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Flashcards in Economic development Deck (11)
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To what extent does education primarily fulfill the economic needs of the nation state?

“Education and economic growth are inter-dependent”. Please explain how and in what ways you agree or disagree with this statement.

Apple (1995) says that ‘Human Capital Theory claims that educational institutions are critical agencies for industrial growth and mobility’. Do you agree with this claim and what are the implications for education?


Shipman 1-5

Human Capital

  • Schultz
  • Fagerlind & Saha


ManPower planning

Sen 1999

Wolf 2002

check VLE notes


Shipman 1971


Schools were never considered to be an important element in economic development.


  1. Schools before C19th lacked efficiency and relevance to adult life outside the family
  2. education was within homes and heavily influenced by church and sect.

It was a luxury for the rich and not much relevance to the rural majority.

At early take off for industrialisation - skills and knowledge for factories was not complex and less demanding than farming. Education didn’t lead to the industrial revolution.

But education improved as industrialisation quickened. The need for discipline in factories and respect for the authority. (Education was the result of rather than the cause).


Human Capital Theory
Fagerlind and Saha 1989
Human capital theorists content …..


for any economic growth and development to occur 2 requirements are necessary:

  1. improvement and greater efficiency of technology
  2. utilisation of human resources in the employment of technology (skills and motivation are imparted through education).

The importance of education in development is recognised through …..


Education for All targets


Wolf 2002

Criticises Human Capital theory to a certain extent

  1. political leaders make education a key issue in many speeches and recognise the importance of education in economic development.
  2. Egypt 1980 47th poorest, 1995 48th poorest
    primary risen to 90% secondary to 75%, uni rated doubled.
    South Korea 1960s-1998
    secondary 1/4 to all. smaller uni than Egypt but then more.
    You can grow economically and expand education OR you can fail at economic success alongside education expansion.
  3. Lots of countries believed education would increase development
    - Sri Lanka, Egypt, Sub-Sahara Africa.
  4. Singapore/South Korea growth compared to Ghana since 1960s.
    There is little evidence that education causes development otherwise African countries would have seen more growth in economies since increase in schooling since they gained independence in 1960s. They have a considerably more educated workforce.
  5. Those believe in manpower believe in educational investment.
  6. Korea did have high education and high income (literacy campaign, expanded secondary schooling, vocational high schools) BUT to argue this you would need to see evidence of a poor educational policy and low economic growth.
  7. But there is no clear link between growth and spending on education.
  8. HK- didn’t spend on education like Korea and Singapore but had growth
    Switzerland - huge growth, low public spending
    TIMMS - no correlation
    America - criticisms of education in terms of unproductive and inefficient but record breaking growth
  9. Could it be growth that causes development
    HK children more in high education because competing for jobs and parents can now afford it.
  10. We can’t say that education is irrelevant to growth. Modern economies do require educated people.

Should education policy take pride of place for government strategy for growth?


Limitations of human capital theory

  1. it assumes that better educated person would get a better job
  2. productivity is not necessarily correlated with education. Job satisfaction and motivation are more important.
  3. It ignores the fact that education may only serve as a screening device of the skills one possesses but not attitudes and motivation.
  4. some think education produces robot workers. Individuals who are not creative.

Manpower planning


1950s - centred around the need for trained personnel

Schools could provide the required personnel in various aspects of economy and government departments.

Schooling could be matched to labour market requirements.

Economy’s need for educated labour could be predicted.

Actually labour productivity is dependent on many factors - technology, price adjustments, relative wages

Only considers benefits of schooling, doesn’t take into account costs.


Cost-benefit analysis


it is possible to calculate the rates of return to various levels and types of education

Considering vocational programmes. They are costly and benefits from them don’t meet the cost.
Some argue that they are not tied to the needs of the labour market.


Sen 1999

  1. Development as Capabilities - are actions one values doing or approaches to living ones values.
  2. how education benefits the individual rather than the whole society.
    .3. The importance of freedom of choice as a criterion for development.
  3. Recognises the production quality of human beings in raising development levels.
    Compared to human capital that focuses on the agency of human beings in production possibilities.
  4. focuses on the social aspect of development that education can bring not just economic.
  5. builds on the idea of human capital but not just focusing on development in terms of GNP.
  6. Unterhalter support this view of Sen

but says the emphasis on economic development alone misses the point
looking at development in terms of income capabilities rather than individual capabilities is not a good enough way of understanding economic development.


Human capital Schultz 1960


People acquire skills and knowledge which is seen as a form of capital

She notes:
investment in human capital through the application of rates of return.
Showing that taking the costs of education into account, rates of return are relatively attractive and larger than gains in physical capital.


Malawi Rose 2003

  1. 1960s education projects largely dismissed - not revenue generating
    Late 1960s - approval of vocational and technical training (base don manpower analysis)
    Late 1970s - education taken more seriously. Shift in emphasis to primary.

It was criticised whether this made any difference

Success in NICs was not just education but state support of trade and markets and public ownership

Stiglitz 1997 supports that human capital supports development
Dakar 1000 conference supported this,
MDGS did

BUT financial assistance for children to attend school has been recognised as a more successful strategy.

The process of T&L is still outside the scope of the World Bank.