This research studies empirically whether there is a role of education in economic growth of Chile during the period 1973-2005. This is done through the adoption of time-series analysis and co-integration techniques. Based on economic theory and empirical findings, potential implications for Chilean educational policy are then discussed. This thesis (Role of Education in Chile’s Economic Growth) provides further evidence to the theory that education is linked to economic growth via the technology parameter, roughly approximated by total factor productivity, and that Chile constitutes no exception in this area. Consequently, these results give reason to believe that education may be an important influencer of Chile’s economic growth and thereby a relevant topic for Chilean economic policy. However, while recent cross-country evidence from World Bank studies suggest that it is the quality rather than the quantity of education that has the largest impact on economic growth, Chile’s greatest educational achievements have actually been in terms of quantity rather than quality. This is most evident in the fact that Chile has received international acclaim for its accomplishment in raising the country’s average level of schooling, while also receiving significant criticism for its modest improvements in student performance, despite consistent and substantial increases in educational funding. These findings offer several notable insights. Firstly, if the results from these World Bank studies apply to the specific case of Chile, it would appear that Chilean educational policy…
Contents: Role of Education in Chile’s Economic Growth
1 INTRODUCTION
1. 1 PURPOSE OF STUDY
1.2 DELIMITATIONS AND CONTRIBUTIONS TO THE LITERATURE
1.3 OUTLINE OF THESIS
2 THEORETICAL FRAMEWORK
2.1 INTRODUCTION
2.2 DEVELOPMENTS IN ECONOMIC GROWTH THEORY
2.2.1 Neoclassical growth models
2.2.2 Endogenous growth models
2.3 THE ROLE OF HUMAN CAPITAL IN ECONOMIC GROWTH THEORY
2.4 DEFINING HUMAN CAPITAL
2.5 EMPIRICAL EVIDENCE ON EDUCATION AND ECONOMIC GROWTH
2.5.1 Cross-country evidence
2.5.2 Country-specific evidence
2.6 IDENTIFIED ISSUES IN EMPIRICAL RESEARCH
2.6.1 How to best proxy for education?
2.6.1.1 Proxies reflecting educational quantity
2.6.1.2 Proxies reflecting educational quality
2.6.2 The influence of data quality on results
2.6.3 Possible endogeneity and simultaneity bias
2.6.4 Spill-over, external effects and non-economic benefits
Role of Education in Chile’s Economic Growth
3 EMPIRICAL BACKGROUND
3.1 CHILE’S ECONOMIC HISTORY – AN OVERVIEW
3.1.1 Sources of Chile’s economic growth
3.2 CHILE’S EDUCATIONAL SYSTEM
3.2.1 Basic facts
3.2.2 The evolution of Chile’s educational system in the period 1973-2005
3.2.2.1 Creating a Darwinistic demand-based educational system
3.2.2.2 Promoting educational attainment
3.2.2.3 Promoting educational quality
3.3 HOW DO CHILEAN STUDENTS PERFORM?
4 EMPIRICAL METHODOLOGY
4.1 BACKGROUND TO STUDY
4.2 RESEARCH PROCESS
4.3 SPECIFICATION OF THE MODEL
4.3.1 Choice of variables and proxies
4.3.1.1 Total factor productivity
4.3.1.2 Educational quantity
4.3.1.3 Educational quality
4.4 DATA – SOURCES, SAMPLE AND BASIC FACTS
4.5 TESTING THE MODEL
4.5.1 Using a time-series approach
4.5.2 Concept of nonstationarity, integration and unit roots
4.5.2.1 Nonstationarity
4.5.2.2 Integration
4.5.2.3 Unit root(s)
4.5.3 Testing for unit root(s) in time series
4.5.4 Testing for co-integration
4.5.4.1 Johansen’s co-integration test
4.6 THE QUALITY OF THE STUDY
4.6.1 Validity of study
4.6.2 Reliability of study
Role of Education in Chile’s Economic Growth
5 STATISTICAL RESULTS
5.1 TIME PLOT OF VARIABLES
5.2 ADF-TESTS FOR NONSTATIONARITY OR UNIT ROOTS
5.3 JOHANSEN’S CO-INTEGRATION TEST
6 ANALYSIS
6.1 IS THERE A LINK BETWEEN EDUCATION AND ECONOMIC GROWTH IN CHILE?
6.2 HOW SUCCESSFUL HAS CHILE’S EDUCATIONAL POLICY BEEN?
6.2.1 Chile’s effectiveness in increasing educational attainment
6.2.2 Chile’s effectiveness in increasing educational quality
6.3 MORE RESOURCES BUT WHAT ABOUT MORE SKILLS?
6.4 LOOKING FORWARD; WHAT ARE THE CHALLENGES AHEAD?
6.4.1 Setting clear goals and assigning accountability
6.4.2 Re-evaluating educational reforms and programs…….
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Source: Stockholm School of Economics