closing the gap in education and technology potx

2 Te Preciviy Gap The Skill Gap “he Technology Gap Concise: Benimaking Lain Areca Pecorance —¬ Chapter 3: How Technology and Skis Interac: Th Evidence for Latin America ad the Criboan Th

Closing the Gap

in Education

and Technology

\WORLD BANK LATIN AMERICAN

AND CARIBBEAN STUDIES

CLOSING THE GAP

ted Dresapoes TE WORLD BANK Tae Se AW

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‘hag pp TT em = (Word Bk Lain Anan and Cann ls) Pr

Inca tigi eles

1 Elston Seonmie pela Ane 2, Bho of whole anon sata Atti,

os? £3636 305

‘Sealers, Wotkes, and Fens The Maj Actor of Edationl snd Technological Progess 9

“The Cail Imporane of Eerie Incnaion Newer 0

‘Clog she echo and Prociviy Gaps Summing Up m 6

(Chater 2: Th Gape That Matter Most 2

Te Preciviy Gap

The Skill Gap

“he Technology Gap

Concise: Benimaking Lain Areca Pecorance

—¬

(Chapter 3: How Technology and Skis Interac: Th Evidence for Latin America ad the Criboan

The Rising Demand fer les Worker in iti Ameie

SElI-Basel T“ehaoagtdl Chnạcn Tan Amedel

‘The Reliionshipberween Tchosagy Tans, the Riing Denasd for hls ‘nl Pazens of Itegtion ito te Gla Eemony' io Latin Aria 6

‘The Level af Skil ins Coury I ep limpotate Deceit of Tehwalogy Tare fom Abra & Tang Tem Cpde inthe Dead fr Sled Workers and Techaogy?

¬

Ente

Chap: 4 losing the Sills Gap: Edueton Poles esos Tans The How

Ecarnal Tanto The (ceria Why

Eeainal Trenton Policy Empbexuse

Unleneeding ae Elsdoo Melee Seoeduy Khoai

Undeneaading he Edectiee Markec Uameuder

Concision: rons s E4eekdee ga ha im [an Amcdet

(Chater 5: Cloaing the Skits tap: Tnilng Pglde „

Yadenl Pu sie a Tranny Sens ia Lt Americ rity

Conte of io Servce Training: Brene fem Meco nô

‘Chapter 6: Technological Tracstons and Bements of Technology Policy

Racal for Government Action: Make nd Coonan Flutes, tà

Police force Fire Seg f Triton plover, Dion Mactaivns od iets Slee R&D 18

Adtgaeeẻ Tcöaelogcel Taaite: ReD the Key Diet mì

‘Chapter 7: Networks and National novation Sytem +169

‘Neal Insoaton Speen Cobierees a Eceaines 10

Eben of Ue af Renues sad Colabrtioe Đề

‘Unive Research Cemetizm Linkages The ore of the NS 0 Polis 0 Impeoe Callaberstion ` tơ 19

Bor33 Cansuucting Relive Demand Shits’ Whac Neds Be Assumed sad Why 56 Boc34 Sele, Techoolgiel Change, and Homan Capt: Manfarring and Develops in Mico» 63 Bax35 Evidence of kl-Bsed Technologic Change in the United tts ad eet OECD Counties = 68 Bor36 Tre iseaianion aed Ser Speci Skills Tenge Charen Bel

Bor$1 Expanding Seandiy Scoot The Gres Tasfonntion of Ameran Elation ° Bor42 TheReumssolmewerwiaKhelidiaeweeme Evidence rm Pes and Todonsia 34 Bor43Candionl Cash Tanne The mcs of PROGRESA in Mexico 34 Box How IafrmaronTecalagy Has Charged he Workplace idence rm he OECD io

Box S —-Minmizing Information Prblems about Pete Univesity rwaler: Eapeiaces

B431 Mesos CONATEP How co Make Vestina! Education inion Wok tả Bor52 Lislogg Leaming:Conepe, Evidence for LAG nd Implant tổ

BoxS4 Ener Ting and Prodrive a Developing Coane Bì

Bo 53 FemleedlCme Seton and Patel Data for Mei nà Bex36 Complements beween Sil and Technology Tainng Teens wo Bost

Box37 Well Designed Lee Grant Sears Can Maia Hn oie ĐH Bor3§ Mercot Prenctive Approach 9 Sena and Madi Sine Eerie Sopp 9

Accent Chages in Tninng Sytem in Lava Amtico Caribe

‘The Dial Ro of RAD Ionovaton ad Learing Supply Side ad Demand ice Messrs pave eal Bilao Singapore's Reliance on EDL

The Roof ines Progeny Rights UPR in Teshoogy Tar Managing Intellect Proper Rigi (PRS)

TRIPS Developing Coutri Coocrs Regrsing the Ứanerelzeines PR Human Capita, PRs, an Ra Policies an Descanso rive RAD and Ti ayer fon TFP Methodology and Resse

‘The Containg Approaches 0 RAD by Kore and Mexico Veonte Hur Capi in the Une ees nd sa Jumptag Builds Bere Mose ad the World Wil Bex «Pat to You Doors Playing Gat « Nana! Iovate Bor The NIS lla Yalant sLưyc ích đong?)

_Dđ tục Byh Thị Are Inreaethe Commerclization of Publicly Fanied Research?

The Chee Appar of Finish RAD Pay Research Canora Japan Did They Wark?

‘The ee Mager Progra Migrio a Vector o Tanoraion etary Migaton i sel land Defciet Brun Dsin in Braid CGulyny p neovation Clase The Milena Scie Ina in Ghle

‘The Pers of Ieelectal Autry, the Rewards of Tae

‘Te Gops Thc Mace Most Fi Sege

an Sạc

‘Thin Sage

‘THB Growth Rasen La Amc Wie Ne

In the 196 and 1950, Growth Rate of TED We High io Chile ad Law i Max Oriec Tain Ametcn Counties,

Comared vo Eas Asis nthe Naural Respuce Abuse Contes, Latin Amaia as Tow Level ad ea Uneqal Dsibation of EdaatonalAtainment sme the Adve Populacion Many Coser a Lain Americ Have Mave ScoaryEnolmet Der, ad Some

ave Smaller Teciary Barollmest Debs

‘Couses i atin America Hate Low ImporePenecton, Low Pence of Capital Goods,

nd Law Lele Royaly Payments Latin American Work Have Small Amounts of RD Expenses Residents of Mone Latin American Contes Have Low Rate of Pet Region in Theis Own Coutts well wi he Ui Seen

‘The Gaps Thr Maer Mose

‘The Bal of Change nthe Wage Bil or Tereay Washer and Secondary Workers Oued iin

By and Lame kl Upgeading dhe ery Level Occ in dhe Sue Sexes Chile inthe 198 ond in Oster Lan Ameccan Conan th 1990s

Jn Cle Fins Thac Were Exper o New Technolgy tea Abad iso Upgraied Su:

“Thee Is More Stall Upgrading, Meare! bythe Retne Wager, Relative Eamploysene Shure,

‘sn Helave Demand fe Terry Worke 9 Coes an Inates Tat Have Hie Timor Penetration, special af Imports Tha Ae Ieee R&D

‘Counce in Lata Aseria wih Mote Sled Worker Are Beter Prado Ado New Techsogie wage lnealiy Ieee wit ces in Dead er Sled Workers

from Pym co Dumond in Eat Anas Sania rom Pym iuund Deni me Lia Arercan Canes

167

Ni

ng Ise

180 lại

193

196

198 19)

“Teble 3 Fram Pyramid to Anvil Osher Latin American Cortes st Tible44 Essa Spending ws Facon af GDP fs Na Low in Moe Lain American Cott st Tile 43 The Opporiniy Gast efAteding Seay Schl Appears Be High in Met latin

“` Scho in Mase

Tihie47 Thee Genny Lic Vaso in iy Schl Scene Pease on Tos Se

‘within Laie Ameria, with te Exception of Cab ° T48 TetôsyEaslineae HarBesGreing cưeue L0 b1 Tible4S td Have Canine o Grow in he 19908 35

TRAE32 Diferences hetwee ison Lering und Tne Edun HH Tible3'3—_rsinatal Productivity Biles of Fora Tain li

“B34 RadenleanlFolcOpuesvilrPbiclưexealooiaTadmiae le Table :1 Impact of radeon EAC Caner and Eaton Pe ve

‘Table 62 Impact through Trade oe 10 Pere Increase in Edson oa TEP Grow Bat, 1998 ua Tible63 Eee ea Poreiga Diet ivestnent us Table 64 Human Capa Theald Roque for Pest limp of DL i

‘ible 65 Non Tf arin Lewes for LAC and East Avan Cours as Tible 66 Ine af Fig Invern Bare, 2000, m

“RA 67 Emludeav/THaIRAD Đenleoesea FeresngcafCDB.LĐSO.ĐĐ i

‘ible G8 Tensions af Strength of Pateat Protection —IPR-fr Sled Counties, 1960-2000 tà

“ic610 Evoaon ofthe Rai of Pie Publi RSD Exper, 980-95 69

‘Teble 6.11 Deerminan of Prise RAD Pes Worker n EAC and Orher Counties Easciie 1, ible 6:12 reelecral Property Right Index 1995 tạ Thble 6.13 Fa Tnentives Regimes oe RAD as of 2008, Ist The 614 RAD Taper by Actviy in peerage) lóc

“T615 Paterae of RAD Espendiiner LAC wees OECD and Ease Aan Tige,Aseages ft 2000, 19

“Tible 6.16 Silay of Education Pacers ip LAC 990) vee TecnlogySaceafl Vewemie(19M0) 188 Tible 7 Powencal Beecham forthe LAC NIS AW Lise 14 ible 72 Determinie ofPtenting in te Unite Sates i ible 73 Tene Benim of Ineeiction of Higher Eason (HE) aod ble

“Bbie 74 Guideline for Sharing Ropsis rom PRs i

“ible 75 Pals fr Improving Acai Prvxce Sector Callbeion ty

ngơ Figure 1 The Knowledge Economy Simple 3 gure 12 The sin Arsen and the Cees Regions Debs i Technology and cain Relative

Figure 22 Many Cosme in Lin Americ Hive Maia Dein Sear Ellen ra Figure 23 Some Cauntes Alun Heve large Dec in Teiry Enlist athoigh Tse

