ECO100Y1 Lecture : Return on Education, Sustainable Development

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3 Aug 2010
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Jan 28, 2009
The Chinese currency is being manipulated and should be higher and should be appreciated as China has
a huge current account surplus.
-IMF has had a mission to watch for misoriented foreign exchange rates
-issue in China is severe and threatening but is politically explosive
-v[ξ‚šξ€ƒo]Γ€ξ€žξ€ƒ]vÁ}ξ‚Œoξ€šξ€ƒwith countries with huge surpluses and deficits
-china was said to be manipulating its currency to boost exports
-ξ€’Z]v]ξ€šξ€ƒ]ξ‚šξ€ƒΓξ€‚ξ‚v[ξ‚šξ€ƒuv]¡oξ€‚ξ‚š]vP]ξ‚šξ‚ξ€ƒξ€žΓ†ξ€ZvPξ€žξ€ƒξ‚Œξ€‚ξ‚šξ€žUÇh^ÇZ}Β΅oξ€šv[ξ‚šξ€ƒΒ΅ξ‚ξ€žξ€ƒξ‚šZξ€žξ€ƒ]ξ‚ξ‚Β΅ξ€žξ€ƒξ‚š}]vξ€ξ‚Œξ€žξ€‚ξ‚ξ€žξ€ƒ
tariffs in US
-trade has fallen dramatically between Singapore and US
CONTINUE ON EDUCATION:
Conclusion-should make an investment in education
East Asia-1990-2002-80%-90% adult literacy,
Southeast asia-1990-47%, 2002-58%
Subsahara Africa-2002-50%, youth literacy-67% to 77% in 2002
United nations study in 2000, external benefits of education are often understated, social rates of return
under model 3 often do not have external economies
-Increased productivity of fellow workers
-Improved health of families
-more awareness of illnesses, faster reaction pattern to curing
-improved knowledge of family planning
-overall life enrichment, better understanding of life
Why are children not in school in developing countries
-schools are filled, no schools in area
-inadequate transport
-educational fees
-not a family priority particularly in agricultural areas, children enter the workforce at a young age
-8 countries in Latin America and Southeast Asia, poorest 40% of countries received 2-Γ­Γ³9}(P}Γ€[ξ‚šξ€ƒ
assistance for education
Avg length of school is 50% less in poor countries than high income countries due to
-teacher absenteeism
-student absenteeism
-needs of the agricultural sector
Indonesia 1973-83
-only 50% of the kids are in school, many villages did not have primary schools, shortage of teachers
-textbooks are rare, hard to come by and expensive
-modest school fees that were not affordable to many families
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-oil revenues from Indonesia and also World Bank
-P}Γ€[ξ‚šξ€ƒξ€Β΅]oξ‚šξ€ƒZΒ΅vξ€šξ‚Œξ€žξ€šξ‚ξ€ƒ}(Z}}o
-teacher training was accelerated
-millions of textbooks were printed
-school fees were abolished
1983
- 95% of kids in primary school
-should gain in future, investment in human capital
More education, should bring greater productivity and greater economic growth?
Looked at Japan and South Korea
Japan
-compulsory education of 5 years 1910-98% of children went to school
-now you have more educated labor force
-although the standards of education was set, the real benefit of higher education needed a period of
economic growth where labor was demanded and a period of high investment when labor and capital
moved jointly
-real gain came after 1955
-had to wait one generation where the education was beneficial
d}]vξ€ξ‚Œξ€žξ€‚ξ‚ξ€žξ€ƒo}ξ‚Œξ€ƒξ‚‰ξ‚Œ}ξ€šΒ΅ξ€ξ‚š]Γ€]ξ‚šΓ‡Uξ€ƒξ€š}v[ξ‚šξ€ƒvξ€žξ€žξ€šξ€ƒξ€žξ€šΒ΅ξ€ξ€‚ξ‚š]}vUneed a better organized labor, move from small
inefficient to bigger more efficient companies
South Korea-1910 education requirements were set
-benefits required South Korea to have high rates of investment, education benefits were only felt post-
war
Summary
-social rate of return, including model 3 on investment and given capital, show it to be more than 10%,
14-24%
-social rate of return from education is higher than social rate of return in the industrial sector: should
increase in investment in human capital
-maximize social rate of return
Benefits include
-higher earned income
-higher labor productivity
-reduce traditionalism
-greater acceptance for change
-higher capacity to transform
-ability of labor to seek out better jobs
-more opportunities for employment
Population growth make education improvement more difficult
-high population growth rate means need for more schools
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