Globalization, literacy levels and economic development

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Globalization, literacy levels and economic
development

• Alok Bhargava
• University of Houston

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Conceptual issues

• Increased globalization reflected in exports,
  imports, foreign direct investment, etc
• New measures for globalization, corruption,
  freedom, tariffs, are being compiled
• Effects of variables such as literacy rates have
  been under-emphasized
• Non-linearities in the relationships

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Conceptual issues

• Effects of globalization on 5-yearly growth rates
• Export/GDP and Import/GDP ratios versus
  Trade/GDP ratio
• Trans-logarithmic functions and specification
  testing
• Interactions between literacy and trade
• Endogeneity of variables and tests

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Conceptual issues

• Globalization, poverty and inequality
• Emphasis on cheap labor in Heckscher-Ohlin model
• Agricultural exports from developing countries
  are restricted
• Exports to developed countries require finished
  goods value added is critical
• Labor force with different skill levels

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Data issues

• Data available in WDI2005 on exchange rate and
  PPP based GDP series 1985, 1990, 1995 and 2000
• Projection of life expectancy and literacy
  variables 5-year intervals are preferable- data
  on 54 developing countries in 4 time periods
• Poverty and inequality measures 1990, 2000 on 35
  countries

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The model
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Model
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Equations
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Conclusion

• Indicators of education and health were important
  predictors of growth rates developing countries
  especially in Africa need to invest in health and
  education
• AIDS epidemic is shortening life expectancy in
  African countries and hampering childrens
  education (Bhargava, 2005)
• Skilled labor is in often in short supply and
  emigration of healthcare professional may be
  putting further pressure in Africa
• Globalization is unlikely to bring benefits to
  developing countries lacking natural resources
  unless education levels are increased