Pigue 24 Colombian and Chilean Xeunluy khoai uiene Fefom Balo lvemamal Ty 2 gure 25 Chun Adles Also Do Baly on ltereaoel Treo ery ” igure 26 Some Late Ameria Counties Appear to Have Low Name of Siena Begices

foe Tine come Levels, bat Otess Do Noe Figure 27 Mot Conciente Region Do Not Appear o Have an Impartne Defi he Fraction ‘ Univenty Sadens Earle a Scwnee and Engiceing mm

“The Dig Die between Et Asn and Latin Ameria Did Nee Shik in ee 1990 [asin America Alo Lage bebin East An in Other Mesures of ICT Infrercte

[ia Arner Counts Also Have La Levee of R&D Per Wesker

‘The Races of ene Repscaion by Lan Areas Ivers Ae Law fr Their Lees

‘Per Capt Tacone

“The Widening of the LAC Techaology Beeweer 1940 snd 2000, ce Ea Ason Tem Trae « Debi oe Sean Yas of Schein Gap: Regional Compussons of Index Scores

Tn Supls, mil he Des in Latin Americ: Dil Noe Change erwee te 1960s ase 190 the Ear Asan Tigers Tare « Defra the Mena

"Nomber ef ates Pet Worker Registered in ce United Sats i Sut, ile the Dei a Lac Ameria Dab Not Chae

“The Mean Wages ap Reltie Supply of Workers with Tour Eatin Ince

Substcoally ie Mowe Lia Ameraa Counties

“The Relive Supply of Washes with Savery Edocaa Tacs Sabana a Lia Amesca

‘The Demand for for Workers Incr Bey Caney eee Bra

‘The Demand for Semdany Worker Incest io Every Coney exe Argentinas Brat

‘Trt Decree and Inport PencriosIncrael ins Number of Lai Ameran Couns

‘i the 1980s and 19908

DI Flows incre Sigaicaey tea Namber Latin Amesicas Counties

‘The LengTeom Cycles so Relate Demand ia Lain Arsen

cstion Tassos

“The ĐaotEaens Edcatonl Avianca Wa ina in Ba Spins nd Koen 1960

Fs, Balsoced nso i the Eat Asan Tiger td Bean

Balince bur Slow so in Some Latin Atevcan Counc

Uden Slow Tosios in rk TatinArercan Cori

‘Thee I No Cle Relevanpbeewee Changes i Edocation Exper and Changer

in Ataiamene ia Lae Ames

“There I No Clee Relate lervea Bluesdoe Qulty xi Quay in ain Aetce

Pacers of EdvatonlAtnnent a Guster Narn, na Peo Tact nthe Eola of EduatonlAetimene

“The Rising Seo the Peace Seto in he Unveiy Make

Private Tey Eaton ls Mae Experaiveto Hoses

Contos oa Eaolene, Scant fom Puoret Housel Are Lasky Ave Pivate Uneriien

‘The Wage of Worker wit "Sceois” Degrees Relative co The wich "Hermit" Dees

in Meni Have Noe Changes athe 1903

‘Cat Reco in Public Universities Lam in any Lain Ante Castes Education and Tausing Stor ara he Woe

‘age Poe ia Brat, Cem nd Mexico Ea and ate 1908

“The Suplyo Skil Labor Lending Conte o Produce in Lata Ameria

‘the Caibean Une af Mase ecole and Availity of kl Worker Ae the Main Reatona Why Fie

Tn Latin America Do Not leet Forel Tring ual of Tsing Proves end RemuresContioacions As Mare sport Coscia

Tor Mico-Eoepies, Gusts 2000

‘Aes 30 Peron of Trig a Lain Arsenic I lve Se Earp nd Antes 0 Percent 'sPeutelySoppied {9 Mexico, Edacate Workers Get Tine Moe Git

eed Sloe lnowsive Pts Tn Test Wetec Mose

i Mego, ‘sal About Half the Rest by Peat Provides eo Thích of Tang Is eral

Ja Mexico, TaniagIncteses with Greer Opens, bat Oniy if Fire Conde R&D

“Teng, Especially fs More Continuo, Face TED lcrces,

aad fe, iesing, and Developmen: Predicions reo Melke trgressee

Hì u

38

6 0

mm 8S

3

93

a

„ tne

14

35

235

6 Be

Mean Tarif Bares peten, 1990 an 1999 Foreign Dat Invern, 1989 a0 1999

ishsAchiving LAG Counties

lowcAthiering LAC Couns,

olution of RADIGDP Expeaitues oo GDP Per Capa 19801995

Patent Right ad Paitately Faced R&D (1980-95 serge fo 38 counies)

Resch, 1999

Ta

Gros ERD Expenses by Eseating Set 1994-98

Pavate RRD Pofoenaee sạl Preinenl Detespmroc

A Simple NIS

Parenting, Licenses apd Royalties and RD Renelmacki

[RAD Expenieareand RAD Fusnced by ắc uc Secs: Tiwari), Kora, alan,

‘dle Preicn! and Oburved RADIGDE Rerun 9 R&D sod Phys Capa

Tre of LAC Conse in Paenting in ibe Usted Stas

‘Allocation of RAD Revo

(uty of Scie Reseach sirins and Unive ry Ranch Calabria

‘rail tnd Mec IRCA in Ate ant Computing Bgupnene

Stent Migration Rae 1993-98 Bin Ciclaon Migraion Population with etry Bdbcion

ui

Hs

dg

32 lội l6

165

65 lóc

Acknowledgments

HIS REPORT ISTHE RESULT OF A COLLECTIVE EFFORT BY A WORLD BANK TEAM coordinated by the Office of the Chief Economist forthe Latin America and che Caribbean Region and led by Guillermo E, Peery The principal authors by chapeer were Guillermo

E, Perry (chapter 1), Carolina Sinchez-Péramo and Norbert Schady (chapees 2, 3, and 4), Iadermit S Gill (chapter 5), J Luis Guasch (chapeer 6), and Willa F Maloney (chapter 7)

‘Manjula Lurbria and Prta Subramanian cosuthored preliminary versions of chapeers 6 and 7

riende and collegues from the World Bank made efor that went wel beyond the call of dary We received iimporeane coneributions fom Hacold Alderman, Ana-Maria Atrigads, Daniel Bechoo, Soumya

‘Chateopadhyas, Wendy Cuoningham, Carl Dahlman, Eduardo Doryan, Marto Garis, James Hanna, Barbara Larner, Daniel Lederman, Danny Leipziger, Eresto May, Marcelo Olarreaga, Lane Pritchett, Jamil Salmi, ais Serven, Wesley Yin, Sbahid Vasu, and ozhees a che Chief Economist's Rerea in November 2001

“The report benefited immersey frm authors wh pe

are background papers These aha jnrudc Anires

Blom, Magnes Blonstom, Mariano Bosch Mass, Marcin

Carn, El ese, Anew Foster, ena Gai, Palo

Goldberg, Cain Goin, Laurie Helm.Neben, Carlie

Hey, Hasan Jcoby, Vans James, Ja J Jmen, Lay

Kate, David Mayes, Water Pak, Niow Peni, Maurice

Sci, Simon Schwsrtman, Enmanvel Semfie Maimo

“To and Valing Wang

“he nuhon voald Hike eo thank ese whose insight,

comernt, diggin ped alu ia poting tie

rep: pec, These corbin Daron Ace dasa Bitran, Joe Jomuin Brinne, Peal Devi Jean Guin, Alan Kreger, Sepen Machi, Ramen Manon, Chesina Pasion, Andes Kodeiguer Clare, and Gilles Seine Paul

nly, we ike to than lec Mocbeoo, Anne Pily Pain Soo a he Weeld Backs Oise ofthe Pb fee proucion and isemincion soppo

Ag crx ¢omisions in the repre ae de sleep ồili ofthe aor sad sho ot be xb co ay of

‘he shove individ o the insiurion cy epee

eonomic Commitso ft Latin Ameria and the Canbess Encuesta Nacional de Ingeesosy Gastos de Los Hogaes (esi) ase Europe

pert prcerng mm European Union Foreign dice investment

Fe trade sone Gros donee product

——

igh edoation Haman Resurve 1

Hiasua Retource Development Fund (Malays) Ineratonal Bak for Reconstruction and Development inferntion and communications cchoclogy

Inersatonl Labour Organization Tnseleecl popcny rghc atin America and he Caribbean Masschusecs Incite of Tchoolagy m————

Nom American Fre Trade Agreement [Nationa Bates of Economie Retearch [Newly indian covey

Notional immontions#em [Net presen vale

‘Orginsaton fr Bconomic Co-operation and Development Pablic aborts

Purchasing power pay Phhicroetch oganirtien Private ate of em

Research and development Reve comparative advantage Seene and rchncogy stem

‘Skil-based technological change

‘Standard Industriel Trade Clesifeaton

‘Salad sedi enterpies Social ate of etn

Science tnd Technology Plicy Cousin) Department of Labor and Social Welfare (Mexico)

“oul factor produsiviy

“Thi Inventions Mathemarcs and Science Sendy

“oral Quality Management

“Trade-Related Inelletual Properry Rights Universidad Nacional Auténoma de Mésico nice Nations Confetence on Inemationl Tide Law nied Nations Edcational, Scenic and Cultral Organiza

‘World Bones Environment Sues World Trade Organon

‘Thea athe sources fal ga ơi né la thà ho ol thew et

CHAPTER 1

Introduction and Summary:

Skills Upgrading

and Innovation Policies

\VER THE LAST 50 YEARS, THE WORLD HAS INCREASINGLY BECOME DIVIDED Jingo two clubs—thote of rich and of poor couneree, What i mor striking is eh the increas-

ng bimodal distribution of income is due not to cancentetion of the fctos of production, such as capital, but rather of knowledge The North bas continued co generate new tach nologies that statistical studies saggest drive ac least half of economic growth, while most

‘of the South has been unable to eke full advantage of them Latin America forthe most part finds itself in the less desirable club Beeween 1950 and 2000, the annual per capita income in OECD counties tripled from US$7,300 to $23,000 (heceinaftr, all dollar values in US$), The Lavin America and the Caribbean

‘region’ (LAC) income level grew much less dusing this period-—just doubling from $3,000 in 1950 to

$6,200 in 2000 So the ratio of LAC's average income to the developed-countey average el from more chen

40 percent in 1950 co about 25 percent in 2000, with much of che divergence occurring during the last

‘quarcer century Tis should perturb policymakers in che region

‘The crend is of special concern since the newly industrialized countries (NICs) of Asia—as wel as other

