The Social Outcomes of Education and Feedbacks on Growth in Africa

This paper estimates the net education effects on economic growth as well as non-market delayed effects on health, poverty, political stability, and other key measures of economic development in Africa. It seeks to do this more comprehensively than this has been done before, as well as to estimate the delayed feedback effects from the non-market outcomes on economic growth and the externalities. It does this by means of a simulation model based on panel and cross country data. However, the effects of education considered here are shown to be consistent with those found in the mainstream of the research on each outcome based on microeconomic data. After developing the micro analytic conceptual framework, the regression estimates are presented in full together with a discussion of the net direct and indirect effects of education on each outcome. These are shown on average to improve nationwide infant mortality, increase longevity, strengthen civic institutions and democratization, increase political stability, and increase investment in physical capital. The later have positive delayed feedback effects on the economic growth process. The effects also lower fertility rates and population growth rates but the latter occurs only after long delays because of the short term positive effects of education on health. There are significant net education effects (after controlling for other things) that reduce poverty, inequality, and crime, the latter after netting out negative externalities from growth and white collar crime. Net education effects reducing poverty and substituting skills for extractive exports also contribute to environmental sustainability. Simulations solve the complete model endogenously and iteratively over time for all of the direct and indirect (largely externality) effects in a process referred to here as endogenous development. They reveal that indirect feedback effects on growth and also on non-market outcomes are larger than the direct effects! Some effects are immediate, but many of the lags are 25 years +. So policy options for a continent in crisis that consider these long lags are considered. A full explanation of the basis for the estimates and of the undirect effects and feedbacks is available in W. McMahon, Education and Development: Measuring the Social Benefits, Oxford University Press, paperback out in Jan. 2002