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Begin New Search Publishing Institution Carnegie Endowment for International Peace Author Nancy Birdsall

1. Human Capital and the Quality of Growth

Author:
Nancy Birdsall
Publication Date:
12-2000
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
T. W. SCHULTZ was ahead of his time, at least among economists. The earliest postwar models of development emphasized accumulation of physical capital, and saw spending on health and education as a drain on the accumulation of "productive" assets. But eventually, the newer classical growth models incorporated formally Schultz's insight, and related work on accounting for growth by Hollis Chenery and colleagues at the World Bank pointed to the contribution of more skilled workers with more human capital to increased productivity and growth. The more recent endogenous growth models are even more emphatic. Sustainable growth in these models is the result in part of positive externalities generated by education, an important form of human capital. In these models, the new ideas and new technologies that are critical to high sustained growth rely fundamentally on high levels of human capital.
Topic:
Economics, Education, and Science and Technology
Political Geography:
India

2. Natural Resources, Human Capital, and Growth

Author:
Nancy Birdsall, Thomas Pinckney, and Richard Sabot
Publication Date:
02-2000
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
In this paper, we present evidence that among developing countries, those that are resource-abundant invest less in education. We then discuss the economic processes behind this evidence. We describe a virtuous circle in which rising private returns to human capital and other assets lead to increased work effort and higher rates of private investment immediately, including among the poor, and generate higher productivity and lower inequality in the future. With resource abundance, however, governments are tempted to move away from the policies that generate this virtuous circle. Dutch Disease and related effects tend to lower the rate of return to the agricultural and human capital investments available to the poor. Resource rents accumulate in the hands of the government, and/or a small number of businessmen, further reducing incentives to invest. Staple-trap effects lead to the subsidization of capital, thereby taxing labor. The labor market in the resulting capital-intensive economy offers little benefit for moderate levels of education. The government may try to assuage the poor by directing some proportion of resource rents to populist programs that create new fiscal burdens but that do not enhance productivity. In short, resource abundance tends to break the virtuous circle linking education, growth and inequality in several places: the choice of development strategy, the level of inequality, the lack of incentives for investment in education, and the creation of a welfare state. We illustrate this breakdown by contrasting the cases of Korea and Brazil, and, since resource abundance need not be destiny, we conclude with policy lessons for resource-abundant developing economies.
Topic:
Economics, Education, Emerging Markets, Government, Political Economy, and Third World
Political Geography:
Brazil and Korea

3. After the Crisis: The Social Contract and the Middle Class in East Asia

Author:
Nancy Birdsall and Stephan Haggard
Publication Date:
01-1998
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
The Asian financial crisis put in bold relief two big differences between the Asian and the Western economies. One has been hotly contested, while the other has been virtually ignored.
Topic:
Economics and Emerging Markets
Political Geography:
Israel and East Asia