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More on the Growth Report

Ignacio Hernandez's picture

We mentioned yesterday the recently published Growth ReportWillian Easterly and Martin Wolf give their views about it in the FT. Others joined the discussion at the FT's Economists' Forum.

(Via Dani Rodrik's blog)

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Submitted by Theodore R. Breton on
I think it is time to look again at schooling's contribution to economic growth. In an article forthcoming in Education Economics and already published on-line, I have used a new cross-country data set on cumulative investment in schooling to estimate the national rate of return on investment in schooling in 61 countries in 1990 and 2000. The results indicate that in 2000 the national return on investment in schooling ranged from 16 percent in Sweden to 84 percent in Pakistan. Using the 1990 estimates of the national rate of return and estimates of the private rate of return from micro studies for the same time period, I have calculated the external rate of return on investment in schooling in 1990. These calculations indicate that in the lowest-income countries most of the national return on investment is external and that it exceeds 50 percent. Source: Breton, Theodore R., 2008, “Schooling and National Income: How Large are the Externalities?,” Education Economics, published online May 17, 2008, forthcoming in print If these empirical results are correct, they indicate that it is the level of schooling that largely determines a nation's level of income. Further, it is unlikely that investment in anything other than schooling could have as high a return. Now these results are long-term; i.e., the return from investment in schooling is not immediate and therefore not evident for a considerable period, but ultimately national policy on public schooling may be the critical determinant of whether a country remains poor.

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