people and planet

2
and supporting good governance (Acemoglu et al., 2014;
Bjørnskov, 2012; Knack and Zak, 2003).
For countries to prosper in their participation in the
world economy, investment in education is a must. Low
and lower middle income countries need to invest in
secondary and tertiary education and expand lifelong
learning opportunities to increase high-value added
activities in the industrial and service sectors. This is
particularly true of sub-Saharan Africa. By 2014, the
region’s gross enrolment ratio in tertiary education
was 8%, far below
the second-lowest
Increasing tertiary regional average, that of
Southern Asia (23%), and
attainment by one
the global average (34%).
year on average would
increase sub-Saharan Historically, as the
estimated benefits to
Africa’s long-term
investment in education
GDP level by 16%
were lower for higher
education than for
primary and secondary
education, the World Bank and others discouraged
investment in the tertiary level (Basset and Salmi, 2014).
But recent evidence on the impact of higher educational
attainment on growth, pertaining to 108 countries over
1975–2010, suggests that increasing tertiary attainment
by one year on average would increase sub-Saharan
Africa’s long-term GDP level by 16% and increase growth
through technological catch-up by 0.06 percentage
points a year (Bloom et al., 2014).
… BUT THE QUALITY OF EDUCATION IS CRUCIAL
The provision of good quality education is central:
Increasing enrolment rates will not have as much
positive impact on national economic growth if students
do not reach sufficient learning outcomes (Pritchett,
2006). Years of schooling is a problematic indicator of
workers’ actual skills because of differences in school
quality within and between countries, in achievement
between students of the same social class and in
acquisition of skills through other sources.
While results of the Survey of Adult Skills in the OECD
Programme for the International Assessment of Adult
Competencies (PIAAC) are too recent to correlate with
long-term growth, surveys of student achievement
conducted since the 1960s by the International
Association for the Evaluation of Educational
Achievement (IEA), along with results of the OECD
Programme for International Student Assessment
(PISA), have been used as a proxy for the quality of
education that adults received (Barro, 2013).
This strand of research has provided evidence of a
substantive link between skills developed through
education and economic growth. It has clearly been
shown in relation to skills in mathematics and science.
Across 50 countries, the average of mathematics and
science test scores available between 1964 and 2003 had
a significant and positive impact on economic growth
over 1960–2000. A standard deviation increase in test
scores was associated with a two percentage point
annual increase in GDP growth (OECD, 2015d).
Research also shows that basic and advanced skills have
complementary effects on growth. Both the share of
students achieving at least basic skills (ranging from 42%
in low income countries to 80% in high income countries)
and the share achieving advanced skills have a positive
impact on growth. However, the impact of the share
of advanced skills is comparatively larger in countries
with more scope to catch up with the most advanced
economies, reflecting the importance of advanced skills
for technological diffusion (OECD, 2015d).
The provision or relative lack of good quality education
helps explain the East Asian ‘miracle’ and Latin America’s
‘lost decades’. Despite relatively high average years of
schooling and per capita income around 1960, most
Latin American countries have had low test scores in the
decades since, whether measured in international surveys
or in regional assessments conducted by the Latin
American Laboratory for Assessment of the Quality of
Education. By contrast, many East Asian countries have
had higher test scores than could be predicted based on
the same variables. Differences in test scores between
the two regions can explain their different growth
records. Within the regions, countries with higher scores
had more rapid growth, e.g. Brazil and Chile compared
with the Plurinational State of Bolivia, Honduras and the
Bolivarian Republic of Venezuela, and the Republic of
Korea and Singapore compared with Indonesia and the
Philippines (Hanushek and Woessmann, 2012).
Analysis of a sample of lower middle income countries
found that if all children were to acquire basic skills by
2030, GDP would be 28% higher over the following 40
years compared with what would be expected with
current skills levels. The increase in GDP for upper middle
48
CHAPTER 2 | PROSPERITY: SUSTAINABLE AND INCLUSIVE ECONOMIES