Should developing countries make more investment on basic education?

Rural China vs Uganda

Study Country: United States

Study City: Cleveland

Study Topic: Economic Development

Service Category: Term Paper/Answer Sheet

Word Count/Pages: 3750 WORDSResearch Paper

Should Developing Countries Invest More on Basic Education?

12 font, double space, 15 pages (not including charts, graphs, reference)

Use STATA to do regression with proper models and variables; Start with OLS We are required to use panel data for data analysis. I chose to use China and Uganda's living standard survey, which can be downloaded from worldbank LSMS website. My professor suggested that I should also consider data from Chinese urban areas, but I was not able to find any survey with useful datasets. Besides, my logic was like because most people think that the economic condition difference in China is mostly due to the low education level in the rural areas, if we could find the similar patterns in rural China and Uganda, we might be be able to conclude that Uganda also need to improve basic education, etc.

But it seems not too convincing to my professor, I was not able to come up with any better and detailed reasoning.

For the dataset, because of comparing two countries datasets, my professor suggested that I should use "append" command to make a single one and use dummy variable to indicate country, which I didn't really get the point. And the robustness may also need to be test. I did the regression separately at first, as you may see it in the presentation ppt, and they didn't yield any good results. I was stucked completely.

By the way, it is just a small one semester research, so it's ok to have unsatisfied regression results in the end. It may caused by datasets problems or many other problems. We just need to state it in the conclusion and probably make some guess.

1. Introduction:

Education has a very close relationship with economics. The development of education depends on the economic development. At the same time, through providing with high­quality labor force education can improve the average productivity and then promote the economic development.

There have been a large amount of research papers about the contributions of education to the economic development. Much emphasis has been put on the higher education. However, the basic education, which I refer to the period from elementary school to high school, is also very significant. In this case, China is a very complicated country but can turn out to be a very interesting research model. Although China is still classified as a developing country, some urban areas, especially the coastal provinces, are believed to have the similar economic level as developed countries, and some rural areas can be as poor as the poorest countries.

In this paper, I plan to make comparisons between the rural areas of China and Uganda, which is one of the poorest countries in the world.

2. Background/Review of the Literature:

China has experienced serious income inequality over the recent decades. The study by Zhang, Zhao, Park and Song (2005) showed that there is a dramatic increase in the returns to education in urban China in 1990s. Therefore, the labor market in China has reformed to improve efficiency of labor allocation and further labor market integration. The institutional reforms have no doubt contributed significantly to the increase in demand for skilled labor.

The study on Uganda by Heyneman (1976) implied that education has a stronger effects on cognitive achievement in less industrial societies. Also, the relationship between socioeconomic status and academic achievement appears weaker in less industrialized societies, so the higher education may seem to be less important under this result.

Ramcharan(2004)'s conclusion showed that the initial investments in both basic and higher education should be the heaviest, and that investments should occur in both education types. However, the developing economies may need only invest in secondary schooling and import high­skilled equation embodied in the foreign goods.

The emphasis on the effects of primary and secondary education remains insufficient. I will work more on this argument in this paper.

3. Hypotheses and Methodology:

It is widely acknowledged that higher education could possibly yield more return on education, which is wages. However, many economists have argued that the return on education has a marginal effect with the every year's increase on education. Thus, I suppose that developing countries should invest more on basic educt

4. Data:

5. Regression Results:

6. Conclusion:

Whether to invest more in basic education or higher education is always a debate. I suppose that for developing countries, basic education is more important since people from developing countries are still struggling with meeting family's basic needs. Therefore, the most significant thing for them is to have a job for living. As the employment rate increases, the productivity should increase as well, which can then promote the economic development. Hence, the government from development countries should help to invest more in base education in order to increase the amount of qualified labor force.

6. References:

1. Economic Returns to Schooling in Urban China, 1988 to 2011

Junsen Zhang, Yaohui Zhao, Albert Park, Xiaoqing Song, 2005, Journal of Comparative Economics

2. Influences on Academic Achievement: A Comparison of Results from Uganda and More Industrialized Societies

Stephen P. Heyneman, 1976, Sociology of Education, Vol. 49, No. 3

3. Higher or Basic Education? The Composition of Human Capital and Economic Development

Rodney Ramcharan, 2004, IMF Staff Papers, Vol. 51, No. 2