Sola schola et sanitate: Human Capital as the Root Cause and Priority for International Development

1
Sola schola et sanitate Human Capital as the
Root Cause and Priority for International
Development?Wolfgang LutzWorld Population
Program, IIASA (Int. Institute for Applied
Systems Analysis)Vienna Institute of Demography
(VID), Austrian Academy of Sciences,Department
of Statistics and Mathematics, Vienna University
of EconomicsLSE - June 4, 2009

• (Bixby Forum, The World in 2050 , Berkeley,
  California,
• January 23-24, 2009,)

2

• Why a Latin motto and what does it mean?
• An earlier version of this hypothesis was
  presented in June 2008 at the 40th Anniversary
  Conference of the Club of Rome.
• Martin Luthers famous principle sola fide
  salvation comes only through personal faith
  rather than blind subordination to the church
  hierarchy
• gave priority to personal conscience over
  institutional conformity and paved the way for
  the occidental path toward individual human
  rights, personal empowerment, empirical science
  and in consequence modern economic growth.
• Half a millennium later, sola schola et sanitate
  (only through the combination of education and
  health, i.e., only through human capital
  formation and empowerment rather than corrupting
  monetary dependencies) could become a powerful
  new principle for international development
  cooperation.

3
International Development Policy is in a State
of Confusion

• A number of recently published broad assessments
  of the effectiveness of international aid paint a
  sober picture
• Exact number are difficult to get, but more than
  600 Billion of aid have been given to Africa
  over the past decades, yet things are getting
  worse.
• External financial aid has contributed to
  increasing corruption and to keeping corrupt
  elites in power
• External interference in governance has made
  things even worse The IMF/WB structural
  adjustment programs have resulted in declining
  school enrolment and worsening health services.
• It is unlikely that aid increases to Africa will
  have a significant impact on poverty reduction
  and long-term development. On the contrary, aid
  has frequently damaged development prospects in
  Africa and further increases in aid could make
  the situation even worse. (Jonathan Glennie, The
  Trouble with Aid, 2008)
• There is no sense of priority. The MDGs reflect a
  rather incoherent set of goodwill.
• Population is not even mentioned in most studies.
• Education is usually mentioned in passing as
  something good, but does not get specific
  attention. Education is not a sexy topic.

4
Hypothesis Human capital is the root cause of
international development

• Why the population concern is in fact a human
  capital concern. Go beyond the Ehrlich Simon
  controversy by adding the quality dimension.
• Adding education to age and sex in every
  demographic study It is the single most
  important source of observable population
  heterogeneity. Fertility and mortality differ
  greatly by education.
• The methods of multi-state demography are the
  perfect tool for describing the dynamics of
  population change by age, sex and level of
  highest educational attainment.
• New data on education by age and sex for most
  countries for 1970-2050 allow new global level
  assessments of the importance of human capital on
  economic growth, health, quality of governance
  etc.
• Historical case studies illustrate the overriding
  importance of early investments in human capital.
• Only a comprehensive systems dynamics approach
  (including feedbacks and non-linearities) can
  help to assess the relative importance of some
  forces over others.

5
Mortality under age 5 by mothers education
(Source DHS)
6
(No Transcript)
7
(No Transcript)
8
(No Transcript)
9
Advantages of this reconstructed data set over
other existing ones

• It is complete for time series and definitions
  are consistent over time (unlike UNESCO
  attainment data set).
• It explicitly considers educational mortality
  differentials (unlike Barro-Lee)
• It gives the necessary age detail (5-year age
  groups) unlike others that only have 15 or 25
• It provides the full distributions over different
  attainment levels (none, some primary, completed
  junior secondary, completed first level of
  tertiary)
• The usual mean years of schooling 25 often
  used by economists is much cruder and less
  sensitive to change over time. It aggregates the
  15460 independent pieces of information for
  each sex in one number.

10
Human Capital vs. Process of Education

• Stock How many people (of all ages) have what
  level of education. Measured through highest
  educational attainment or mean years of schooling
  
• Human Capital Matters greatly for health,
  fertility, personal wealth, economic growth,
  quality of institutions and governance .....
• Flow Education as the process, by which people
  (children) move from one educational category to
  the next higher. It is essentially the process of
  investing in the production of human capital.

11
Principles of Population Projection by age, sex,
and education
Mortality
Males
Females
Males
Females
Migration
Migration
Migration
Fertility
Population by Age, Sex, and Education
Population by Age, Sex, and Education
2000 2005
12
(No Transcript)
13
(No Transcript)
14
(No Transcript)
15
Alternative Education Scenarios to 2050

• FT Fast Track Universal Primary Education, 90
  Junior Secondary, 60 some Tertiary
• GET Global Education Trend Improvements in
  education transition rates that follow global
  experience of past 30 years (driven by Asian
  experience)
• CER Constant Enrolment Rates Keep proportion
  in school constant over time.
• CEN Constant Absolute Enrolment Numbers No new
  places in school while number of children
  grows.

