Higher Education and Technological Advances as Countries Develop-Becker

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09/05/2010

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.

Posted at 09:42 PM | Permalink

Comments

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Though education is a pillar of society, ensuring proper access to it is just as important. Complicating the situation even more are harsh student loan debt terms: http://lawblog.legalmatch.com/2010/09/09/the-truth-about-escaping-student-loans/

Posted by: KenMasters | 09/22/2010 at 01:08 AM

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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Posted by: Alex | 09/22/2010 at 11:05 PM

Great work. Higher education and technological advances are the backbone of a country. undeveloped countries are facing these problems. They need something from the upper level for their growth.

Posted by: scout | 09/23/2010 at 06:16 AM

Great post,the advances are moving very quickly and geographically.

Posted by: Ollie@ CIE International Education | 09/23/2010 at 08:17 AM

This is very interesting. It's very helpful for everyone to have access to the technology I have readily available. Sometimes it's hard to image how I would survive without these tools...

Posted by: Accredited Online High School | 09/23/2010 at 09:20 AM

Are a country's commitment to "rule of law" and the successful eradication of pervading corruption also a factor toward creating a wealthy country? Will a widely educated population necessarily lead to these achievement of these goals?

Posted by: TP | 09/23/2010 at 03:01 PM

Higher education is good but if not accessible most especially by commoners whats the use. What we need is an education for all poor or rich.

Posted by: Clown Outfits | 09/24/2010 at 12:53 AM

Apple touts the fact that it has a solid advantage by controlling both the hardware and software. Although this is true, what they don't control is the content itself. The iTunes Store is their attempt to at least control the distribution of content. The iPad is their attempt at doing print media better than old tech. Now they want to take on television. As with music, their best bet is to deliver TV 'better' than the old media. Their best bet is to offer only what the user wants, in an easy way and totally portable.

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Posted by: Nike Shox Rivalry | 09/25/2010 at 04:11 AM

I completely agree that if a developing country want to grow at at a faster rate, education is definitely required. In the case of China, the One Child POlicy makes parents put all the effort and resources in their only child and thus children in China can be higher educated. In my opinion, I think the one child policy is also a crucial factor for China's rapid development.

Posted by: Vivian | 09/26/2010 at 01:08 AM

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Posted by: chat | 09/26/2010 at 09:27 PM

I think that this article is well written and informative. To tell you the truth, I am impressed by the way; you discussed higher education as the key towards economic growth. Many developing countries have issued accelerated diploma and other higher education to help improve their economy. And, I agree with you, when you said that people who graduated earned more, because companies paid more for individuals who are skilled and knowledge to do things as compared to undergraduates that still needs to be trained and cost the company money for training. Skilled employees are needed for a developing country for it to become a rich nation.

Posted by: Catherine is looking for an Accelerated diploma | 09/27/2010 at 05:10 AM

Higher education and technology ,both are main ingrediants of a country's development process. however if business is suppose to drive the economic engine of any country then there also have to be a
good government that takes local and international trade into account.
A balance approach needs to be put in place. We cannot just ship all labor intensive work overseas and only have high education jobs. We are really experiencing this issue right now with most of our MFG jobs shipped abroad.

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Posted by: tag heuer formula | 09/28/2010 at 10:16 PM

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. 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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