Paul Krugman's Education Miracle

There are several arguments attempt to explain the reasons behind miracle. Paul Krugman pointed out the similarity of the Asian countries to Soviet Union in 1950s. The rapid economic growth of Asia was driven by labor and capital accumulation rather than an increase in efficiency. Krugman explained through the example of Singapore that the miracle is driven by perspiration rather than inspiration. In other East Asian countries, there has been less of increase in efficiency than the increase in input. He further suggested that the diminishing return to capital accumulation will hinder the sustainability of growth (Krugman, 1994).

Kim and Lau confirm this argument through their work by comparing the source of growth between the East Asia (Singapore,

One can argue that there has been an education miracle that propel the economic miracle. Education itself is definitely not sufficient to growth as outward-oriented, government intervention and geographical location also plat a part. However, education is still a necessary condition to achieve economic growth (Tilak, 2002). Not only growth was rapid during the miracle period, but also the investment in education both in quantity and quality. In 1965, the average years of schooling for the four Asian Tigers was 1.5 years above the the other developing countries (Barro & Lee, 2012). High rate of primary school enrollment was prevalent in this period in which Hong Kong, Singapore and South Korea performed above 100% while the figure was 97.15% in Taiwan. By the beginning of 20th century, primary school became compulsory and universal which later pressure the need for secondary education (Fontana & Srivastava,

Later in the period between 1970s-1980s, secondary education was expanded. Demand for public education increased in line with the economic growth. The enrollment in secondary education were 35% in South Korea, 45% in Singapore and 29% in Hong Kong. After the intervention of government to supply the secondary education the share of enrollment soar dramatically to 95%, 92%, 71%, 69% in South Korea, Taiwan, Singapore and Hong Kong respectively (Mascelluti, 2015). Government has created a pyramid of education support by heavily support the basic education. Once the fundamental education has been fulfilled, it stimulated the demand for higher education, the higher ladder of the pyramid. In 1960, huge public expenditure of the East Asian government was devoted to education. The share was 2.2 % on average for all developing economies while the number was 2.5 % for East Asia. Out of the education budget, it was allocated to basic education the most (World Bank, 1993) (Fontana & Srivastava, 2009) (Tilak,