The Role of the State in Education and Development : The Case of East Asia

Presentation to National Authority of Assessment Conference on ‘Quality and Equity in Education Systems’ Rabat, 20 th April 2010 Andy Green Professor of Comparative Social Science Director of Centre for Learning and Life Chances in Knowledge Economies and Societies (LLAKES) Institute of Education University of London

Globalisation and Development

Globalisation has changed the terms of development. It has transformed:  the nature of world markets and what it takes to be competitive in them  the nature of the national state and the relations between states and other levels of governance  the possible paths of development

Globalisation is Changing the Dynamics of Development

In terms of the factors promoting economic development globalisation increases the importance of : • international trade (and thus the need for export oriented economies) • knowledge, skills and technology transfer for development in the global ‘knowledge economy’ • MNCs and FDI in knowledge and technology transfer • education and skills (as argued in endogenous growth theory)

The Conditions for ‘Late Development’ (Amsden)

‘Late industrialising countries’ countries can develop more rapidly in a global era due to: • the global disaggregation of production and services industries – the global division of labour • Increased possibilities for knowledge and technology transfer from: - increased investment flows - increasing codification of knowledge and skills - advances in ICT Countries which develop rapidly have the skills for successful knowledge transfer.

The Role of the State in Development

The role of the state in development is becoming better understood partly as a result of:  more complex understandings of the globalisation process  A more historically informed approach to development issues

The Crisis and Development Theory

 The current world economic crisis is also reinforcing the need to reconsider dominant model of development.

 The crisis suggests that the neo-liberal model of finance driven, debt-based capitalism in developed countries has run its course.  The crisis of neo-liberalism, combined with the growing power on China and India on the world stage, suggests that the neo-liberal model of development – encapsulated in the ‘Washington Consensus’ may also be re-thought .

Neo-Liberal Development Theory

The Washington Consensus model, prescribed by the international agencies, and backed by the most developed economies, has emphasised:  Minimal government intervention including through Industrial Policy  Free-trade (no tariffs, subsidies and free capital flows)  Structural adjustment policies to reduce state spending The policies are based on neo-liberal policies for economic development which go back to Adam Smith.

The Myths of Liberal Development Theory

 However, these policies are based upon myths about how the now rich countries actually developed and there is little evidence that they work well now.

 Historically, most successful developing countries, including the recent cases in East Asia, have used substantial state intervention (in industrial, trade and education policy) to assist development.

 As Ha-Joon Chang, the Cambridge development economist, has argued, successful developing economies often have more to learn from Frederick List than Adam Smith. Liberal free trade policies have generally advantaged the already powerful economies. Advocacy of ‘free trade’ policies to poorer countries is often a case of rich countries tending to ‘kick away the ladder’ on which they ascended.

List on the State

 List criticised Smith for ignoring the historical evidence of how the rich countries had developed through harnessing the power of the state. He advocated using the power of the state to develop manufactures and to gain a foothold in world trade through the nurturing and protection of infant industries and the use of mercantilist strategic trading policies. ‘Power is more important than wealth...because national power is a dynamic force by which new productive forces are opened out, and because the forces of production are the trees on which wealth grows, and because the tree which bears the fruit is of greater value than the fruit itself. ...industry and thrift, innovation and enterprise, on the part of individuals, have not yet accomplished ought of importance where they are not sustained by municipal liberty, by suitable public institutions and laws, by state administration and foreign policy, but above all by the unity and power of the nation’ (p. 132.)

Late Development Theorists

Late development theorists, from Alexander Gerschenkron to Alice Amsden, have built on List’s insights. They argued that nations that industrialised after Britain had to do it differently since technology was more advanced, and more easily transferred, and since industries were on a larger scale.

   Industrialisation could happen more quickly Required more state intervention Relied heavily on skills and skills transfer

Developmental State Theorists

Developmental state theorists, such as Manual Castells and Chalmers Johnson, have applied a similar analysis to the way in which Japan and the Asian Dragons have used neo mercantilist strategic trading and industrial policy to develop their economies. Their analysis not only shows the important role of the state in economic development but also the importance of developing state capacity through education and policies for national cohesion. All ideas familiar to List In practise the successfully globalising East Asian states have followed List rather than Adam Smith and it has worked.

