- Email: [email protected]
Education and Development: Measuring the Social benefits
Book reviews
553
Education and Development: Measuring the Social benefits Walter W. McMahon, The Clarendon Press, Oxford, 2000, pp. 314. Price: £47.50 (Hardback). ISBN: 0-19-829231-7 This book aims at estimating the total effect of education on development. After a short introduction, the author introduces the endogenous growth literature and presents his basic model. The focus of this model is on medium-term dynamics, emphasizing the impact of human capital investments on growth. This impact is shown as a crossing-over from a lower to a higher growth path, due to an increase in the education and skills of the workforce. During this crossing-over, the economy experiences increasing returns to scale. Long-term equilibria are not investigated in this volume. Using a time-series of country-level cross-section data, the author estimates growth equations from East Asia, Latin America and Africa, with a focus on the role of investment in education. The results convincingly show the importance of education, and the story wins in plausibility because the investments distinguish among primary, secondary and tertiary schooling. Subsequently, the author’s focus moves to, what he calls, the indirect effects of education. In successive short chapters, he investigates the effect of education on Health and Population Growth, Democracy, Human Rights and Political Stability, Poverty and Inequality, The Environment and Crime. Each of these chapters makes for interesting reading. In all cases, a plausible case can be made that education plays a role, but, also in all cases, the lack of a formal theory and the paucity of data make the empirical results less convincing. The data problem is particularly severe because in most cases, large time lags (between schooling and subsequent outcomes—such as environmental improvements) are in order. The author cannot, of course, be faulted for the data quality, but he could have been more careful in presenting the results. Sometimes, the empirical analysis turns into a fishing expedition, which damages the credibility of the arguments. For instance, on a cross-section of 62 country level data, the author regresses an index of political stability on per capita income (with a 7-year time lag), primary education (12-year lag), military expenditures (1-year lag), a communications measure (2-year lag), social security expenditures (no lag) and a 1-year lag urbanization index. All variables turn out to be highly significant, with an R-squared of 0.98. This is too much, even for the author. For the final chapter of this volume, he chooses an alternative equation to explain political stability (which includes secondary education with a 20-year time lag: R-squared of 0.46). In the final four chapters, the author puts it all together in a series of simulations that show, by region, how education plays a central role in the overall development arena. These ‘‘endogenous development’’ simulations take a broad look at development over the next 40 years, including economic growth, but also including non-market aspects of the quality of life. In these chapters, the author also attempts to use his estimation results to measure (in a comprehensive way) the social benefits of education. One can quarrel with the results (as I have done above), but the author makes a convincing case of the deep and lasting impact that education has on the well being of a country’s population. True believers in education as the key to development will find much in this volume to strengthen their beliefs. Skeptics will find many important and interesting topics that call for more research. I agree with the final conclusion of the author
554
Book reviews
that there is a need for ‘‘more theory and measurement’’ to obtain ‘‘the ultimate outcomes of education’’ and thus enrich the intellectual debate on development. Jacques van der Gaag FEE van de UvA, Roetersstraat 11, 1018 WB, Amsterdam, The Netherlands E-mail address: [email protected] 3 October 2002 doi:10.1016/S0304-3878(02)00112-8
Resource Abundance and Economic Development Richard M. Auty, ed., Oxford University Press for UNU/WIDER, Oxford, 2001, pp. xiii+340. £45.00 (Hardback). ISBN:0-19-924688-2 It has become increasingly widely accepted that developing countries which are unusually well endowed with natural resources often seem to derive little benefit from their apparent good fortune, and indeed commonly under-perform relative to the less well endowed. Much supporting evidence has been adduced for this proposition, and a wide variety of possible explanations advanced. This volume is the principal output of a UNU/ WIDER project designed to get to grips with these issues, to document the extent to which the proposition holds, to provide some sort of integrated rationale, and to derive lessons for policy. Aside from the introductory and concluding chapters, there are 17 further chapters grouped into four substantive parts. What looks to have been fairly tight editorial control has kept the average chapter length to around 17 pages and this makes for a reasonably brisk read; however, given the range of material presented, it does in places make the reasoning hard to follow. As a consequence, the volume does not really offer a reader unfamiliar with this literature a self-contained overview of it, particularly as regards its theoretical underpinnings. The first half of the book provides rather general summaries of experience on a grouped basis, and discusses how this experience may be conceptualized and modelled. The second half provides a set of country case studies which are intended both to utilize and to validate the insights offered in the first half. Arguably, the principal value of the book may lie in these case studies, but given the sheer diversity of the experience they cover, it is not practical to review them in detail here. This review, therefore, must necessarily focus more on the earlier, general part of the book. Apart from providing a preview, Richard Auty’s introduction presents some condensed evidence on the levels and growth rates of GDP for various country groupings. These distinguish between six cases, two for ‘resource-poor’ countries, and four for ‘resourcerich’ countries. (This categorisation is utilized extensively in later chapters). The former are simply divided between large (1970 GDP greater than US$7 billion) and small countries. The latter have the same division, but with the ‘small resource-rich’ countries subdivided
