Higher Education in Developing Nations

I have long thought that donor agencies under-fund higher education in developing nations. I think a part of the problem is that the economic analysis of the benefits of high education has been seriously flawed. The ones I have seen have focused on returns to the graduates, and on the efficiency of the educational process itself.

Of course, if students take forever to get through third rate schools, only to find that they can’t get jobs when the graduate, and leave for greener pastures in other countries as soon as they can, it makes little sense to throw good money after bad. Economic analysis can illuminate such problems.

Of course, it is important and useful to study the stream of income received by people according to the education that they have received, and to figure out things like the present value of the increment in future earnings per unit of additional education.

However, projecting such calculations into the future is perilous. Take the example of Ireland. For many years it provided university education to its youth, only to see a large number of the graduates emigrate abroad. Many were concerned that the national investment in education was bearing inadequate returns. However, when new government policies and entry to the European Common Market encouraged foreign direct investment in Ireland, lots of jobs were created. Not only did new graduates remain in the country, but increasing numbers of emigrants returned. The returns to higher education suddenly looked much better.

It is hard for economists to document the benefits to society that come from higher education when those are not captured in the incomes of the graduates, but I think those external benefits can be extremely important. The economic impacts of trying to run a nation with too few teachers, engineers, and doctors are very severe.

The returns to educational expenses for the creation of the cadres of such professionals are highly non-linear. I would predict that the rate of return is likely to be low when the number is below some critical mass, and then to increase. Thus as the number of engineers gets to the point where they can manage the building, operation and maintenance of an adequate infrastructure well, the returns per engineer entering into the workforce are high. (Of course, this assumes that the overall national policy environment is conducive to the growth and efficient operation of that infrastructure.) However, training more professionals that will be usefully employed in their professional occupations quickly becomes a losing proposition.

In these circumstances, good economic analysis requires that not only that the average return to investment be calculated, but the marginal returns to additional investments in training different kinds of professionals – a very difficult analytical task!

The Science-Based Professions

Readers of this blog know that I am very much concerned with the development of the science-based applied professions in developing nations. These include medicine and engineering, but also professions in areas like agriculture, forestry, mining, and meteorology.

It has not escaped policy makers that it is more expensive to train people for such professions than it is to train people in the liberal arts. It seems to have escaped many of them that the returns from training adequate numbers of such people are also quite high, and those returns justify the educational investment.

The Management Professions

It would seem that in the last decade or two, an increasing number of people have come to recognize the benefits of university training for the cadre of people needed to manage an economy. This training includes training in business management, public administration, health service administration, educational administration, etc. It also includes training in ancillary areas from accounting to information systems.

Without people to efficiently and effectively manage large organizations, societies can’t modernize. Higher education has a demonstrated capacity to train large numbers of managers to high standards quickly and efficiently. Unfortunately, some countries have also managed to demonstrate how to use higher education badly for this purpose.

Nation Building

I spent time in Uganda and Kazakhstan this summer. Both are multi-ethnic societies involved in nation building after the collapse of empire states. The experience has made me think more about the role of higher education in nation building.

I once heard someone say that part of the problem with Idi Amin was that he was very poorly educated. I suspect that is true, and that one of the problems of post-colonial countries is that they don’t have cadres of political leaders who have been educated to the appropriate standards for leading a nation. Jared Diamond says something similar in “Guns, Germs, and Steel: The Fates of Human Societies”. He suggests that the European societies, that used books extensively, had leaders with wide knowledge and understanding of political precedents, and were consequently able to outmaneuver the societies in Africa, Oceana, and the Americas that did not use books in the same way.

As I understand it, nationalism in the 19th century focused on nations as communities of people with a common language and common culture. It emphasized the nation-state, in which the borders of the political state were coterminous with the geographic extent of the one-language, one-culture community. That is a model that is difficult to apply in either Uganda or Kazakhstan, or indeed in many parts of the world.

The United States, in contrast has been a “nation of immigrants”. Nationalism here has included many different ethnic groups, with many different cultural backgrounds, who at least on arrival spoke many different languages. The melting pot assimilated these immigrants, helping them learn English, making their cultures more accepting of others, encouraging them to internalize U.S. political culture, and imbuing them with nationalistic fervor for the United States.

The U.S. public educational system was a critical element in this nation building, and I suspect that the higher education system was a keystone element. We still struggle in this country with integrating our ethnically diverse population, and with accommodating the continuing influx of immigrants into the core national civic culture, and we do so at a time when the information infrastructure and institutions are changing rapidly. It is not clear we will continue to succeed, even as well as we did in the past. Still, U.S. mass public education, including mass university education is an important model.

Again, I am not sure how the economists deal with the nation building aspects of education and higher education, but I fear that they tend to leave them as unmeasured externalities, and thus to leave them out of the sight and out of the minds of policy makers.

Conclusion

Higher education is too important to economic, political and social development to be underfunded. It is also too important to be done badly, and where the quality or efficiency of higher education is too low to justify investments in education per se, serious consideration should be given to investing in reform.