Economists have found the concept of human capital to be very useful in explaining not only differences in individual earnings but also aggregate variations in the well-being of nations. Because of the importance of the human capital, another strand of research has delved into the determinants of relevant skills. Both lines of inquiry have advanced markedly with development and expansion of international testing of achievement, particularly in math and science.
While most analyses of growth and development emphasize the central role of human capital, measurement issues have plagued both research and policy development. Specifically, attention to school attainment and enrollment rates appears to be misdirected. In contrast, recent work has shown that the measures of cognitive skills that can be derived from international assessments greatly improve the ability to explain differences in economic growth rates across countries. Moreover, improved cognitive skills appear to have dramatic impacts on the future economic well-being of a country, suggesting that policy actions should focus directly on school quality and other means of improving cognitive skills.