The Poor Track Record for Neo Liberal Growth

As Ha-Joon Chang has shown in ‘Kicking Away the Ladder’ : During 1960-1980 (when world trade regimes allowed developing countries to nurture their industries and external trade through import substitution policies and strategic trading) developing countries grew at an average rate of 3% pa.

Since 1980, with Washington Consensus policies, only 13 of 88 developing countries saw average growth rates in 1980 2000 period at more than 0.1% over the previous period. And many of those which grew fastest ignored liberal policies of the Washington consensus

The Role of Education

Education can play major role in promoting successful engagement with the global economy by six key processes: • • • • • • Providing skills which attract inward investment Assisting in knowledge and technology transfer Upgrading the economy Reducing inequality Promoting social cohesion Strengthening state capacity

East Asian Growth 1965 - 1990

23 economies in East Asia grew faster than all other regions at 5.3% pa, mostly due to rapid growth of 8 high performing Asian economies (HPAEs) : Japan, the four tigers (S. Korea, Taiwan, Singapore and Hong Kong) and the East Asian NICS: Indonesia, Malaysia and Thailand.

Average % growth pa: • • • • • HPAEs: East Asia minus HPAEs: OECD: Latin America: Sub-Saharan Africa: (World Bank : East Asian Miracle, 1996)) 5.3

2.3

2.3

1.9

0.1

Growth rate of Japan and tigers during 25 years from 1960 was over 8% pa on average (Wade, 1990). Growth rate of S. Korea 1962-1979 averaged 18.4% (Amsden, 1992)

Growth, Distribution and Well Being

• Between 1960 and 1998 real income pc in Japan and tigers increased x 4 • Life Expectancy in HPAEs grew from 56 years in 1960 to 71 in 1990 • Proportions living in absolute poverty declined between 1960 and 1990 from 58% to 17% in Indonesia and from 37% to 5% in Malaysia (compared with 54% to 43% in India) • HPEAs also achieved low and often declining levels of income inequality, particularly in Japan and Taiwan but also, until the 1980s, in S. Korea and Singapore.

Role of Education in East Asia

General view : education played major role in East Asian Miracle WB from growth accounting estimates: ‘far and away the major difference in predicted growth rates between HPAEs and sub-Saharan Africa derives from variations in primary school enrolment rates.’ (EAM p. 54)

Human Capital Account

Skills contributed significantly to productivity growth and technology transfer. Educational development was successful because it largely followed the market and was informed ‘sound’ policies: • HPAEs had high initial levels of literacy (although so did Sri Lanka and Philippines in 1960s) • Investment focused initially on universalising primary education which had highest rate of return • Secondary and higher education were developed sequentially when growth and higher rates of return to higher levels encouraged private investment • Growth, private investment and declining birth rates (earlier and sharper than in other developing countries) allowed increased in per capita spending and higher enrols in education without excessive public cost.

Developmental Skills Formation Critique

Developmental skills formation theory (Ashton and Green) does not disagree with many of the human capital assertions. However, it claims they miss: • the importance of secondary, technical and higher education expansion in later stages of development • the role played by the state in generating demand for skills • the role played by the state in coordinating skills supply and Demand.

Commonalities of East Asian Schooling

East Asian education and training systems differ in some significant ways: • Japan, Taiwan and Korea are highly egalitarian (non-selective neighbourhood comprehensive schools; mixed ability classes; equal resource distribution between schools) – Singapore and Hong Kong are comparatively elitist • Japan and Korea have extensive company based training in large firms. Singapore relies much more heavily on Gov’t funded workforce development • However, they have a number of features in common (Cumings)

Commonalities of East Asian Schooling

• • • • Highly centralised administration (although this is beginning to change now) Major stress on dissemination of basic skills Bias towards Maths and Engineering (20% get maths A level in Singapore and 40% of graduates are engineers) Major stress on Moral and Civic education (made possible by centralised control)

Importance of Socialisation

Arguably the most important contribution of education to economic development in Japan and Tigers has been through effective youth socialisation • Encouraging disciplined attitudes to hard work • Generating ‘national spirit’ of struggle and sacrifice in early years of development • Creating ability to work in teams (more notable in Japan and Korea than Singapore perhaps) • Development of state capacity.