March 1, 2013

Degrees of Development

New data suggest that the higher the educational attainment of civil servants the better a country’s economic outcomes

Education of the population is generally viewed as a key ingredient for economic growth. Economists have emphasized three main channels through which education theoretically induces economic growth. Education increases labor force productivity, which raises the level of output. It enables technological innovation, which promotes economic growth through improved inputs, enhanced processes, and better products. And it facilitates the transmission of knowledge and the adoption of new technologies, which also enhance economic growth.­

While that may seem to be a self-evident proposition, empirical research on the relationship between education and development is far from conclusive. That may be because education is not being measured properly. Research into the empirical relationship between education and economic outcomes has traditionally used measures based on the average number of years of schooling of the general population (see Box 1). But such measures have been criticized because they capture only the number of years of schooling without considering the quality of that education. When learning (as measured by cognitive skills) is examined, there is a much stronger association between education and economic growth (Hanushek and Woessmann, 2008).­

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