

•So openness should lead to relative expansion of higher education in OECD and reduction in non-OECD.

Results

Dynamic Change

Comparing Subsamples

Targeted Spending

OK that’s the data

•Which tells us that the patterns hold up cross-nationally.

•But am I really right? Maybe something else is going on that explains all the variables.

•That’s why I look at cases

•Philippines - internal variation

•India vs. Malaysia: cases ‘off the diagonal’

The Philippines

The Philippines

South Asia

India•Economic nationalism and ‘permit Raj’

•Govt. focused on higher education and on ISI, reducing demand for general education

•Singh reforms in 1990s permit free exporting plus foreign ownership.

•Huge current demand for education: Infosys, Wipro.

Malaysia•An autocracy - we would expect low

education spending

•But... export oriented industrialization meant that providing education did not reduce wages of elite.

•Also increased demand for education

•Very high rates of spending - up to 8% of GDP

Southern Europe and EU

•Often democracy and openness happen at same time - so how do we disentangle effects?

•Look at distinct shocks

•Spain, Portugal, Greece all democratize in 1970s and join EU in 1980s.

Spain

Portugal

Greece

Conclusion•So what have we found?

•Democracy increases education: Surprise?

•Globalization increases education: More of a surprise. Not a ‘race to the bottom’

•Interesting effects on higher education.

Pritchett

•A bunch of things I ignore:

1.Physical expansion of schools

2.Improved quality of schools

3.Expanding demand for schooling through increased returns

4.Expanding demand for schooling through reduced costs.

Pritchett’s recommendation

•Change form input oriented system to performance oriented system.

•Clear objectives; financing tied to objectives; producer autonomy; producer accountability.’

•How: public sector reforms; school autonomy; private providers; vouchers; community control