Education and the World's Poor -- Entrepreneurship Not Aid is the Solution

|Peter Boettke|

Economists and political economists since the founding of our discipline have been vexed by the question as to why some countries are rich while other countries languish in poverty.  As I like to point out to student audiences, the book that synthesized knowledge and established the discipline was Adam Smith's An Inquiry into the Nature and Causes of the Wealth of Nations, and over the past few years perhaps the top book readership and wide critical discussion wise in the field was Daron Acemoglu and James Robinson's Why Nations Fail, and one of the most respected economists around is Esther Duflo and her approach to studying poverty and policies directed at the alleviation of poverty throughout the world.  In short, we are still grappling with Adam Smith's problems and puzzles that he identified back in 1776.  It is the question that drives us.

Unfortunately, the discussion seems to cycle between an emphasis on the extent of the market, or the capacity of the state; on the accumulation of physical capital, or improvements in human capital; on the good fortune of geographic location, or the path dependency of history --- OR, some interaction between these various factors.  This is all well and good, and the discussion is certainly lively, but progress does appear elusive.  Instead, there appears to be some iron law of intellectucal cycling when it comes to answering the fundamental questions of economic growth and development.

One of the constants is educational opportunities for the individuals (particularly children) in the developing world.  Cut off from educational access, and the prospects for living a life out of poverty are bleak.  But for the vast majority of thinkers this implies greater state intervention and budgeting to provide educational access to its citizens -- particularly the most vulnerable of those.  If the region under investigation lacks the governmental capacity to provide schooling for its young, then a case is made for international aid to support public schools for the poor. This is that conventional presumption.

Pauline Dixon challenges this conventional wisdom in International Aid and Private Schools for the Poor (Elgar, 2013).  Based on extensive field work, Dixon demonstrates how educational entrepreneurs are providing low cost and superior quality educational opportunities to the most vulnerable of populations in the poorest regions of the world, whereas the public school options are failing the children due to misaligned incentives and lack of knowledge that results from being immune from the competitive process. Her work should be widely read by anyone interested in these questions.

The Times Literary Supplement has just released their annual issue with the Best Books for 2013, and Pauline's book have received this honor.  Congratulations to Pauline for this richly deserved honor.

 

Comments

[Rafe Champion]

Check out the Ed West Centre where Pauline is based. http://egwestcentre.com/
West was a Canadian-born libertarian. He did some great historical work on the amount of private education provided by "penny schools" in Britain and the American colonies prior to the statist public education movement. In some places the literacy rate was higher due to the penny schools than the results from modern public education. Go figure!

[NathanaelDSnow]

The importance of private education for economic development has been well-recognized at the more local level for some time. Private missions in the inner city have been doing this work for decades. Thinking *too* globally has caused many to forget the effectiveness of this work, such that private schools in the city are neglected among charitable organizations supported by philanthropies.
Anthony Bradley has been writing about this for a few years now.

[Thinkmarkets.wordpress.com]

Someone should inform the pope about this.

Mario Rizzo.

[Quan Le]

Foreign educational aid is a really good way to help developing countries. I’m come from Vietnam which is a developing country. There are a lot of international schools in Vietnam that teach in new ways (new technology, more application of science in reality) and all the subject are taught in English. It’s good for young generation in developing country to learn in a new, modern environment. And it’s easier for them to study abroad because they have a strong background of English. But the problem is after they study abroad, will they come back to Vietnam? If developing countries didn’t have any plan to keep talents that studied abroad coming back to their home countries, it’s easier for industrialized countries like USA to keep them. As a result, developing countries would lose a number of talents who begin studying in their countries but study abroad lately and stay in a industrialized country to work and be a part of labor forces of that country. To prevent it from happening, developing countries should have plans that not only attract other countries to invest money in education but also keeps talents that were taught and transmitted new idea, new technology in their own countries to help developing countries reach to industrialized faster.

[Roger McKinney]

On the other hand,too much education is dangerous. The "Arab Spring" happened to a large degree because of thousands of unemployed college grads. The Arab world has offered free college education for decades, but their socialist economies failed to create jobs to absorb them.

The guy in Tunisia who set himself on fire and launched the Arab revolutions was an unemployed college grad.

Education does not create economic development. My state, Oklahoma, is a perfect example. For 40 years the state has tried to grow its economy by educating everyone. Growth has been very slow. Unemployment has remained low because the unemployed leave the state. Our biggest export is college grads.

[Ngoc Tran]

Education is such a really important element of any country's development. Because if people had a strong base of knowledge, they would know and use it to help growing their own country. Especially poor countries, they should take care of this issue. They should invest more on educating children. If not, children would grow with low knowledge level and become unemployed. But to help the country to be industrialized and to be developed we need people who have strong knowledge about technology, new manufacturing...And to have all of those of course people do need to be schooled. The government should not cut off any expenses, budgets of the education. The government should know the value of it. It is the best component of helping developing any country.

[Rafe Champion]

Ngoc, it is not just a matter of spending more money on education. It has been quite clear since Peter Bauer's work which commenced in the 1940s that foreign aid to governments of the Third World has for the most part (leaving out direct medical care) done more harm that good. No just no good. Harm.
The point of this argument on education is that the education has to be relevant to the needs of the people where they live and work. That is most effectively delivered by educators who respond to the immediate needs of the people where they live and work. Simply putting more funds into a government line item called Education means next to nothing in terms of delivering the specific kind of education that is required on the ground.

[Roger McKinney]

Rafe, the McKinsey Institute has a good paper on the value of education to development that says only on-the-job training works. General education such as what people get in K-12 and college is almost useless.

Other than OJT, education does not cause development; it is a result of development as people with more money want better education.

[Rafe Champion]

Yes, misplaced education is not just a problem in the Third World, a great many of the people in western universities would do better with on the job training. Too many courses make people come out more stupid than they went in, and far too many people in ok courses are not genuinely interested enough to get real value from the course.

How many people in non-vocational courses attend the lectures because they are really interested in the subject, and how many are there just because they need the points to complete the course?

Jacques Barzun saw it all happening between 1943 when he published Teacher in America and 1968 when he published The American University who took any notice?

By the way you can get his books these days for next to nothing.

http://www.abebooks.com/servlet/SearchResults?an=Jacques+Barzun&fromanz=fromanz&sortby=17&x=44&y=7

[Daniel Araujo]

This post was an enlightening one indeed. Misplaced education is a topic i know very little about yet the point of it makes sense. The education systems in third world countries will never prove to turn out students who are exceeding the standards of the fellow students. Entrepreneurial expansion in the poorer countries applies incentives for creating and expanding knowledge which would promote positive education changes in third world countries.

The focus of education must always be to grow and make society better not just a regiment that all people must suffer through. Education must be government better in order to streamline the use of its resources.