‘ouneres, such as Finland, thar are closer to LAC in resource endowments—were able to achieve dramatic

techtology driven inctetes in living sada scrote the

same period fic, the cet eon of ou age cy

F200, From Nara Resta be Kewl Emon, wa

har what distinguished the socccufll rooureabandenc

‘unis (Aust, Canada andthe Scandinavian eaueis)

from the disappointing LAC experience ws precily their

abiley 19 lea from abroad—sbeiraaonal innovative

‘apuity This eepore looks moee carefully 2 what i takes

for countries, and mor enrly, foes, oles how £9

learn The key ingredients isthe seco f these courier

ae, fst, dạt thợ eal om tenghiael the aed for a

explicit, iene and suetaned policy ro move he pte

sector to the cecinologial foie, and econ, hat thợ

‘ngage in on fhe ost xpi and raat build-up of

tional human epi inhuman haar

Eévcation is wt fora est ewo ơn, Eint, chát

slwayrbees ica complement co technological aan,

[vena ae at 1950, the Unied Sates was perhaps che nly country where che mean individual leaving school vei a high schol gredute By the time counties in

‘Bueope—teeing the tpi rt of the United Sere san economic powethouse—leaned thei lesson, che Unies Saces ad expunded is Jud oer Europe in tercay ed cation, and most Baropen countries have oly recently begun casing this gup The Eas Asian counties appear

‘ohare earned eh son mạch mơ qucly—the Repbic

of Kors, for example, hay eeonduy and erry educa soa indiacors chat ae alrendy beter than those of many ropean counties I moe other countcier—incang mach af Lain Americe—this recognition ha come mace slowly Emerging evidence suggests chat the koowiedge ramos benefits of foreign direc ivesemeat (FDI) and

‘rade liberalization, for example, te enhanced by higher rock of man capital,

Technolgiel change inthe 20eh century has been

taeesingly besd in Eeurs led worker and appre

tobe the gest fre devin the increasing sie used

‘nage diferenilin the indueiiand counts This has

een traf 40 Jog tha people aw thik the ei

cđhnạc bạ qeags fired mor skied educated worker

Batis ws nocalways the xe for ple nical change

in Beccary Bein displaced sil risene There is

some evidence hatte shila cure of echnological

cunge bt accented inthe lst decades, pally a «

‘etl ofthe ale eration al comassications fc

ology đCT) reoluion (de Fern aod eeers, 2001,

This repre focuses noc only on the gaps facing Latin

‘Amsrica in boc eduction and technology, but specially

on the incerctons beeen the ewe The central pret

‘he report isha sil and ecology đeo la tnDer-

ant ways and his reltoaship xa (Mndanennl season for

the lage oberved diferences in productivity and cores

eros couric Indeed, neces tie ve shown hat

Alfeencs in per capita income depend mare on difreaces

‘i coal ctor prducveyCTFP tha on dienes in p=

nary Betxkeeurulxiem' An dị poe rguc thr ila

upgrading, technological change and dice inten age

‘aaje facto behind toa factor producivity growth

“The report shows hi il-bises technological change

is indeed being transfered coda a fster sped 0 LAC

couneries,a elewbere, imi they ae sow more pen

to trade and EDI Hows and hve iret the level of es

cation feet wor Fre In chapter 2 we pesca emi

fal evidence that technological change has beeo

omplerentay with il level Latin Ameri i he ast

‘ro decades aia been theese ia rote developed cn

‘tics Weabio show tat sta esl, rs ave ebay

Increted the demand for edvcted workers the reg,

puriaarly woekers with ere edkation and sis ein

the demand fo vested workers bus bid up chee relive

——

This technological eaaforction appears 60 be ine

smacely laced to patterns of incegration inthe woe eco

omy Trade snd FDI have fcltaed the cransmision of

technological change scot borders Abo, resin sectors

‘wth higher exposure fo tae and FDL are sujec to more

compeciive pressures Adopring and adapting, mote

snared tebedlogie snổ hring nử tnsing part co"

cated workers i ope way 0 espond co this pesare ro

beeme man producti, Filly theo changes bere

sliced counties ierenly ad ac diferent pois ine Increases in the demand for skills seca with the

‘option of new sechnologies hae taken pace pial ia

‘ouncis with eels of human capil above & minima

‘heeshold fn adison, the patterns observed in moe Eatin American countries ia the 1990 ate simular to hoc

‘served in Chie in the 1980s, suggesting the existence of long-term cycles stoned with ecological progress in the eltve demand for nore siled workers, depending on ben oan opened up eo tae and FDI campers, Scha proces thus crating beth chalenges ad oppor tunics Denna foe higher sil, and in paca foe workers with certiry education, i rising faster han eran fr le led woskers in mont of he eon Hence the challenge: negli in wages tea to cree a ong 1s major negualits i acces to education seman and he Jacko kl may Become a fete costa for fa and cient echnology trate and ths fr potential growth

‘Bur ho he oppocunity ce taceael poearil demsnd for education afer dhe possibility co accelenue producit=

iy growth inthe economy by clsing the cacionl and technological geps the Ltin American counties exhibit wieh respect their pees To achieve thức policy muse respond swf so dha his pote demand fo higher and beer educations accu transted inc higher and beter

‘cational level ofthe work force and higher preety ity athe es ese

Focosing on sil sprang, echnaogical chenge and thei incertons hep ut iciplinetisking abou che aren cofised sus surounding the so-aled hnow-

‘ge economy Ibo I sa gure 1 (elaborated apo in {Gill 2002) we presen asinple sophie representation af he 'menerionbetteen technol snd sls hat we flow csnpsie he eusio of dls upgrading and cholo

‘al change ereaghous the bo Productivity, Educational, and Technology Gaps

in Latin America and the Caribbean

In hapee 2 we compure che performance of counties in Tain Amerie in terms of proactive, sil, ad ee ology wie dhe performance of an average county in dhe wel” ofthe East Asian “igs,” nd ofa group of soc- nfl omar resound economies Bec the

‘countries we want co compre are a different sages in developmen, we aut cher expected lve of ahiewe- rent give thei per capita income evel and compe it

ce thei acral level of achievement 10 thu the estimated

sp ar lative othe level ef developmen ofeach country

‘We find hat, in he aggregate, Latin Ameria suffers fom

ignifcane defies in productivity, sil, nd echoology

(See Sige 1.2 and eble 1.1,

As menciare, productivity difeences between counees

ad berven firme wichin couneis re pofoundyafeced

.- Ắ

se dt túc Bax Adao tags, thi chịc vdlLabote-

vera ses of TEP growth also ovpetorm Latin Ameicn

on menurs of ecology and skill The same is rs for

tome of the succesful aru resource-based economies

‘Wickin Lara America, he bese-peorming county, Chie,

concurtesly had postive iacete i pracy, sub-

stan skill upgrading and inceses in al ioe sư:

clued wih ecology tater and innoratin

Since thee i ao perfect measure of kills, we consider

the evolution of educational arainment ofthe ade pope

luton measure a average yar of education) ad he toc

lation of enoilmene rates, Over de courte ofthe lt wo

decades, he mean yar of education af the ale pope

tion aged 25 a lr hs ne up by L7 ears in he pion

‘Asai ales ave 04 more years of eduction than would

be expected for the income levels This pp in che mek of chctional atainment iw reflection of relatively sow ated sometimes ieadequae eduction ovestments inthe past Tt '5theefrepariedafy xoaying ta ebserre ha he iw of new educated worker it alu inadequate The region bas large deci io enrollment, paiclady a che secondary school eve gure 13), wll asa problem withthe qual= ing of edscation Latin America ha an agarepae defi of soup 20 percentage pots et secondary enollnen and

10 percentage pints in gross etary envllment given its sveige income level, while art Asia har supises of mare than 17 apd 3 percentage poins, respectively, and succes fal narra resource-bsed economics of 6 and 14° Fl, sve discus the quay ofthe stents “produced” a eck level of eication, at given by the performance of Lain American scant and adults on interatonal standadied test, The evidence here is moce Limited, a most Latin

‘American counis donot pưrdoipee rgulnhy n mee-

‘atonal ets, bue the wvalable data reflect yet another

serous defi Noc only do Latin American couneies (other

than Cubs) underperform relative to an incomeadjused

encima, the fen underperform elaine to much poe

‘We ao we thre sof fcr to aes the ecology

8p Fin, we examine the degee to which Latin American

courneries ae expo 0 foreign impor, in paticule

imports of capital goods, make payments license foreign technologies and recive FDL, Import penetration asa share

oF GDP is lower than expected, and impor penertion of pial goods, which ofen embody new cehnologes, is shout oe-sinth ofthat inthe ast Asin ciges While Latin

‘America enjoyed an advantage over East Asia in ers of ompoter impor in 1980, that position was reversed by

"họ Lutn Ansies an he Crean Reps Desa Technolgy aed Econ ltr te Es ola (1980-00)

1960, and ehere ar no ndaions that Latin Ameri ica

ing that gap FDI, on average higher in Lain America

‘han in East Asa a a proportion of FGDP However, this

also refetsa greater preference or icesing—the contac-

‘ual ease of technology, which provides technology i 2

‘more accesible manne than FDI—in many Asian counties

Second, we evaluate the development of the ICT setor

8 an sential complementary instrament co develop tee

ological capabilities and we show that LACS gap rave

Ease Asia has more can tripe uring tbe 19905

Thi, we focus on domestic spending on research and

evelopment (R&D) and payment fr licensing, lative to

the benchmak fr counties af thei eel of income, but

also with respect co the performance of soprstars such as

Finland, Kove, Il, Ireland, and to the exracedinary

recurs generated 09 innovation investments The most

king results the lw level of RAD conducted by Gems

‘This spat du co wea supporcing intitcions suchas

cede markers, ICT infastrocture r government policies

‘ovard fomeating innovation IPRS, competitive subi,

and cx incentives for private R&D, and so on) I also

tefleces thar unite recent opening of LAC economist

competition and foreign ideas, ems had the the mac

‘ended to have disproporionately high level of prici- pation ia teal Bnancing and implementation of R&D (a lange pare of the later being concentrated in public sive

aly, though fr moe dificale co bendnar, the we

of ingoratin-reated resources and human capital is highly inefficient inthe region The over cooeination of uni-

‘erstis, research enters andthe productive stor is poor, implying thar the liele R&D iaveement dat is done is employed relatively neficenly, wth lower resus in terms

‘of pens and impact on growth chan in che eae of com able countries or the OECD Thus, ar only does Latin

“Americ lagi ems ofthe oa amount of RED reaive 0 (GDP, bura relatively large hare of tha RAD is undertaken

by che public sector and as les spillover on private R&D than in ober laude AS x consequence, RD spending

i Lavin America is not cy small, buts ess concenteated

in applied research and development ad has les diệt on tenes and productivity growth than what we abe in (OECD cane and in che Asan ier ee haps 2 and 7),

