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Education, Economic Development, and Technology Transfer: A Colonial Test

  • John R. Hanson (a1)


I test the hypothesis advanced by Richard Easterlin and others that the importation of modern technology and prospects for economic development in the Third World are principally a function of the local population's formal schooling. According to orthodoxy, manufacturing more than any other sector should repay investment in human capital. Yet the correlation of schooling with the manufacturing sector is much lower than with the mineral sector, an enclave in colonial economies and a symbol of underdevelopment.



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1 Easterlin, Richard A., “Why Isn't the Whole World Developed?” this JOURNAL, 41 (03 1981), pp. 117.

2 Headrick, Daniel R., The Tentacles of Progress (New York, 1988), p. 384.

3 See, for example, Hopkins, Anthony G., An Economic History of West Africa (New York, 1973) and Fieldhouse, David, Colonialism, 1875–1940 (New York, 1981).Fieldhouse's most recent book, Black Africa, 1945–1980 (London, 1986), tacitly conveys the familiar impression that the educational situation in Africa was so deplorable at independence that its previous effects were inconsequential.

4 Todaro, Michael P., Economic Development in the Third World (4th edn., New York, 1989), p. 430.

5 See, for example, Bowman, Mary Jean and Anderson, C.Arnold, “Concerning the Role of Education in Development”, in Geertz, Clifford, ed., Old Societies and New States (New York, 1963), pp. 247–79.

6 UNESCO, World Illiteracy at Mid-Century (Westport, 1957), p. 130.

7 Woytinsky, W. S. and Woytinsky, E. S., World Population and Production (New York, 1953), p. 767.

9 Ibid., p. 763.

10 For details on the low educational expenditures in colonial Africa, see Gifford, Prosser and Weiskel, Timothy, “African Education in a Colonial Context: French and British Styles”, in Gifford, Prosser and Louis, W.Roger, eds., France and Britain in Africa (New Haven, 1971), pp. 688–89.

11 Carnoy, Martin, Education as Cultural Imperialism (New York, 1974), p. 138. Italics added, based on the rest of Carnoy's discussion. Kilby's work on Nigeria echoes Carnoy.See Kilby, Peter, Industrialization in an Open Economy: Nigeria 1945–1966 (Cambridge, 1969), p. 259.

12 LOGAGE is the logarithm of the difference (AGE) between the postwar date of independence (with a 1960 cutoff date for colonies whose independence came later) and the founding date of the colony, according to Encyclopaedia Brittanica, Inc., The New Encyclopaedia Britannica (15th edn., Chicago, 1988). The results presented here are not sensitive to the use of other possible founding dates in cases in which there is doubt or to other reasonable adjustments reflecting the checkered history of colonialism.The source of the data on religion is Barrett, David, ed., World Christian Encyclopedia (Oxford, 1982). The fruit of a decade-long project beginning in 1968, this remarkably comprehensive and rigorous work not only surveys all branches of Christianity worldwide but also breaks national populations down according to religious affiliation. Standard categories and a standard format are used for every country. Historical data drawn from censuses of religion are presented. This excellent book makes it clear that national populations are not always easily categorized by religious affiliation, one reason why, though tempting, it is not necessarily apt to use a dummy variable to represent a country's religious character.

13 In Muslim northern Nigeria, for example, Christian mission schools were proscribed. See Kilby, Industrialization, pp. 236–37.

14 For example, compare the OLS equation explaining manufacturing as a share of national product (MANPR) with the analogous equation in Table 1. The OLS version is

where LIT is the adult literacy rate in 1960 and POP is population size.

15 See Chenery, Hollis and Syrquin, Moises, Patterns of Development, 1950–1970 (Oxford, 1975), for extensive discussion of the various technical issues involved. Their general conclusion is that for countries at a low level of economic development and in the face of serious data constraints more sophisticated or complicated econometric approaches yield little additional information.

16 International Bank for Reconstruction and Development, World Development Report, 1980 (New York, 1980), Annex, World Development Indicators;and World Tables, 1976 (Washington, 1976). The per capita income estimates for 1960 are the most recent ones provided by Summers and Heston, members of the United Nations International Comparison Project and the recognized leaders in estimating national incomes in poor countries. The results are not very sensitive, however, to the use of these estimates or some of their earlier ones.See Summers, Robert and Heston, Alan, “A New Set of International Comparisons of Real Product and Price Levels Estimates for 130 Countries, 1950–1985”, The Review of Income and Wealth, series 34, no.1 (03 1988), pp. 127.

17 David, Wilfred L., The Economic Development of Guyana, 1953–1964 (Oxford, 1969), p. 227.

18 Another potentially important effect is the well-known high correlation of higher literacy for females with lower infant mortality and better nutrition, which can raise labor force productivity in addition to other benefits.

19 Headrick, Tentacles, p. 15.

20 Harrison, Lawrence E., Underdevelopment is a State of Mind (Lanham, 1985).

21 The simple correlation between population size and the literacy rate is nearly zero. This presumably explains why no one has noticed the connection between the spread of literacy and the size of population previously has been neglected and explains the focus on economies of scale and the like.