553
Education and Development: Measuring the Social benefits Walter W. McMahon, The Clarendon Press, Oxford, 2000, pp. 314. Price: £47.50 (Hardback). ISBN: 0-19-829231-7 This book aims at estimating the total effect of education on development. After a short introduction, the author introduces the endogenous growth literature and presents his basic model. The focus of this model is on medium-term dynamics, emphasizing the impact of human capital investments on growth. This impact is shown as a crossing-over from a lower to a higher growth path, due to an increase in the education and skills of the workforce. During this crossing-over, the economy experiences increasing returns to scale. Long-term equilibria are not investigated in this volume. Using a time-series of country-level cross-section data, the author estimates growth equations from East Asia, Latin America and Africa, with a focus on the role of investment in education. The results convincingly show the importance of education, and the story wins in plausibility because the investments distinguish among primary, secondary and tertiary schooling. Subsequently, the author’s focus moves to, what he calls, the indirect effects of education. In successive short chapters, he investigates the effect of education on Health and Population Growth, Democracy, Human Rights and Political Stability, Poverty and Inequality, The Environment and Crime. Each of these chapters makes for interesting reading. In all cases, a plausible case can be made that education plays a role, but, also in all cases, the lack of a formal theory and the paucity of data make the empirical results less convincing. The data problem is particularly severe because in most cases, large time lags (between schooling and subsequent outcomes—such as environmental improvements) are in order. The author cannot, of course, be faulted for the data quality, but he could have been more careful in presenting the results. Sometimes, the empirical analysis turns into a fishing expedition, which damages the credibility of the arguments. For instance, on a cross-section of 62 country level data, the author regresses an index of political stability on per capita income (with a 7-year time lag), primary education (12-year lag), military expenditures (1-year lag), a communications measure (2-year lag), social security expenditures (no lag) and a 1-year lag urbanization index. All variables turn out to be highly significant, with an R-squared of 0.98. This is too much, even for the author. For the final chapter of this volume, he chooses an alternative equation to explain political stability (which includes secondary education with a 20-year time lag: R-squared of 0.46). In the final four chapters, the author puts it all together in a series of simulations that show, by region, how education plays a central role in the overall development arena. These ‘‘endogenous development’’ simulations take a broad look at development over the next 40 years, including economic growth, but also including non-market aspects of the quality of life. In these chapters, the author also attempts to use his estimation results to measure (in a comprehensive way) the social benefits of education. One can quarrel with the results (as I have done above), but the author makes a convincing case of the deep and lasting impact that education has on the well being of a country’s population. True believers in education as the key to development will find much in this volume to strengthen their beliefs. Skeptics will find many important and interesting topics that call for more research. I agree with the final conclusion of the author
554
Book reviews
that there is a need for ‘‘more theory and measurement’’ to obtain ‘‘the ultimate outcomes of education’’ and thus enrich the intellectual debate on development. Jacques van der Gaag FEE van de UvA, Roetersstraat 11, 1018 WB, Amsterdam, The Netherlands E-mail address: [email protected] 3 October 2002 doi:10.1016/S0304-3878(02)00112-8
Resource Abundance and Economic Development Richard M. Auty, ed., Oxford University Press for UNU/WIDER, Oxford, 2001, pp. xiii+340. £45.00 (Hardback). ISBN:0-19-924688-2 It has become increasingly widely accepted that developing countries which are unusually well endowed with natural resources often seem to derive little benefit from their apparent good fortune, and indeed commonly under-perform relative to the less well endowed. Much supporting evidence has been adduced for this proposition, and a wide variety of possible explanations advanced. This volume is the principal output of a UNU/ WIDER project designed to get to grips with these issues, to document the extent to which the proposition holds, to provide some sort of integrated rationale, and to derive lessons for policy. Aside from the introductory and concluding chapters, there are 17 further chapters grouped into four substantive parts. What looks to have been fairly tight editorial control has kept the average chapter length to around 17 pages and this makes for a reasonably brisk read; however, given the range of material presented, it does in places make the reasoning hard to follow. As a consequence, the volume does not really offer a reader unfamiliar with this literature a self-contained overview of it, particularly as regards its theoretical underpinnings. The first half of the book provides rather general summaries of experience on a grouped basis, and discusses how this experience may be conceptualized and modelled. The second half provides a set of country case studies which are intended both to utilize and to validate the insights offered in the first half. Arguably, the principal value of the book may lie in these case studies, but given the sheer diversity of the experience they cover, it is not practical to review them in detail here. This review, therefore, must necessarily focus more on the earlier, general part of the book. Apart from providing a preview, Richard Auty’s introduction presents some condensed evidence on the levels and growth rates of GDP for various country groupings. These distinguish between six cases, two for ‘resource-poor’ countries, and four for ‘resourcerich’ countries. (This categorisation is utilized extensively in later chapters). The former are simply divided between large (1970 GDP greater than US$7 billion) and small countries. The latter have the same division, but with the ‘small resource-rich’ countries subdivided