Contributions of Education to Economic Development with Endogenous Growth and Policy implications

Endogenous growth in East Asia is seen in this thesis to be results of an interaction between the expansion of education with the diffusion of capacities to adapt and use more productive technologies. These human resource capacities in the labor force have been essential and aided the export-oriented growth strategies that each of these nations have pursued. The main theme of this paper was to investigate the role of education as a source of economic growth in Korea. In this study, first, the objective mode was built by extending neoclassical slow growth theory. Second, the capital deepening typical of an endogenous economic per-capita growth model was developed empirically for seven East-Asian economies as for the medium term, during 1965~1989. And then we found the meaning of coefficients of growth factors, direct relative contribution of each input to per-capita growth in seven East-Asian countries, relative indirect contribution of education to per-capita growth in seven East-Asian countries, relative indirect contribution of education to per-capita growth in Korea, accounting for difference due to accumulation in Korea. The indirect relative contributions of secondary and higher education and R&D to per-capita growth change the results somewhat. Secondary education is still the largest single contributor 65 percent of predicted growth is due to secondary school enrollment in Korea. Primary education comes second with 36.2 percent and followed by higher education at 4.7 percent. Physical investment gives 24.9 percent and unimproved raw labor contributes only 6.6 percent. The productivity of education is given prime importance in modern per-capita growth models. These models also accommodate endogenous technological change leading to increasing return to scale. The effects of education on per-capita growth are seen in three ways: (1) through the increased educational attainment as the labor force increases their skills and hence their productivity, (2) through the contribution of investment in higher education to the conduct of R&D, and the training of R&D demand for firms as endogenous technical change, and (3) through the ability to transfer the technology from more advanced countries, as well as to learn and adapt tp new technologies on the job