by William J. Baumol, Robert E. Litan and Carl J. Schramm. It is an interesting book, and one worth your attention.Culture, policy and institutions
In one section the authors discuss "culture" as a determinant of the ability of a society to progress rapidly economically through entrepreneurial innovation. They make the point that, while culture is sometimes thought to be relatively slow to change, countries that have established policies and institutions that promote entrepreneurial innovation have experienced rapid increases in entrepreneurial behavior within less than a generation. They suggest that perhaps culture responds to policies and institutions rather than the reverse.
I am very interested in UNESCO, and I perceive that the emphasis in that organization is that globalization and other pressures are driving cultural change at a very fast rate, and indeed that many people are concerned that those changes are threatening many of the most deeply held cultural values of their societies. They question how rapid cultural change can be made more morally and ethically responsive to the members of the cultures involved.
A definition of culture is:
The totality of socially transmitted behavior patterns, arts, beliefs, institutions, and all other products of human work and thought.Under that definition, institutions are part of culture. I understand that Baumol et al. consider institutions such as markets and those involved in the rule of law and intellectual property rights protection to be worthy of special concern for economists, and are referring to behavior patters and beliefs as "culture". However, the links among policy, institutions and culture even in the author's limited sense are indeed complex. Institutions and policies do not come into existence or do not work if they are in too much conflict with the beliefs and behavior of the society to which they are introduced.
The main point I would make is that cultural changes are probably critically important in achieving economic growth, but that those changes affect a broad cultural network, and should not be made without control by the members of the culture that would be changed.
Education
The authors also suggest that they believe increases in educational opportunities are necessary to achieve economic progress through entrepreneurial innovation, but not sufficient. I suspect they are right.
They also suggest that economists, using the techniques of econometrics, have not been able to support that assertion. The authors do note that economists strongly believe that there are benefits to education that are external to the earning impacts of more schooling, and that it is the development of skills used in the workplace that counts in terms of the economic value of education. I concur.
Econometrics techniques are difficult to apply to situations in which there are many necessary conditions to an effect, but where in many cases one of more of those conditions are not met.
In the case of education, all too often analysts are forced to lump very dissimilar things. The value to a country of preparation of much needed professionals in public health or engineering may be quite different than the value of preparation of lawyers or historians in excess of the number than can be employed, but training of these professions are often lumped in expenditures on higher education. Indeed, it seems very likely to me that the marginal returns to different kinds of education are highly variable, depending on the society's needs for skills and abilities to utilize graduates effectively.
It should also be noted that UNESCO and the United Nations have realized in the creation of the goals for Education for All and the Millennium Development Goals that basic education is a universal human right. Rights "trump" utilitarian concerns, and countries have the responsibility to provide those services which are determined to be the rights of their citizens whether or not they are "profitable".
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