Dien lain, pone Soe caer 2 “ os a 9 a „ se “

even when benchmarked by thie sespectve serge per

apie ince

The oll pica that emergesis thus on f LAC con-

tries aoe having given ianemaion ad science and echaol-

gy cer oe in thee develope sets unl ery

recently Asa els, wile thee levee fincas of ech-

solgy absorption nd innovation hae incre, thecchanc

‘ties have fallen behind mow agressive ecnomies such 2:

the Asian cgers, Isl Ilan, and Flan No daub the

opening fee LAC cones as piven them seer access

to varius technologies developed ard, However af we

sng throughos thi repor, rely having acces 0 tech

day nel su beenoush fr epi saab growth The

cecal queion e wha epi and inscintons shoe

counties need couse these eclopes efcealy and exes

tually so set hen oot «pth of inoraion das

evelopment which lls fr tna longer prow

From Financing Gaps to Productvty Gaps:

(Closing the Gap in Education and Technology

in a Synchronized Way

‘The 1980s and 1990s in Latin Americ and de Caribbean

‘were mache by a srg with win defi de ap

and «rade gap Bacl and moneary policies kept ener

sage Te would nor be an exertion o sate hat coun

tres of dhe region have mostly accepted the wisdom of a

men the Badger and ensuring external blanc chrough

caneratvenoneary and exchange ate plies But, with

few exceptions such as Chile, these devas have also been

malel by gputeing gunrh engines—shich in can

"tt lợy anmul sạc mượt Ỹ pelucitly gươxdh,

‘With prdcsvty growth accepted at the in quan of

‘tained economic growth, latin Ameria’ challenges shi

ing fom closing che financing gapt to dodng the

rodhoirhy ppt

Jost the financing gap ta ewoclvly elated com

ponents (the salle’ ewin deci fecal and curene

sccouns),pradacivey apa can be thoophe of a heing =

‘uly symbioicomponens—kills rl technogy Inthe

same way thas the Eaancing gape mus be coed together

to ensure susie, sil and veehaolgy gap aust be

reduced smaltonoa in onde co rete productivity eas

in an ciety

‘The experience of counties ia Latin Ameri ad around

the wor pens wo condemn canes haat eo clase

education and technology gaps in an vngnrhưoniel

‘manser wo low or xtc economic proweh The reason ithe stro complement between ecology ad skills hat lesehind sk bisedechooogial change because ofthe acs it, killed workers ae needed 9 implement new technologice becuse skilled workers ae more ape at cảeling with change The second isthe phenomenon of

“directed” technological change—the smal of more sled woke in developed counres as creed incense far Gms to develop new technologies thc are moe skill: Incense (Aeemogl, 2002) Directed echichange requires an even greater aed fer sad in the sprang of

‘sccon stems in develeping counties, he sil ied ature of techlogical change is oie ro continue Tie, sled woken capes, ad ceria ar ruil pro ace signicane adaption of exiting techoclogies and even more acess new ont Eves plain adopion and difsion exiting technologies equines maim generalized level

of elscation ofthe wor ere a lease sme secondary el

‘tio and of eng and R&D in Sms

"Ts counties with low level of ednetion resin in

1 ep of tcchlopial stagnation, low geoweh, and low

<ernnd for education a reason why basic edocation must

be highly subsiine everywhere) Conversely counsies may _erogly subsidise en ecacon, but if they done open

te trade and FDI and Bem ate soe wet co compeicve pressures cat simulate techaolopcal progres, and hence demand fr uci, the wil ind out tara igh peo orton of hee educated emigrate and ha hey mus ke,

ot incene the level of sbaiiation to compensite for wen sflscive demand In sini ven, low lees of R&D in firms ey easily Become a festive inietian ro sdopton fnew technologies and innovation and hence tthe growth

‘of demure for education while efforts bythe government

to subside RAD ry flr achieve eer goals whea tow lel ection pera andr the economic weno open

te de and FDL and fn ae competitive press co Iovate A background paper for this repo (GI 202)

‘conparers ter of atin Amica and aon-Latin Ameccan

‘uteri oreo wich ve en highly sce in yo _hrnising thee edveatonel and technological policies and developing educational and echeologia capabicis ina balanced way, and sme tha have not The pape’ cele ons are summarised inbox 1.2

“The smpliaion fr countries Lain America and the Carbbean and elswhere is that sey ca ls sila teh ology gape more produciey, chat i, with sronger eects

on productivity and hence economic growsh—and indeed

with les liet—if eel policies ia these wo ates ate

yarn

“The need for synchronization implies hac phase ofthe

cational tansiin (om low basic and secandary eda

‘ation eves and quality thigh levels of secondary and cer-

tiary education) and the ehmolgiol eanston (om

reliance on adopting simple foreign techology 10 majo

czas 0 identify policy pois aed actions to correct

Imbalances snd acelerte ecitional and technological

progres in synchronised way The ection on Closing the

‘Technology and Proucivity Gaps aad tables 1.21.4 poe

vide simpli version of uch a road nap,

‘Students, Workers, and Firms: The Major Actors

‘of Educational and Technological Progress

Io eis epore we foes our analysis on he major actors of

‘he edacaconal and echncogiat procs: students, work

5, and ims, They ae the ooes ạt acurmlace and wse

noes spur podotivty nd growth, Evils schol,

‘sess, each cetera govezamen seta nd

polices are jst filtator—smugh of ial imporance—

cf the proces fil and rechraogical grading in =a

ey, Bor dhe main se and fcilrses ase ee the

Fig incentives © contabute in an ecient way «0 this

peo

Sdents and worker will not sccumalite enough

knowledge if they ate nx ofr (or anno deni high

quality elcaion ad ening and se 00 prospec ofp

itbleemplopment for eductedkilled works, What they

sed in rdays world of rapid sil bite! rechnaogical

lunge ate abilities ro “lean,” roadie, 0 ianonate, ro mor

in eas, and co eae to wide vain of actors Te sae

exceatively speciale’, “eel” education, a lee ọc

until la ec potgfsduee sedis, nd even shen baie

scenic keowlege i eis ad develapment of prod-

lem solving” abilities are mote important than mastering

specif techniques chat may fst become abot

Seadene apd workers need ifort about the qua:

iy of elation and eaining ered by the divene supplies

Ahence dhe imporance of tate exams, sound ncrediaion

Process, labor observ) and cdi seb ome

ome liquidity consis (ad i he cực of poor fais

eghesbsitis to recor high hore opportunity

ont) Credit abd information ae expecially important

i erty suction, ie oner to contre the potential

demand cuted by mpidlyssing wage premiums for

‘workers wih ety education ito effective demaad and

higher enrllmene, particulary in he best private and

public riven,

Having th ight incentive or public hole adie

semis, af well as for eicher, al cri, Teo often

publi rears fll the schol andthe teachers and not

fhe seudenes Cortenly used cies or allan of

sear public ichools teins generate perverse lneeidtr in ranycòntrixin the iøa Pđucxien nde: TninƯ nục lara goxeionefthe ner ocho am ah

‘es We found too many các in the region in which large increases in expenditures in public edacation in the lst cade were not matched hy correponding increase in coverage oral

"The ee i tte centr of the process fil gra ing 20 eednologica change Aen makes decisions onthe stills ofits work fore (ebough recaiement ad onthe

‘or exeznal taining) and che ecology it wes (hen

‘oprion sdapetion, or reaion) in 20 iterated way AC

‘he mic level th kill eechnology complerentites are inv to avis Kei ede, economists, nd polcy= maker who sometime pi ded, wef hae frm ha ae more aggresive in adopting, aaping, or ce- ting new eecologes ae alo chose tha cri higher skills invese mae in eining, irs tat do han terhocogies do neti, Fes thet vet in R&D do one

‘ening Nocsurpriingly, Seas haba ingot and in {ne dhe os shat show higher peoducciiy growth couse cusicy runs boch ways here af sua) Icenives ae t=

ai Ye eund ht irs mre exposed to foreign comper tiion (whether of inpartso¢ in expre mates) rere highee lls an py hem ete aa spend moe ia ein- sng, leasing, and R&D

2 ceil iegor-ne nding i thea tht che lee of ering by Sees depends mace he compecve preires they fie, Anl hệ incentives co adap, adap, ad crate

‘ew technologies, a wll aon the eel and quali of cdo

‘ation of he abe ace thợ can hie, than om subsidies or ring hap) In panic, em is Latin America

nd she Cares in idl vale in echnical ion nd training services by lege public agencies, geersy Sinanced by carmsked cane, This an arene which efor Ins Been underway ia many counesis (Chile, Meaco,

‘Unugaay ar aad of he cure inthis aes) in the eon, tres la serine tobe done Good dation and tec ology policies are good esining pices Es ring services mutt become more competitive And camusked cases for ering shuld either be llc in «competi

‘ive way chrough matching grant schemes (co both in-im

sd exeral ening) oto improved coverage and qualey

of gene eduecion exible abo markers are imporan for rms be able

to rapidly cetracece the sill emposton oftheir labor

force in sponse to reguiemets fnew cheapie Rigid

Tabor mares delay the pace of alocion of sew techolo-

‘Beste adapecons by Gros

Simialy, acest to rk epi is lo erie or Seme

engaging in gee R&D an sll upgrading eos, Hence

the imporance of dep and moce sophistieated facil

smarkess—and, specially, the aed to develop vestre

capital Sund)—for courses wishing 66 sep up efor in

‘sapracion anid innovation

‘The Role of Gaverament Policy

“The previous dieton highlights che fact tha albough

seadens, workers, and Gms ate the ain actor in the

procs of accumulation and productive us of knowledge,

and tata vaiey of faciliting inition os sat

supply edacaional,eaiaing and echclogiclsevies pop

‘opsponeancouslin he rig enroute sacral

Jimportane ole foe government policy in hese aes Fuse,

_overnmenes mst cree the righ mmm rough tim

‘lacing openness to eign trade and FI, fcilaing the

evelopment of deep and sound nrc nrkers aad ex

ible bor ares and applying efecivecompecion poi-

cdex Only in such an envioomene are ms willing and ale

‘engage in alpen, adaptation, and creain fete

olagies and in ecrting higher kills and ening

‘Second, indicated, cei and information coos,

aswell es opporciniy cots fr poor ile, may inhibit

ote demand for edscaion so be converte ino

tive demand Goverment sippert <0 crace widespread

seadent lan systems; aged eluational ours, chal=

ships, and subsites for cadets of por file and ate

‘rams, aborobsratris, an aceriaion system to del

swith asymmetric information peables ate cial policy

cious ro overcome impefections in edatol ade

ing markets Appopeategovernzne and fending allocation

leer pubis and waves reset co eae

the right incentives in public educational systems Supply

conscns ate sill imporan in ray counties in asc hs

ica, especially iar ar

“Thid,kaoalele cretionamldifsio j chancteised

by impertee appropri ad high spillover; ha is 0

sy, he social value i mạch higher ehan the private value

and hus, in the bene of eflctiesubiies o¢proecio,

firme and maces will proce lee chan wha i willy

peal In partial ee rare nds ea the soil ae

of private RAD exceds its private vaue fora muleple of

2 in developed countries and that RAD shoud probably be

‘creed by «factor of 210 10 in developing counties Hence, a vriesy of polices and instruments have been designed and iplemezed everywhere ro support he process

of knowledge creion eo difsion: nelle property rights; ee incentives or sbscie eo private R&D andlor rnin: and che creation of specialized public (oe publi! private educational, scenic, and technica nseituions

