Economic Growth: The Impact of Improved Education

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Prospectus and Annotated Bibliography
I. Motivation and Statement of your Research Problem/Question
The significance of improved education has been critical for the development strategies of most countries, and the research data (Vinod, 2007) shows significant progress in improving school attainment across the developing world will boost economic growth in recent decades. Developing countries have made a significant amount of progress in improving their literacy and college level education. A country such as Korea has increased their educational spending since the mid-1960s as a developing country, by the beginning of 21st century, Korea has reached the income standards of high-income countries. Thus, human capital seems to have an effect on …show more content…

But this approach has wrongly assumed that all schools will produce the same educational benefits regardless of location and reputation of the school. A year of schooling in America and a year of schooling in Africa are treated as equally productive, which is not appropriate. In this research, a more direct measurement of human capital is student test performance in math and science that described as cognitive skills. The relationship between cognitive skills and the growth of GDP per capita would produce more accurate result on how human capital affects economic conditions. Specifically, the research question for this project is how student test scores in math and science affects the national GDP per capita, instead of using the traditional approach of school attainment with average years of schooling as a proxy for human capital. The approach of using cognitive skills as a proxy for human capital is not new as Hanushek (2013) has used the basic and advanced skills for his human capital proxy in his research on the importance of cognitive skills for economic growth. Nevertheless, the majority of researchers still used school attainments for their human capital related studies and might because the data of test performance was not available in the …show more content…

The theory model has a residual in the equation and later Mankiw and other researchers realized that much of residual might be due to human capital. Thus, researchers developed augmented Solow models, which contain human capital as an independent variable in explaining GDP growth. The human capital theory (Teixeira, 2016) is the foundation of this research as a country puts investment into educating human to learn skills and technology, the production per worker will increase as same as an operating machine with more advanced technology in the factory. In addition, workers with higher skill and expertise in technology can earn higher earnings to maintain healthy body and thus produce long term reliable production at work, and lead to increase in production for the employer, then the industry and the nation. By using the cognitive skills in measuring human capital can enable the research to see how effective is the education spending on the growth of the nation. From the research question of this study, how do student test scores in math and science affects the national GDP per capita, and the following hypothesis emerges: H1. Country with higher student test scores than OECD average in math and science will grow faster in terms of GDP per capita; H2. Country with lower student test scores than OECD average in math and science will grow slower in terms of

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