5 - The Role of Education

Summary

Chapter 5 evaluates the role of education in China’s rapid growth. In 1980, China was one of the poorest countries in the world, but the average years of schooling of its adult population was already near that of a middle-income country. This relatively high educational level was an advantage for China’s economic development. However, this advantage all but disappeared by 2005. China’s greatest advantage turns out to be in the quality rather than quantity of education. According to the cognitive skills index produced by Eric Hanushek and his coauthors, who use it as a measure of a country’s educational quality, China ranks the best among all developing nations. This factor alone may explain a very significant 4 percentage point difference in GDP per capita growth between China and developing countries such as Peru and South Africa. It is shown that China’s advantage in the quality of schooling is not due to more investment in education by the government. Instead, it is the traditional Confucian culture that has made people in China and other East Asian economies influenced by the culture value of education more than people in most other developing countries.