“The spa aalzrs desig sues fr same ofthese ist meats nd where, when ond under which conditions tse

‘ncervenions sem eo have eer more siesta Ke Ss, for example that tax incenties or private RAD ae ec- Live ony in counsis with sương ex sytem character aed by few exemptions and high enforcement Taaspteat and competitive machin grants chess may be mace c= tive in ase LAC counties under preset cecunstancs, The

‘mos importan eancsion, however i chat fecsve inter cco (hough sale innovation networks) sas mot

‘anes he individ! design and developmen of inintons and pliyinaturenes 0 rapport she pce of knowledge creation and difision,

‘The Critical Importance of Effective Innovation Networks

‘The impocance of ete national ad neato “inno

‘ation newark lusts aes na on from the sương like their Bowes eduction ar technology, bt en the senmarkss character of many of che iasiations 3nd organizacons ha re eve parcipancs a these area and

he sigeican“iafoesioalayemetsis dat caractet= lae the process of knowledge cesin,sifasion, and shorten, Wed chi the Latin American the Caribe

"gio he only lags in the evel of sacks and lows of ed

‘ational and ecological capi, bu lio often ae hem poorly wing oat incentive Famework and to ack of etegntien of the coun “oatonl innovation rreme” (N18) (ce ae Lo and cape 7

“Linkages between univers and pate sector Bem ate senportane even a he uly stages of ecological catch-up, when mos ems are pearly engaged inthe adopion and

‘minor adspeasions of frign technologie (AE cis eage of development, universities and pubic reseuch astiions neice the only insane where scenic sarc tnd echslopical knowledge are sired in a sigaiicaae swayand thu they at cial supports for eigen od sectors ha engage in mote ignsican adapecins oe

‘Simple Mata notion Sata (M6)

“Human Capical

in the creation of echnlogies) Suengtheing dose ks

Iecomes even more important inthe second pas, n which

large numb of rn begin wo be engage in majo adep-

tadens end leaders engage mace in ereaion, Howeves,

`

tives for me ad universes to ines, and bli policy

an play very imporane role needing the

‘atin Ametian countin may want eo eat by paying

‘ose acenson to designing policies tha strengthen ince

rivet for nach collabontin Collaboration i ines

owing nce nly 0 problema of ayamersc inrmation ems

donc know well wha universities an indeed fe, and uni-

erie do oe kno wel wht ims need) bt alo Base

fad incentive OF parca importance at ie of ile

kkenal propery sights of research res obtained in uni-

‘erie and hough public funding individual searchers

os benefit fom a substi pr, bt unis oe inde-

dent earch centers eed to share to cmapent free

Siaacial and insiatonl rks thợ incur la supporing

hese activa well as other incentives embedded i che

scructure of benef and pronatis within universes and

public each cee fo atin Americ and che Caribbean

seme degre f clara reicence out als be recone on

‘he prof public universities as well at ms Public policy

opporving private RAD and taining might give some

preference joint univeniy (or independent retarch

More general, he soled Naina noratin System

ca hardly be called a system ia Laứa Amedoa coanies and it prac ile innovation I íe nơc— qø thon íc e-seicdy ngioi che Seton ad ineeations

——

ims incr: with others in varie ayt and Proximity (or viral cher can reduce the trmtk<ione ose of these inceacins and improve the speed aad gale {ny ofthe dow of information among chem, More important,

1 chee are significa spillovers arising from ia-Erm tin ing and R&D ffs, sectoral caters hep internal in many ways these externalities by setting cooperative sil laperiding snd RAD effors and exalishing “ules ofthe me” among private arr), thereby providing abot ro

‘hes active They ao help aes the aye

‘mation and coordination probleme chat plague the ela tionships of market and nonmarkce actos in knowledge test nd dfn activites Ended, sector nooracion systems of “lucene be developed in asthe indepen eae wy inhorsdøn pneem in epper ming may have

‘ey le th iacenets with cat of agricul! exports

of shes foresry in Chile, elsewhere) They gui

‘he developmen of specie sills and RAD aie which

is mo oy tha sues storie may not pil oe to other

sectors, a pened in Finland with the Nokis case oi

he US mining industry in chee century) Goveraments

0 a shoal suppoe ees of sch emerging naorasion

‘ases However, attempt create clstes fom ch

uve often backfield there are ao clear policy sign

cies cot ean be fllomed Evidence show that exiting

noel he eet eo be the enue of private enter

preheuchip dat beicio i a posiive busines environ

‘eat oes ade regimes, song dome plan aca

instiratons, and sound edocaioa! and technology policies

Mose suzcesl experiences sues tha well-dsgnad p

port policies for RAD and sil upgrading, of «general

face and coverage, ight be ffcealy implemented

through exsing and incipient seco clusters and some

‘wha tlre thee specced

As important, any succesfal Nasional Innovation

System ant havea inceroutionl dimension, Koowlsdge

creation and difision i essentially an igeratonal

henomens Most ne knowledge wil contin re ro:

luce in andl of advanced count, where che latest

stocks of hums capita nd innovation network exis, and,

‘huis, ba ms and naionaledaton ad inevacon sya

tems mat fective link wih them if hey wan ro

‘eed in adopting, adapting, and creating eectnologie in

flciat way Thus, satonal educational eyes in Latin

“America and che Caribbean mst be wel coanected with

the best educational systems aad, These inks at espe

hủy occa cheery and postgraduate lee Link

fg up local aniversities and auonamous research centers

‘with world-class nsitoion can be elaively staighor-

‘vu and yield high pus

“Te abil of amc eo network with sym aes

el aul regi sha he domestic arm alee have some

"te of indigenous ecology, This aes t

Aico come up with seer polices shat an tp sec

such lishages,eeber than emoving regulary utes to

DI, or other expor or iors regulations th prevere

domestic rm mm neering with global cis, How

ves, mice tora innovation laters have tobe co

ected wih dee pees abrod Governmenc policy might

special support sme sil parading and RAD iii

feng sectoral chases that have soch an oterztinal

enhancing dimension

aly aloe of knowledge is “disembodied” and can

fry be cassie (inspite of ICT progres) without

esol ioteacton he intentional ielation of sled workers and students is crite aepece of « saxcessfal National Innovaion System Seudy-abeosd programs and temparuy emigration of weer isa anor and highly eff cient source of technological transfer Clely bran dein horse country of rg in she shot run beens ia most veloping coaneris eduction ix publicly funded and migration tepreens dain on reutes But eten bain aia can be earned ito agin twine bythe tied role fhe Indian engineers Silica Valley fr te subse

«quent development ofthe domestic oftware dur othe Chinese Jewish ditpors forthe capi trhaoiogjel

uc of Chin an eh Closing the Skil Gaps meneeee dạ

‘he productivity of Buus wacker, which means th kl

‘upgrading sow shuld havea lager effect ae growth cates than id before Tae region mas hen close sil ge

13 at as possible, Caper shows hat by 1960 he exon Jad Levels of education comparable to these of Bast Asian counties and many pesiperal European counts Those counties, howese, engaged ia more mpd ection! rramitions and thas we abe today’ sor gaps in Latin

‘Arveica, at india above Most success episodes of educational uperading—the nied Sets Herween 1850 and 1950, Korea and tác

‘Scandinavian counties since World Wat Ihave li" lowed a sequential patern of upgrading, Se balding up tniverl be edeation then bread secondary educa,

an Ginaly generian scas to universities Edcaioal ternsiions ate dicused in chapter 4 ad represented it

Public Policy amd Funding a Mot Countries in Latin

‘America Should Feces on Expanding Secondary Education, while Facilitating Private Expancon

of Tertiary Ed The incesing fetus to secondary and ewigy ection sggese that ce technological tansiion wil require more rker ofthis sil eel However, mentioned before,

‘he mont ditincive feature of che Latin Ameria and

‘Caribbean region’ average educational landscape is large

Soetfl in seconday-edvsted workers, compared to mild

Aleceacies tthe evar level given is level of develop

ment In thissense the region has ellowed an “unulanced”™

educational pac, when compared with OECD and Asin

‘coun Thi patem makes por use of he nin com

penceaeiis within the education syem dư it

‘edces the efcieny of tertiary education (as theresa at-

rower talent pol fom which select students or etary

luekde) elo makes poor us ofthe complementary eae

tionship beewen the ecaional andthe technological tan-

sition of «country, asa widespread coverage of secondary

celaesuon bạ een fund ro be a cooiion for counties tô

fay reap eechnological spillovers rm FDI ad eae eis

leo likely tobe unsustnnable snc ic exacerbate inequal-

iy The leser deficit and the higher rina returns 0 er-

tiay education may suggest chat public poicy (and in

farce the allocation of public rscucs) should focat

‘mote om increasing secondary eduction, while 2 the sae

‘ime fairing the piace expansion oferty education,

“This general puter aoewidhanding some counties in

‘the region—inpurculie Chie, Argeaing, Uruguay, and

many ofthe English-spesking Caribbean countriee—bave

done eter jb on secondary eduaton and cei educa

tional push should now center more on broening aten-

ance to etary eduction In the other extreme, ther are laggards chat sill need to focus mos of hee efor on improving coverage and quality of asc education,

“The Best Ways to Expand Aeces to Education Vary swith Batlenechs Paced

‘Are sraents completing primary choo and noe eavalling

in secondary school, of are they dropping cục midway hough secondary school? Low erallment level may them selves rele iter inaiciee efective demand by indi- vidal, or nsfcien supply of educational portunities

