Higher Education and Technological Advances as Countries Develop-Becker

The essence of traditional international trade theory is that poorer countries produce goods and services with resources that they have in abundance, mainly low skilled labor and sometimes natural resources. They export these goods, and import goods from the richer countries that require skilled labor, and considerable physical and financial capital. This theory provides many insights, and must be followed if poor countries are to start on the path of economic development. However, it does not go nearly far enough in mapping out how countries can continue rapid development, and go from being poor to becoming middle-income, and eventually to becoming rich. 

To continue their economic progress, developing countries have to move up the product ladder and start producing more sophisticated goods. To do this, they need to import technologies from the rich counties, and increase the training and education of their populations. Advanced technologies are partly acquired through foreign direct investment and from trade with rich countries. Along with the more sophisticated goods and services imported, developing countries also acquire some of the technologies developed in the economically advanced nations.

 Importing advanced technologies can carry developing countries to middle income status. To eventually reach much higher income levels, these countries must begin to innovate themselves as well. International trade and foreign direct investment are also necessary for this further stage of economic growth, but it is not sufficient. Continuing rapid development toward becoming a rich country requires skilled entrepreneurs and workers who can not only utilize and adapt technologies imported from developed countries, but who can also create develop their own technologies and processes.

Several ingredients are needed to accomplish this- of course, particularly important are competitive markets and creative entrepreneurs- but in the limited space for the present discussion I want to stress the role of education, especially higher education. In early stages of economic development, a country needs a literate and energetic population with a wide education base of perhaps only a few years. But as countries continue to grow, they need to upgrade their education levels beyond elementary school toward high rates of secondary school completion among young persons.

Economists and other students of economic development have learned only in recent years about the great significance also of higher education for countries that want to progress beyond middle-income status. Higher education has become important to the development process mainly because of the growing value in the modern world of command over information and knowledge.  The spread of university education and training toward a much larger fraction of young persons is crucial to producing efficiently the kinds of products and services that would help developing countries continue to drive forward.

For several years, along with others, I have been studying the worldwide boom in higher education in both developing and developed nations. These studies document that the rates at which young men, and especially young women, have been graduating from universities have accelerated in almost every country during the past 30 years. China, for example, has had a growth in enrollments at universities of both young men and women since about 1990, and a sharp growth since the late 1990s. A similar rapid expansion of higher education has also occurred in many other still developing countries, such as South Korea. Developed countries too have generally also greatly increased enrollments at universities, although the US has fallen behind in the fraction of young men who go on from high school to receive a college education.

The signal given to young persons that higher education pays off much more now than in the past is the sizable growth during the past several decades in the average earnings of individuals with a college education compared to the earnings of those who do not go to college. Earnings of persons with college education increased faster in recent decades not only in developed countries, but also in many rapidly developing countries, such as China and Brazil, that are supposedly specializing in goods that use less human capital. Developing countries imperil their continued economic advance if they fail to provide much greater opportunities for their young men and women to achieve a university education.

To conclude, the main message of my comments is that in order for poorer countries to continue to grow at fast rates, they must move beyond specialization in goods produced with relatively unskilled labor. They need to upgrade the goods they produce by utilizing more advanced technologies, and more skilled workers and entrepreneurs. At first, most advanced technologies are imported from other countries, but eventually developing nations need to produce themselves many of the technologies required to upgrade and expand their production. To accomplish this last great stage of economic development, both public policy and private households and businesses must begin to emphasize higher education, and other ways to greatly improve the advanced human capital of working men and women.

Comments

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Higher education and technology advancement,both are main pillars of a country's development process.I totally agree with all the research and thoughts of the writer.

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[Tiffany]

I completely agree with this post. Become a more advanced country does not completely depend on what your exports or how your economic improves in general. Education is something that will bring a country to the next level because it helps prepare the leaders of the future.

[blake]

Seems to me that a lot of the benefits of higher education could be more quickly and cheaply spoofed with smart phones and the internet. My cell phone lets me watch ivy league lectures, and while it's no substitute for the actual experience, it seems to me the closest most third world children are likely to get. I expect advances in teaching software will only increase phones effectiveness. With wireless and a smart phone a farmer in Africa can google his problems just like I do I'd imagine. And you can provide hundreds of people internet and communications access for the price of sending one child to the west to be educated in a top ranked school.

