The Influence of Education on Economic Development

Abstract

The purpose of this research is to measure the effect of education on economic development. Economists use education to explain growth unexplained by capital, and argue that it is a fundamental determinant of technological change. Sociologists have tended to endorse this view arguing by either invoking human capital theory, technological growth, or arguing from a modernization perspective, that education increases entrepreneurialism and Western pro-capitalist values. Using an ordinary least squares regression we analyze the comparative differences in growth in GDP/capita as measured by Angus Maddison’s historical GDP dataset among the nations of the world between 1870 and 1950. Education data comes from the recently published educational attainment dataset by Christian Morrison and Fabrice Murtin. The results show that education effects are weak – nearly zero. Education in 1870 predicts growth for the 1870-1950 period. However, shorter lags show almost no effect. Primary education has substantially greater effects than university education. Education/modernization produced very slow effects that cumulated over the long term. However, most of the significant fluctuations can be attributed to other more conflict-oriented variables.