‘The demand for mote education by individual should be

‘lose related othe demand fr mae ected workers by ems: as relive wages is, we would expect young people ose more schooling This demand fee more sehooing by niviuals syil co mace, however, bens of dit onstsints,unceranty abou the returns to education and her ikroeion tree Sle Inter cm the probe lem may lie ae wih the denasd for education by io

‘viduals, buewih the supply in the education syscem The number of losin public universiey may be xe (a here

‘snot enough cos recover nd most cundie fc ai con strain), and in runt areas in some counties there may simply be no secondary school The appropriate mix of policies will eherfore be couney-spei and should be

eerie afer «cael analysis of bene, demand,

nd supply consenes inthe education marker

‘We Bnd ia several counties in the region indcacions of

ath sappy conser and ince eflesve demand for

secoodury education Such aici demand for secondary

schooling may be cle ether to insult demand by

fms nto high opportunity cos of choolng, Policies hae

promote echogical change have he poentiltoncrense

the earns to schooling and he wiliagnei by young men

sd women to defer entace into the labor uct So wll

those eae improve quay, and hence tetues of secondary

‘eucaion And, as en imporant motivation to lie

secondary schol lis nthe possibility to proceed to triay

‘elucaion and reap the Lenois associated wih the high

‘mage premiums for workers wth higher edi, seen

ust know hc they wil havea chance geese

luca (ice below) Programs tae subsiize dhe se oF

secondary schooling fo eens from poe fries, sc 8

‘vont anf ike the othe Prog prog

jn Mexico o the Bolsa Escola in Brainy alo beef

sive in overcoming gaps berween pecsved made

co secondary cation and high oppetunity os ong

employment

"`

eppeus wo be s pblem in tual ars i many Lain

‘American contre ad even in rb ret in oe Ta thee

secing,progrars ro incre the aaa of scooting

facies are mguied

‘We au Gd tht, in many cuties in she gio, the

‘aia consent for pre aixenddetlacfcdedonend,

sve chac for subsidized public universes is supply

Alehougs ceri igh ptt demand for pia wives

sii, brea ofthe high eres, this dot not necesaly

taal inc high frie derand because ef guy eo

straies and inermasion aiymmesre Seen fan and t

etd seholaship programs bold promise, i they ae well

designe Posing houschols wth informacion about the

quali of privaze providers rough mate exams for ged

tes, bor marke ebseratore, and sound acceditation

programs) will help them emake beter choices and, by

‘redoing uncertainty and Bridging infertion gaps, may

increne fictive dem

Ta contast, public universities ae eavlysusidined

fn many counris and, ss consequence fae une efce

tive demand Increasing aggregate budgets o public uni

vests is generly oe a Feasible ot desiable Slaton,

-iven fiscal shortages ia mone counties In many coun itis, wher coos per student are inorionely high by lovenational seandads, there ae sigaicane possiblities

oF fceeses in enrollment fora given budge In mos higher cost ecoery, if coupled with widening cod and targeted scholarship progrars co eliewe liquidity con- stents, would be an efficient way to increase coverage

“This obvious course of action, however, peat co be con serine by the sme politcal economy forces the fs in the fie place ro unbalanced educetinalransitons and high subsidiation of tertiary education forthe lice an

‘mide clases In sch cae, cere ia lea the aed co transfer pablc resources according 0 performance, chs taeaing appeoptiate incenties fr ficeney, end for

‘OECD couserier—with he aim of drawing ou the most sppropite policy mie or the region i the coming decades

‘sing em suve da for 22 Lavin America couesen and

‘comparing the ndings o data for eecnd OECD an ase Asian couse, we nd thu the public provision sỹ ch noogy-oeted ering is getealy viewed as elatnely inefiient ond lea,

‘idence fron eration in Eat Ain ints hat wel ron khong sọc at hat ae fective in increasing i service rising, bue the evidence fom within ond ouside

AC orebelingl incest edation lees of work

‘et and ineadacton of ew rechalogeae the me ipo tane coma of insersice tuning The nai eso is hat {LAC cours shald view “ining policy” tae jus sub-

‘dung oc roving ting, bua inresing the demand foc ring teough ppp technology-clated pics,

a incresing the snail ĩ akes tưnnghspprgpive

sshaccion poi: Edacion ses ob the mot nTgranc

nubler of eaining nd eehalogy change oe impor-

ant iseigator The aia rege needed for exci ain

ing policies sa change in the exiting pubicpeiae balance

in taining proiion Many LAC counties (mse aay

Chức, Ưngoyi and Maric) have ben progresing in chit

Airection, ba mich sil reine co be doe

Lifelong Lesrning as Altay: Been Importent

Liflong leaning ccs bythe absolixcence of gen-

ral sil seggted ie scons a comred wide eaining,

‘hich is necesitaced by the obsolescence of speci sks

equim on the jab or through echnical edvcstion, The

portale de lowing gustan Ha the ee markt

changed 50 Uae che enplasis 0 Ilong lering now

grester han twas before? The evidence frm ix LAC one

foes appease indicts shat thas no the “new soc”

may not tat diferent rors the ld oe Theres a debe

‘hat pi technological change, especialy skil-bise re

ological change, ries conan etuning, Buc even i

long ler ise nsportnt aw the ve bie, the

‘man policy implications ae in it fo ean cers And

the implications are hat Schools shold tec hw eo ean,

ot xcepaton speci sl and he importance of esndary

‘cational edition should decline onetime oupuion-

specif ering gets shed up wo rao leels

Closing the Technology and Productivity Gaps

‘The Prgressee Stages of Technological Evolution

and the Synchronized Phasing of Educational

Ti chapter 6 we identify the instrament end potices for

cechnology squsition and developmen, ad eval seit

sex e products Fis anally Begin ei echo-

logical atching-p by adopsing more meden technologies

ins rther seugheoeward fshion,chough in many cases

eve thisequies sme sis upgrading abd RAD rape

patelyslee and adap echeaogis to lc conditions

er cn many sucesfl fiers egin co do major ape

tons, which requis stepping up efor in sil upgrading

(hough ecvitment and ening) and signfeane RAD

Svescments Final the most successful es, especially

when competing interaatonlly,tequie mae inccwaiont

nd development of ew echooogies o keep competitive

edge Fortis, they rete highly speciale sls and

major invests in RAD Progresivey, major adupeations

ml ienotadonscanet be đoe in Boue bạt la he lượt

of ems ad thas rouie efi ianoration necwors”

ae east a a sero level However i must be pein mind that even in developed ounces mos ofthe fms are Fundamentlly adopting ot tceping with joe few ding euting-ege nora To

‘WU ie has eon etinated eae 86 percent of Fence’ ee ological ogres is purchased fom aba, the remainder being peered oly Eaton and Korum, 199) and chat resources dedicned to “kepeion” fa the Unie Str, tvidely recogized as the naavcion lads ecoed thse ded

‘ested oo innovtion a the fone by «fcr of roughly 30:1 Jovanovic 1997),

Foethe ke of coneenence,wealfra spied view here

of he echnologial anion dạt conaie as though,

“The choice of policies and inserumeacs, we argue depends fon their levels of rechnolgical and edacaionalachiewe= ent—county conditions and endownnens Tecsalogial progres and innovacion sa proces aad evolves ovr tie

‘Induce ingovacon and sills upgrading Teasing through his sage will enlah a signican crate i poteadal demand for dation by rapidly những prenims for secondary and recy education Mose countries in Latin America and the Caribbean have slreudy gone mcceslly rough this sage

Aces global mates exposes ms to newer pte and prozenes— which leads eo «proces of reetaogial

‘nstation and sme adpeaion—the Sse step toward any accu Hower, technology adoption satan cay and coelet activi, ven ee fs sage of edoption electing the sgh echoology—implies an ably to gather elewane lnfoematon and make ate judgments And quite fea

‘cree at leas some mine adapatons othe quale of

Joa inprs und othe Loa endons

or cots hr ed sherenes rb ren he eee

ological Foner (sch a Hai), the corertane of he

cechnology policy shouldbe thei education poicy—a push

‘oad getting tthe srs level of bic education co

plel with an open ade policy and repletion of mess

thất esœs mai doglme and dicourges tent

seeking belusve, undersaning he the lower de cae

‘sonal eves che lower che Benes from ride ad FDI

As countties canst through this stage, however,

inmpeovemenss in the quay of buie eduction and

increased coverage of secondary education begin co

‘ncrese in imporace as does begining co step up efores

soseenexFDI,paiesledy dưoogh nsdtutiomldhorctrs

such a special regione for expore promotion anes Copy:

right and erademusk procection and some form of patent

protection do ned co be cootidered at cis stage facie

‘rate echnology ante fom abr, Specific appr ro-

grams co dal upgrading and RAD efor in emering

lnsoration cher, acmally ia sectors wid tadional

cowmparative advantage such 45 those based on natural

resource endowments, may have high psy, Ie is also

‘important co engage eexly as pote in tlecrnmni

‘tion seco reform, co inctese competition and cover

ge, and he development of a fen Ineree legal

framework 1 increte connective Countries a he upper

fn of this stage inclde Nicaragua, Guacemala, Bolivia,

ondars, and Paesguny (ce able 1.2)

Catching Up—Movingtmeard the Tecelgial Frootier

“The fist stage i flowed bya elarvely long period of

‘azching up.” in which mose Ses ae baslyeagage ia

cedhnoloieltansfer and catch-up, bat where inooetions

se su sare A natural bos to making the easton co

this eee sage is wsuly recived when ras move fen

domescic co expore makers and when choy ate exposed co

signitcane level of compedcon Demand for workers with

bigheeducaton sigh, bur eh count sl ee age

secur education gap Skil neds become more special

ined, a des the policy environment As a county erase

‘hough this stages lager Faction of Kes engage in skills

“3pgodliagtho»gh tnining a4 in RATD for adaption of

fereign ecologies, ecting the aed tke beter whan

tage ofloal esoutes ro mod the ecology to better

‘0 compenste forthe high opporancy eos of seheaing Bur, as an important motivation fish secondary ect- tion sro be able wo proces ro tertiary eduction and reap the igh wage preniums, the counties alo seed fo pu i place well-designed system fei (and information fr tertiary education, 0 tha nce fr poor fie know they have air chance so proceed to terry eduction if

‘ey indeed ile secondary schoo

‘Couneris in tht brake, ia which lage pumber of fens eed 20 rast ro sie adopion wo more cmt plex adepaios, are ikly to bene fom more active pro mien of echoolgical ernie and adaption Further encouraging tad and FDI by engaging in bier and rule