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I agree with the post.Education is ever ending thing and developed nations does not mean that education should no longer needed.Each day there is a new thing to face and education is the thing which give way to solve it.

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[Jen]

Well, undeveloped countries lack capitals besides technologies. The national policy needs to focus on certain niche first, concentrate the capital then start from there.

[Jack Fulfilment]

I see that poorer countries give at first cheap peoople to work. In this countries is a high technology, but not technology from this country. Riches country produce goods in poorer countries. I see in my country, there is a lot of people high educated, but they are usualy go work to other "high" countries.

[n]

I agree with writer but we should consider unemployment in developing countries .Becuase they dont have job opportunity , over expectation in these countries can cause many problems . and I want to state that I agree with high education of the highest quality

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Thank you for the Post. This seems to have as its starting point, absolute advantage - the conclusion might be somewhat different if comparative advantage were the tools used as first principles.

[Tariq Scherer]

I note that the summary paragraph ends with: "To conclude, the main message of my comments is that in order for poorer countries to continue to grow at fast rates, they must move beyond specialization in goods produced with relatively unskilled labor" and I can not help but agree with the intent and meaning of the sentence.

However, I am surprised that the very act of 'specialization' in the production process is not recognised as being the essential ingredient forward that enables demand for higher education, increased skill sets, higher management, scientific, cultural and business skills leading to enhanced productivity, and in turn, capital accumulation.

It appears to me that these core skills, gained at a micro level, and incentivised by the increased trade gained from this knowledge is not only a strong driver to economic growth, but also a sustainable and competitive driver: ie one that produces a net gain for all parties. Furthermore, this specialisation becomes a natural conduit through which to drive and value increased education.

My only concern is that we may put the carriage before the horse when calling for increased education as a core supply driver of the economy. Without the adequate depth in demand, such education risks being diverted towards less than productive means, which in turn can then damage the sustainable growth of a country.

I don't want to press too hard on this aspect as, of course, education appears in and of itself a moral goal, for developed as much as less developed countries. However, education within an economic setting still needs grounds over which it can grow and, given such a requirement, core economic specialization then provides the fertile soil for the future educated aspirers.

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e that a lot of the benefits of higher education could be more quickly and cheaply spoofed with smart phones and the internet. My cell phone lets me watch ivy league lectures, and while it's no substitute for the actual experience, it seems to me the closest most third world children are seolikely to get. I expect advances in teaching software will only increase phones effectiveness. With wireless and a smart phone a farmer in Africa can google his problems just like I do I'd imagine. And you can provide hundreds of people internet and communications access for the price of sending one child to the west to be educated in a top ranked school.

[watch]

My cell phone lets me watch ivy league lectures, and while it's no substitute for the actual experience, it seems to me the closest most third world children are seolikely to get. I expect advances in teaching software will only increase phones effectiveness. With wireless and a smart phone a farmer in Africa can google his problems just like I do I'd imagine.
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http://www.businessweek.com/magazine/content/10_37/b4194008546907.htm

6.3 million unemployed or under employed did not go well with the theory.

The advancement comes with strong policy of gov (industrial and technology) and access to cheap labour. It has been proven by history and current situation alike, Egyptian, Roman, Greek, US (slave), Singapore (India, Malay, etc), Japan, etc.

[Charles]

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[Peterman7]

My only problem with this is that the American economy is a key factor in world wide growth. I understand the need for smaller nations to grow and provide quality goods, but it begins with larger nations doing the right things for their people. Investing in their own people and infrastructure provides continual growth, resulting in growth world wide.

http://economicrebirth.blogspot.com/

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Changes in technology have historically affected employment because some tasks are done more accurately and easily than people can do them.People have to exercise more flexibility in their work lives as well as becoming life long learners.
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With wireless and a smart phone a farmer in Africa can google his problems just like I do I'd imagine. And you can provide hundreds of people internet and communications access for the price of sending one child to the west to be educated in a top ranked school.

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technology and discoveries will always have an impact on human mankind. 1000 years ago as much as today.

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Let's hope that the economy will pick up with lesser unemployment rates.

[Bill]

The truth is that not all people possess the intelligence to significantly benefit from education, and that traditional countries are collections of people who evolved in similar environments. This is a very uncomfortable subject for some.

But from my observations in the workplace, ‘Skill’ seems to be much more closely correlated with ‘Innate Intelligence’ than ‘Education’.