ON THE CONTRIBUTION OF EDUCATION TO ECONO MIC-DEVELOPMENT

Numerous empirical studies show a positive correlation between educati on and economic development. However, little is known about the underl ying processes, and while a contribution of primary and secondary educ ation to economic development is generally acknowledged, many critics argue that the poorer countries may gain nothing from investing in ter tiary education. To shed more light on this question, this study draws on regressions of the growth rate of per capital income on different variables for educational attainment, as well of course as referring t he other most important growth factors (accumulation of physical capit al, technical progress, the possibility of 'catching up', and a countr y's openness to trade). Based on a data-set covering 75 countries from 1960-1990, it is shown that tertiary education in less developed coun tries has a significant impact on economic development, provided that there are no 'educational imbalances'.