——.—

Ông che inveemrr climate though active pomocion policies a practiced by Cova Ric) wil accelerate the pce me nd sigaicane dapaios, as well creation by as emepog se of lade

rs, hould be sted by implemen a patent psetion regime tht 6 cade-elacd inellceal propery sights

(TRIPS)-cenieen, bút not si s wo impo high

“hen san cong ln ơmx cflower din: by Fly devel-

oping the ICT vec, ad by exablishng x broader policy

of suppor fo private RAD and taining thro compet-

tive gre stems, la ea ofthe previously more Reuse

supporto afew intraton chasers

`

'6zoiteniyimsoppcsdonm Re tndreidielddlx

perading A mentioned eal, chaper7 Rds that moet

of RAD is Latin America and the Caribbean is curently

being dane by che public sector and universes without

chongh inks and spillover on RAD by fra and speci

‘aed private agencies, in sharp conta with what happens

jn more secs euces, andthat mayo hem il have

enero ounce public oeipanive training insicues

‘hac tend ro get behind the rechaoogy curse,

Tabor mache Bibi and dep nae seca pa

siela aces co vente capital become mie importa in

‘his stage san increasingly larger number of Gers engage

in ecologic sn skills upgrading

‘Most atin American cous, such at Basi, Colembis,

‘Cosa Ria the Dominican Republic Salva, Pasa,

‘the Replica Boivatana de Venezel, and the English

speaking Caribbean countries, are inden pate of his

seage Ths ia summary he cent pies Fr mae LAC

‘counties at presen ae closing fst che pin sear ed

‘ation while continuing wo expand etary edacation, and

st theme timeccating beter nce for piste RAD

0d ening, inlading an overhaul of rent predominanly

publicly funded and executed RAD snd ening schemes

(ace able 1.3),

Seining the League of taovaters

rms sae have Been preset in global mckste—adapcing

xưng technologies and selling he eesulking produc a

lowes cost than ie competitos—find mars erding as

ew low-wage entans eke away rsket Se, Sustaining

_ potion in glbal market chen necesita ep forward

‘oto creating new produces and procees (which eeatiy

feelieted by túc acquired knowledge), a well as capil

scumulaio, fom dhe aptand-epore sae Coutees

‘inthe soemally ave all core of vecondary ed

tion for now chores of worry ocesingenall=

nents in terciany elution, Psegadate programs begin

to loarish.Asepeced, the United Sates and Japan ae fir

ahead ofthe eto he wo

` eNiascesdee nho cơm,

‘Wha is oer i anew advanced cout sack

1 Koes, Il and Finland Ge ehenseloes i hiss ee slo, Desi frequene eefeesces eo such nations a “pew rats othe league of innovative economies, the notin

of uenly ating on the scene’ it miteaesved Firms

in hese couneis have been engaged in making produce and proces improvements or many in Co ere, how

‘et that here appar to Beating” pois in macy chết, shea investment ia RAD by Sms and pone epson (jase © mention ewo rao indies of tecnologia inno- tion) acres ts vay rapid pace and such cases sesh

so ke related to 2 major push by governments and peace secre wo crea fll itegated “anoratin ster." Such counties appear as ties ees thei efor in R&D sul ir outcomes in vers of patents when benchmarks sith esgece tebe income level ee igure 1.) Such ffs

se epically sociated with very high ove produciviey roweh and, a cee 7 eres, che ees fern appt

‘ro jmly chose investments ae Sige 1.7) Counties inthis nage asd to cope with che large rcs tien of sens who having fished secondary education, tee demanding sce tery eden Stele po- rams me become masive, targeted acholaraipe ned eo

be increase substan, and iformaton syscems (ace

xa bur ober, asreditaion pte) nett be

subexncialysengthene Pstgradae spite, putea

lay iascenoes and engineering, mua ceive astong push

‘With che dieance 2 te techsalopil ftir arrowe

«ven more, ecology Pic gets ven more complex The

objective aw so isle the eaten of sew tech

ils bya ge numberof fem ad elute the Gactne of

‘hove cht engage in major adaptations iga dmole-

ies a wil continue to ease and adap ecologies

fom abroad) Advancing the innovation stage regis =

Signer leap forward in erate RAD On he pr ers,

ie meets lage investments in iowse RAD aciviy

dc chế congestion with universe and independent

research cent Goveraments must spore deers by

stepping up in a considerable way subsides crush con

petitive ching gene systems, eseaishing ax incentives

for RAD, incresing the financing and provision of basic

esearch, srengehening izle property it, deep

cing ene makes and conning to upgrade ICT elated

infnmuctreto word cls level

‘Ac chis rage much of technological advance i ace

(enbolded in inva) ater thas coved (vi

“Depend se fs related tober maby ad xp

cstv necworks offs nd institutions of higher ening

and reach (econ, rasioaly, and sntenatinally)

sume even grater importance A coberen and sage

<ependeninvaion and RAD frnewerk is esta

ef each the rstion sage, Mont of all, he ices

facing ll coe have toe lly aligned ad che,

mm

append i the Latin Americ and the Caribbean eg,

“The evidence ofthe input ofa well-designed system 6

lea Beidenceprescoted inthis repre shows thas pene

Figs, public funding, and aman capital cele peivace

RAD in OBCD and Eat Asian councries, Private RAD and

public RED in arn eile domestic aon and

go tansee of techoology, whieh cortebte co dhe socks

of domestic and forcign generat knowledge capil,

‘which in cus lad to higher producciity: Such Lk,

‘pecially ths fram public R&D co pivte RAD, ae fod

to be wesker in Latin Amerce and he Carbs than

henhee

Todceom fr Chilean Mexico sages chat sey wes

in the Bre stages of his phase, bu have no et emgage

inthe kind of camaic takes chat Kees, lca, and

Finland made when chey hd a simi level income, ot

‘ha Indi nd Chiza appr the way to making Ober couric, sucha Argentina od Uruguay, have ot aly aoe

‘aken off in ters of inovaion in spies high level of

"haan capil, bue Uy are als ir beind the "normal

‘ouncis theres! income A chapeer 6 nots, many LAC couse hase ey he eel of eri ection that the NICs, Paind, and lel had atthe beginning ofthe 1980s during thei take period und hence would sppest

‘ime fo chem ro make «big ps in pice so ene age privae RD investment (ce able 1

“The teaaiton that we have sketched above should be viewed as a coninuous process, though there appear co be

0 igicantnolineaies inthe pach followed by many sce caunties, pacalatly when hing ote nmo-

‘sation phate: «concentted pushin innovation policies

nd scoresponing exponential increase in eve RAD, stots, and prouciviy growth And progres eroagh he (lee ages of his union ny be que uneven sướng sectors well at among Gems in each ecto See bor 13.) Third Stage

Tân hoơng — hemdemrtrer Teun” thse’ Mobscenge 2 esp pep mhườn rg,

ory se OED ae Neeehe Mmdmlerl — Peemimerdmvia

‘Summing Up

(One ofthe abiding mysteries in development economics as

xen why poor cuneies have not agresvely exploited the

immense global stock of knowledge to accelete growth,

Tncresingly the leeture focuses on shortcomings in

‘acon innovative capacity High levels of human capital

nd exponie vo foreign technologier—for instance ehough

‘rade, FDI, licensing, andthe inreeational cculaion of

skilled workes—are cri a only ia hei ova ight but

ho vialy in ow they complement each othe, AS coun

‘tis sok to accelerate the pace of echooogial progress, +neving thatthe righ aman cepa i arial dco

‘The evidence cleely shows thatthe higher peorming

‘counties that made 2 transition to fall partes i global innovation, Finland, Keres, for example—have da- rmaialy increased bother level of human capital and thế snvestment and policies fr inovation ina concert {ashion In acon co getting the basis ght in erm of

lagging in othe global knowledge economy, they aso

ume co ters with tw fundamental iss sing every

cones flowing in thi ocses

int, knowledge ata commodity i paged with ext

onary martes and ence che rake wl noc gen

‘race the opeimal level of innovation, To rept, eos

salyes argue that she United Sues shold probably

incest its RAD by a ctr of and we ofr evidence chat

TÁC is le ctea farther below apeial Furthermore, the

ineiucions crested to recive theie masker furs

universities, oveeament Ibori, nelle! propesey

Fighes—be, by defniton, ost the met and hee sre

‘tt eoondintel by the price mechani,

‘Second, xtc apect othe proces of developene is

‘hr fms an che county asa whole, "lam to ea.” Ta

1

of he fm as equine suppotve se of policies and ints

‘ions ging fom well-designed fsa incentives and sub-

sidis co the active promocion of collaboration dưưngh

incubator, technological pack, and lasers coshe cation

od couedinaion finds coasrcia tha hare the ots

nd ks of RD and skill upgrading nd serve a ening

Iabosrres fo lest advened fms: and co eablishing

+otenas le Tâckdying Lông rm ara

‘oh consiercons dra an integrated ppc td

«coordinative and eve leading ole fo goveniment Ata

minimum the sate aes to eure a consistent and cob

ote of incentives to entre thatthe insiuions created

to adres makes les collaborate filly with rs,

In the highly sacri couse, gonernments hve aot

een shy abour financing sod wderaking RAD cha bạc

bros spillovers

‘Nota ours ars stage whee undertaking sch pl

des fase prot doe ao make een centers

Iwond gvermene acing of RAD ithe conor emaine

lose if basic isin incre isi dou, o a ức

repre a sed he ie man pt ibn Tar

ssid, he cen countries have consent taken an ative

‘sppeich integrin in the weld economy —uperading he leuning sn tairing oacig of firms, sekcvely fnsncing vate HAD, encouraging te lcensing of rigs echaco-

es, protecting ileal prope righ, stimolcing the eselopmen and acceso ICT and progres doping and toning up their Nacional Innoetion Setar chan aie ming fr mination cotoetiom‡orimpresio tem echnolgy Ths engageren: in he long proces of retaking the necesairyinsitinal elem pals ote

‘ey inthe developmenc process

‘Though arguments fr edictonl “nds policy have largely been discret, a government’ re in providing the sees innoeaton en all upgrading-elated com plements to previous efoems provides challenging policy sagends over the next decades Aa active end ficient anowaton polis” i sequied, and though muny of ies

