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Knowledge Capital, Growth, and the East Asian Miracle

Eric A. Hanushek, Ludger Woessmann
Published Date: 
January 22, 2016
pp. 344-345

With per-capita gross domestic product (GDP) growing by an average of 4.5% annually since 1960, people in East Asia are about nine times as prosperous as two generations ago. By contrast, the average person in Latin America is only about two and a half times as prosperous. Over the past quarter century, both theoretical and empirical analyses of possible drivers of the different growth rates seen around the world invariably assign an important role to human capital. This has led to development policies focused on increasing enrollment and retention in schools. We argue, however, that too much attention is paid to the time spent in school, and too little is paid to the quality of the schools and the types of skills developed there.

Knowledge capital accounts for apparent growth mysteries in East Asia and Latin America.