16
Kenya 2000
17
Kenya 1970
18
Kenya 2050 Fast Track Scenario
19
Kenya 2050 Global Education Trend
20
Kenya 2050 Constant Enrollment Rates
21
Kenya 2050 Constant Absolute Enrollment Numbers
22
(No Transcript)
23
Lessons

• Education matters greatly for fertility and
  mortality and therefore for population growth.
  More education leads to later age at first birth,
  better access to family planning and lower
  desired fertility and hence reduces population
  growth (in high fertility countries).
• High fertility is an obstacle to increasing
  school enrolment. A rapidly increasing school age
  population makes it more difficult to increase or
  even maintain school enrolment rates (see
  absolute enrolment numbers scenario) lower
  average schooling in turn leads to higher
  fertility (see Nigeria).
• Policy Implications
• Education as a fertility policy More effective
  than only addressing unmet need because it also
  lowers desired family size and is strictly
  voluntary and considered desirable by almost
  everybody.
• Lower fertility as an education policy Efforts
  to increase school enrolment rates are greatly
  helped by reducing the growth in the school age
  population.
• The combination of education and reproductive
  health (schola et sanitate) is key to breaking
  the vicious circle of poverty, lack of education
  and rapid population growth.

24
The changing human capital distribution in the
world
Education level of population aged 15-64 in four
mega-regions
1200
800
400
25
Based on the new IIASA-VID Educational Attainment
data set for 120 countries for 1970-2000 previous
(inconclusive) economic growth regressions could
be re-estimated and finally showed consistently
significant positive effects of improving
educational attainment. For poor countries it
is the combination of universal primary with
broad based secondary education that results in
significant economic growth. - The current MDG
goal is not sufficient.
26
Education and DemocracyUsing the Freedom House
Indicator of Democratic Rights as dependent
variable, similar panel regressions show that
higher human capital is associated with more
democratic rights. In particular a reduction in
the male-female education gap has a highly
significant effect. There is no question about
the direction of causation because education (the
flow) must have happened long before the
relationship (adult stock) is assessed.
27
(No Transcript)
28
Systems ModelsMulti-sectoral computer models
with systems of non-linear equations and
feed-backs trying to capture real world
interactions as comprehensively as possible are
the best way for testing which factors are
primary drivers and which are intermediate ones.

• World 3 The 1972 Limits to growth study did
  not explicitly consider education stocks.
• PDE (Population-Development-Environment) in depth
  case studies by IIASA Mauritius, Cape Verde,
  Yucatan, Namibia, Botswana, Mozambique. All
  explicitly include human capital (by age and sex
  and 3-5 education categories) as part of
  comprehensive multi-sectoral systems models.
  Extensive sensitivity studies showed in all cases
  that investing in education is key to success.
• PEDA (Population-Environment-Development-Agricultu
  re) Models by UN-ECA included literacy by age and
  sex in the model. Also turns out to be key to
  sustainable food security in seven African
  countries.

29
National Success Stories

• The story of Finland in the 19th and 20th century
• The Story of Germany 1945-1970
• The Story of Mauritius 1960-1990
• The Story of South Korea 1970-2000
• The Story of Iran 1980-

30
Alfred Sauvy, 1958 book Fertility and Survival
Population Problems from Malthus to Mao Tse-tung

• Writes about the miracle of Germanys economic
  rise after total destruction in 1945 and the fact
  that it had to absorb five million refugees
• Why this success, contrary to the forecasts of
  all doctrines ? Because these men without
  capital came with their knowledge, their
  qualifications. They worked and they recreated
  the capital that was lacking, because they
  included a sufficient number of engineers,
  mechanics, chemists, doctors, sociologists, etc.
  If five million manual workers had entered
  Western Germany instead there would be five
  million unemployed today.

31
National Success Stories

• The story of Finland in the 19th and 20th century
• The Story of Germany 1945-1970
• The Story of Mauritius 1960-1990
• The Story of South Korea 1970-2000
• The Story of Iran 1980-

32
(No Transcript)
33
(No Transcript)
34
(No Transcript)
35
(No Transcript)
36
(No Transcript)
37
(No Transcript)
38
Human Capital and Adaptive Capacity to Climate
Change

• There is no doubt that some societies will be
  better able to cope with the consequences of
  climate change than others. But what makes the
  difference?
• This is probably the biggest unresolved issue in
  attempts to assess how dangerous climate change
  will be. It requires forecasting future societies
  more than half a century into the future. (Will
  Bangladesh in 2080 be as capable as Holland today
  in protecting itself against sea water rise?)
• Population and human capital are probably the
  most easily projectable element of this. Many
  other things also change along cohort lines. This
  is the topic of a big new 5-year program at IIASA
  (ERC Advanced Investigator Grant).

39
Conclusions

• The explicit consideration of the demography of
  educational attainment opens up an important new
  window for analyses aimed at finding the best
  policies for improving human wellbeing.
• Since the human capital data exist now, it does
  not seem to make much sense to restrict the focus
  to the quantity of people only (by age and sex)
  and leave the crucial quality dimension out.
  (This has also implications for demographic
  bonus studies).
• As to the claim that human capital is indeed the
  root cause of development, this plausible
  hypothesis still needs further testing. If
  accepted, it has huge consequences for
  development strategies.