‘components and institutions shouldbe neural aces se tor, some need co be lord o supp rncging nnev tiên duøt in pariolrsetos, As this report wil show, tiết cunnie in the Luận Amedial tả th Cadtben region gin alas every dinesin of haan aa e- ological schievemeas AS 0 region, to rephrase Pacers queso collective mil is ox yt pepe ak de tage of che unpredicabe technological opporenities that the aew milena wil pres us

Endnotes

1 Sede Fer alte 20, caper Hl sa Jones (099, Pee Prot 200

2, Ofer kilt an elas” dst alin

sa lice i pray level Die in aly of

te uch deroces Set Loy, Faye, and Caden 202)

Teleport twee tht low set niente seth eanda nel ec athe oleh pcos ean

CHAPTER 2

The Gaps That Matter Most

HE CENTRAL PROPOSITION OF THIS REPORT IS THAT SKILLS AND TECHNOLOGY interact in important ways, and are a fundamental reason forthe large observed differences ia productivity across countries, Focusing oa gzpr in productivity, eechnology, and education is

4 natural way of considering differences in welfere across nations, and goes back (atleast) t0 the work of economic historian Alesander Gerschenkron (Gerschenkron, 1962; see also Fagerberg, 1994) But estimating che sizeof gaps is aot an easy maccer fora numberof easons First, daca are noc always available on appropriate measures of productivity, skills, and eechnology aod, when they can

be found, these daca are often plagued with measurement esror Second, diferent countries ee a different sages in development: a simple comparison ofthe educational attainment of adults inthe United Seares and Peru is obviously not very informative, but one of Peru and Thailand may be Much of the ealy work

by Gerschenkron and others analyzed the gaps between “leader” and "technologically bckward” countries

In tie chaper, we take a differen approach, Most of the evidence we present assestes whether countries in Latin Americe and che Caribbean have high (or low) levels of productivity, skills, and technology for cheir levels of pee capa income The estimated gnps are therefore gaps relative to the level of development They provide a benchmark for countries in Latin America (box 2.1,

‘Throughout eis chapeer an in much ofthe reper, we The Productivity Gap

aricalaly srs che comparison berween Lain Amstice Table 2.2 summacine ofc productive CTFP growth

a wo ser of conomie: he cel Fast Asian “cigs,” fora sample of counties in the OECD anal developing including Hong Koog (Chins), Korea, Melasa, and repone for she four decades berween 1960 and 2000 Singapore and group of counties abundant in aatasl eapz,Fajzyber, and Calderén, 2002) (The top pase resources, including Canada, Auscralia, New Zealand, presents simple avenge acest counties, while in the iland, Nerway nd Sweden The compton wit che Bat bottom panel the averages have bee weightod bya con

‘Asian tigers «naar one becae both set of counties y's GDP) Specialy, we present the reultso'« Slow state at simile level of developznent inthe 1960s In decomposition of eur growth into the contributions of lase years cept, Frt Noaral Rese she Kedge capt, labor, and produce growth Note that sis

“sen, se reqel thục many counce in Latin Americe the simplest posible Solow decmposton i dor ne con Inve a compsive advange in narra resources Fortis eal for changes in the “quale” of labor (or example tren the comusien with ther coutrie abundant inaat- the mean edation level of che labor foc itso canes wal resource i ale informe inthe “quale” of opal or example, few echooogies

are embodied in apiel) All ores in kil, increases ia

‘technology, aswel as any interaction effects berween skill,

a echnology on growth wil heer becaprared by this

‘measure of TEP,

‘Total Pactor Praductivity Growth jn Latin America

Has Been Low in the Last Two Decades

“Table 2.1 shows thatthe last ro decades ave no been god

for Latin America, Fusing on the GDP-weighted averages,

Latin America had the highest tes of productivity growth

oF any developing region inthe pe-1980 period and, ina

fashion sar to Eastern Europe, te Mile Eas and Noch

Aca, and SubSahuan Ac, very low negative growth

rates of TEP in the post-1980 period By conte, TEP omc in the lst owo decades be been high in Eat Asia 1nd South Asa Table 2.2 presents che same information,

by couney Table 2.2 lal shows the differences becween [Lavin Ameri, East Asa and che sar resoure-abundane

‘counts in Laia Ameria, only Chile had robust TEP growth exten both the 19805 nd 19905, while Argentina, Bolivia, Conta Ric and Uroguay Id respectable groweh

‘ates of TEP in the 1990s Korea an Singapore were goad pesormers among the Eat Asian gers, while Finland and

"Norway also id well!

The Skill Gap

“Latin mecca sling behind in the global TEP leagues

‘Wha explains this? We fst examine differences in sills Since there isn perfect measure fils, we onside he

‘componeas We sar off with a dscstion ofthe sk of

‘lucational atainment of the adule population ia Lain

‘America We then consider ce fw of sled workers in che region, as given by current enrollment at various levels in the eduation system Finally, we discus the gly ofthe seudents “produced” at each level of education as given by the performance of Fain American sens and das on erotional andardaed ree

Worker’ Education Attainment in Many Latin American Countries Ie Ln

‘Over the course ofthe ae rwo decades, the mean years of ehucaton ofthe adult population aged 25 und older as gone

up by L.7 years in Lain America (om 41 wo 3.8 yas)

‘Bur educational atanment in many Latin American coun tes isi very low Figure 2.1 presents satterpot of the mean year of wchooing ofthe labor Fre aged 25 and der elaive to pe capita GDP, a well see cartespond- ing regression li (No ha ere a houghout this chấp ter, the regeeston includes al of the coun inthe woe fox which daa are vilable—in thi cate 105 counties We

‘TP Groth aes Lal Arca Ware Ngan In th 1808 and Low athe 18808

"`

(6.0 and more than thức yeas higher shan ha of Bei

lan adults (4.6), Allo che comparison marsrl resource

sundae courier sotide Latin Americ ae above the

regresion line, faving edscaion levels above cue that

woul be predic for dee fcome level There ae also

Tain Amerian high pefores: Pere, Thalia, and

Colombia have very sitar income levels, but Pesvin

das have more than ose more pear of chooing chan shit

‘Thai counters (3, compared co 6.1 ye), and mre

‘han 2 yar more choking then Colabians (3.1), On ave

age however, Lain Ameccan als have 1 yar fir

ets of ection, wile dues inthe Ease Asian Sige cour

tries have 1.0 mor yes of eduaton and hee inthe t=

tal resource-abundane countries hive 1.4 mur yes of

schooling than would be expected for thei income lee?

‘swe wil discus in caper these dierences area result

fhe pacers of mach fe ill gad in Eas ia

sin some Scandinavian countries han in Lan America

‘ony B these level of stinmcnt could be the rl

of very large numb of adults wih secondary education

“Table 2 herons prec evcinate ofthe fection fas

‘with no schooling some pimary shoo some seeandary schooling, and some university for coutries in Lacia Amerie, the East Asian eigen, and te grup of ata reeouce-abundant countries in 2000 The cable cleniy

‘hows tae he dsibtin of education among adultery ltfree in the he ef couse in 200, Laci Ameri Tad much higher tins of ales with no schooling, ot

1a the 18809 an 109s, Growth Rae fT Wor gh i Chile ad Lot Mon

Sov acter haan ng tonto TH HT ơn

‘oly some peimary schooling compare co the igen or a

tral esurce-abundaet ounces, There at also deces

in the dseibuion of educational acsinment fr count

‘rth deerme scan yas of echoing, Maley end Pacer

both fave 79 man yeu of weholng bu ia Malaysia $3.0

percent of the population has some ecndary chling aly,

‘nd only 7-5 percent has ome ecay edcstion, wheres

{n Panara 28.5 percent ofthe pales ie sone secondary

schooling ony, and 19.8 percent has some univesiy Ia

Venera, the Faetion of adults wich some univericy

education s aoe mich lower hn tha inthe Sandi

song, ven though the mean years of schooling of

Venezuelan alle i oly oneal tha of « Seandnuvan seule Toa lage oxen, ches diferences ar sul of he highly inequinbledisibocin of elcaiona atsiament in serve Lan Ameren counties,

Some Latin American Countries Appear te Be Undergoing “Unbalanced” Educational Transitions

In chupeer 4 we show eae the alk of sll upgeadiag berveen 1960 ad 2000 in Lakin Americ ok place tthe tera leml, wil he bulk of ill pgreding in Eat Asia took pace atthe secondary level (The picur for dhe t= tai remiơdhưuhencounriel mơ mie ony of

Mt ate Amann Cote Hore Le Lvl of lactona Athen of Tout Ppaation

‘GDP in awit ‘Sth manm 1 commen Serer sence te wg gery pps ed sl ny Te ne ma om ce

then wee sey fre in their uation tation ia

1960) As «rer, some Latin Ameicn contree—epe

lly Coss Rica, the Dominican Republic Salado, nd

Venezuee—teem tobe flowing “sablanced” educational

‘ezsvon:althoggh mow ales in ese counties ll bere

primacy elution oles 9 ack upgrading took place at

‘he tertiary eve, ard eo ila eh eco eve, that by

2000 there were fer hln with ony scoary hole

Caton than adults wih teary edueation As we wil dis

‘usin dealin chaper 4 unbalannt educational anions

tục Hàng eệ agave consequences in zerms of ee long

teem sustainably of eluainal tain, neque and

‘he ability o upgrade ecologies

“The educational ataament ofthe population na coun

ry is theres ofthe accumulated fw of fvestments a

schooling in ale decue.Presenenrolimens determine

aw sscks will evolve in the fore New colors will be

ow ofthe labo oc inthe ext decades We ow tu co

1 dscason of contemporaneous invetmenct in edacacon

by looking a the enrollment ets in paar khơi, cc

ondary choo, and rea nein

Mest Latin American Countries De Net Have a Gap

fn Net Enrallment in Primary Stool Primary schools the necessary building beck forall =

‘ional upgrading, Benchmarking lain America in terms of et primary encallment rates suggests tha the region a4 whole des not “underpeeors” oa this dimen sion" The ne ensllmest levels given by the faction of ildeen of primary school age who are enrolled in primacy school) Sil here are countries such at some ofthe poorer

‘ovntries in Ceneal Americ, and regions within other

‘ounerien, such at pare of the south in Mexico and che Noreeas in Bras, where primary enrollment sates are sul low, and should continue tobe a focus for goverment policy

Mort Latin American Countries Have Massive Deficits

tn Net Barllment in Seoredary Schl

[Although the Lata Amerian pete eegading se pc

‘macy enrollment rates is encouraging, the sme cannot be sai abou ot ecoadaryenrllmen ts Oven he epion has a mas dfcic in secondary enrollment Figure 2.2