22 Mandle, Jay R., The Plantation Economy (Philadelphia, 1973), p. 143.

23 EXPT was calculated from population data in Mitchell, B. R., International Historical Statistics: Asia and Africa (New York, 1982),for 1913 or a nearby year and export data in U.S.dollars in Stover, C., “Tropical Exports”, in Lewis, W. A., ed., Tropical Development, 1880–1913 (Evanston, 1970),supplemented by Lewis, W. A., “The Growth Rate of World Trade, 1870–1973”, in Grassman, S. and Lundberg, E., eds., The World Economic Order: Past and Prospects (New York, 1973);Yates, P. L., Forty Years of Foreign Trade (New York, 1959);and Issawi, C., An Economic History of the Middle East and North Africa (New York, 1982). Colonial records, which were well and assiduously kept, are the original source of the data, so these sources are mutually consistent. No attempt was made to estimate population when data were not available for 1913 or a close year.

24 The source of data is Hanson, John R. II, Trade in Transition (New York, 1980), pp. 2627.

25 Data from Ibid, and Hanson, John R. II, “Export Shares in the European Periphery and the Third World before World War 1: Questionable Data, Facile Analogies”, Explorations in Economic History, 23 (01 1986), pp. 8599.

26 See, for example, Kmenta, Jan, Elements of Econometrics (2nd edn., New York, 1986), pp. 443–46.


28 Garnaut, Ross, “Resource Trade and the Development Process in Developing Countries”, in Krause, Lawrence B. and Patrick, Hugh, eds. Mineral Resources in the Pacific Area (San Francisco, 1978), p. 139.

29 Statistical tests of the type used earlier for EXPT corroborated this argument.

30 The share of minerals in national product was computed by multiplying MINEX by the ratio of exports to national product. Virtually all mineral production was exported.

31 The source is UNESCO, World Survey of Education (Geneva, 1958), vol. 2.

32 The countries are Algeria, Morocco, Tunisia, Ghana, Nigeria, Kenya, Zaire, Cameroon, Togo, India, Sri Lanka, Indonesia, Jamaica, Guyana, Uganda, Trinidad and Tobago, Burma, and Malaysia.

33 Bohr, Kenneth, “Investment Criteria for Manufacturing Industries”, Review of Economics and Statistics (05 1954), pp. 157–66.

34 It should be mentioned, however, that in the early twentieth century complaints about the harm done by illiteracy to the productivity of factory workers were heard in India. See Carnoy, Education as Cultural Imperialism, p. 111.

35 World Resources Institute, World Resources, 1986 (New York, 1986), pp. 289300.

36 David, Economic Development, chap. 4. By the 1950s mining and mineral processing represented about 3 percent of the labor force and over 11 percent of GDP, while manufacturing represented over 12 percent of the labor force and 3 percent of GDP, according to David. This implies much greater productivity in mining. For numbers, see Ibid., chap. 2, p. 77.

37 In Jamaica, as a matter of fact, the mining companies also are engaged in agriculture. See Ibid., p. 190.

38 Headrick, Tentacles, p. 275.

39 Bohr, “Investment Criteria”, p. 162.

40 Headrick, Tentacles, pp. 275–76.See also David, Economic Development, p. 91, for references and comment on training in Guyana and Jamaica.

41 Bohr, “Investment Criteria”, p. 162.

42 National Industrial Conference Board, Obstacles and Incentives to Private Foreign Investment, 1962–64 (New York, 1965). Unfortunately, the total number of companies participating was not revealed, except that 284 American corporations gave responses concerning over 1,100 investment decisions in 73 countries. The cooperation of the leading business groups or organizations in each of the 12 countries was obtained, however, implying a large and representative sampling outside the United States. Official responses to the corporate assessments were solicited and often received from the governments of the countries profiled, further indication of the seriousness with which this project was conducted.

43 The criticized countries were Algeria, Angola, Burma, Cambodia, Sri Lanka, Ethiopia, Ghana, India, Indonesia, Iran, Laos, Malaysia, Morocco, Pakistan, Philippines, Sudan, Tanzania, Vietnam. The others were Guinea, Guyana, Zaire, Haiti, Iraq, Jamaica, Kenya, Korea, Liberia, Libya, Malawi, Mali, Nigeria, Syria, Taiwan, Thailand, Trinidad and Tobago, Tunisia, United Arab Republic, Zambia.

44 National Industrial Conference Board, Obstacles and Incentives, p. 84.

45 The omitted countries are Malawi, United Arab Republic, Vietnam, Laos, Angola, Taiwan, and Guinea.

46 The omitted countries are Vietnam, Malawi, and United Arab Republic.

47 The omitted countries are Laos, Vietnam, Cambodia, Guinea, United Arab Republic, Guyana, Haiti, Liberia, Libya, and Syria.

48 The classic account is Clower, Robert et al. , Growth Without Development (Evanston, 1966).

49 Mason, Edward S., “Raw Materials, Rearmament, and Economic Development”, Quarterly Journal of Economics, 66 (08 1952), pp. 332–33.

50 Ibid., p. 336.

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Education, Economic Development, and Technology Transfer: A Colonial Test

  • John R. Hanson (a1)


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