Human resource development in East Asian countries

RECENTLY, THE World Bank Institute brought out a working paper called ``Building Human Capital — what others can learn," in which it has reviewed past trends in education, the policies followed by East Asian economies for development of education, the emerging issues and the lesson it offers to other developing economies like India.

Not only the East Asian economies have grown fast but their level of human development also has become a source of envy for many countries, in particular, the developing ones. People in East Asia live longer, are more literate, many go to school for longer periods and they eat better as compared with people in South Asian and other developing economies.

Japan has a life expectancy at birth of 75, Hong Kong and Singapore 71.7 and China 69 while the world average is 63.6 and the average in developing countries is 62, according to the Human Development Index. Hong Kong, Singapore and Japan are among the top 20 of the 174 economies, according to the UNDP, 1988. Their growth has been described as an economic miracle behind which there is an education miracle.

The object of this paper is (a) to study the allocation of resources to education as a whole, and (b) allocation for different levels of budgetary resources between levels of education and the role of the private sector in financing education. In view of the topicality of the relative roles of private and public sectors in education in India also, reference may be made to the Indian situation.

Review of economic growth

Between 1980 and 1990, the average annual GDP growth rate was 6.4 per cent in Japan, 6.4 per cent in Singapore, 7.1 per cent in Hong Kong, 9.5 per cent in China and 9.7 per cent in Korea. All these countries had growth of expenditure on education at the same rate as GDP growth barring Japan, namely, 1.6 per cent, 7.1 per cent, 7.6 per cent, 8.4 per cent and 9.5 per cent respectively. The East Asian economies believed in the importance of education for economic growth and made large allocations for it. Countries like Japan had already made heavy investments in education and hence could reduce the pace of expenditure.

Other effects of education

The contribution of education need not be confined to economic growth and income distribution. It has improved health practices and nutrition and generated more effective political demand for health and educational services. It has reduced infant mortality and contributed to longevity. The effect of education on fertility and population growth has also been found to be quite large.

Allocation of resources to different levels

The East Asian economies began increased allocations to education only after the late Sixties. Hong Kong and Taiwan invested only 2. 1 per cent and 2.4 per cent in 1960 but they started spending more from 1980.

Therefore, the World Bank has concluded that while recent figures for East Asian economies are high they are not high when compared with other developing and advanced economies.

The East Asian economies have accorded high priority to basic education (primary and secondary) relative to higher education.

In fact, in Japan, Hong Kong and Singapore, 84 per cent of the educational budget was allotted to elementary education while 87 per cent in Korea was allocated to pre-college education.

The share of elementary education has been one third. Thus, all the three levels of education have been getting equal weightage in the allocation of resources. Among the factors that contributed to balanced development of their educational systems, the World Bank study has cited historical factors, legislative compulsions, strong belief in the contribution of education to development.

Other components

Quality general education as well as vocational and technical education and research and developmental education have received emphasis in the East Asian economies. Thanks to a declining growth in population pressure, it was possible to increase expenditure per student and improve educational quality. Student- teacher ratios in primary schools ranged between 18 in Japan and 28 in Korea, which is only half of that in many developing countries. They have been emphasising high technology in education and training systems. Due emphasis has been given to scholarship and welfare services.

The bulk of the population possessed some kind of vocational training in schools and therefore unemployment rates were low. Further, there were investments in specialised human capital, namely, research and development or science and technology related activities. In Korean industrialisation, investment in research and development has been identified as the critical facilitator of human resource development. Education and research in all the East Asian countries have been coordinated to ensure mastering of foreign technology.

We shall now look at the relative role of private and public sector in all the East Asian countries. Primary education everywhere in the region is exclusively provided by the Government. Private schools have a negligible role even in the case of secondary education though there is some private secondary education but in countries like Japan and Korea higher education has been dominated by private institutes. In Singapore and Hong Kong there is what has come to be called entitlements approach implying that all are entitled to receive education and it is a responsibility of the state to provide it.

In general, human capital contributes to economic growth by increasing productivity of all factors - internal and external - which have been high in East Asian countries.

According to one approach for measuring economic growth (Denison), between 1968 and 1989, 45 per cent of the growth in GDP was contributed by education. In Korea, a high school graduate earns 1.18 times the earnings of a middle school graduate and the ratio increases with higher levels of education. The returns from investment in education in all these countries are found to be positive. And women's education is found to yield higher returns than men's education. Thus, it is found that investment in human capital, especially in education, is found to be more conducive to economic growth than investment in physical capital; the more developed a country the lower are the returns on education at all levels. For example, the returns on education are lower in Japan than in other economies. Finally, the positive and higher ratios of returns on education also highlight the less than optimum level of investment in education in East Asian countries.

Trend towards balanced allocations

The East Asian economies have accorded high priority to primary and secondary education relative to higher education. This is not a recent phenomenon. Even in 1885, Japan devoted 84 per cent of its educational budget on six years of elementary education. Both in Japan and other East Asian economies for a long time, primary education enjoyed high priority. About 75 per cent of the total educational budget in Japan, Hong Kong and Singapore and as high as 87 per cent in Korea were allocated to school education in 1925.

It is only recently that higher education is getting a high priority but still school education receives a major share of the total budget in East Asian economies. It is above 40 per cent in Korea, one third in China, and one-fourth in Hong Kong and Singapore. Hong Kong, Singapore and Japan also allocate a little more than a third of their total educational budgets to higher education and the share is one-fifth in Taiwan. The share of secondary education also is around one-third.

In China, between 1980 and 1985, the allocation to first level education changed from 27.6 per cent to 31.5 per cent, in Hong Kong from 33.7 per cent to 21.14 per cent, in Korea from 49.9 per cent to 44.5 per cent, in Singapore from 35.8 per cent to 25.7 per cent and in Taiwan from 28.4 per cent to 24.5.

For secondary education, between 1980 and 1985 the allocation changed as follows: China from 34.3 per cent to 31.5 per cent, Hong Kong from 35.7 per cent to 35 per cent, Japan from 75.1 per cent to 42.2 per cent, Korea from 33.2 per cent to 34.4 per cent, Singapore from 41.1 per cent to 34.6 per cent and Taiwan from 26.4 per cent to 31.7 per cent. Again, for tertiary education, between 1980 and 1985, China changed its allocation from 20 per cent to 16.5 per cent, Hong Kong from 24.6 per cent to 37.1 per cent, Japan from 22.8 per cent to 13.5 per cent, Korea from 8.7 per cent to 7.9 per cent, Singapore from 17.1 per cent 34.8 per cent and Taiwan from 19.5 per cent to 21.1 per cent. Thus, the present pattern of intra-sectoral allocation to education reflects a balanced nature of educational development.

With a good pattern of intra-sectoral allocation of budgetary resources, a reasonable level of balance could be maintained in terms of investments in different levels of education, as exhibited by ratios of expenditure per student at different levels of education (namely, expenditure per student of higher education over expenditure per student in primary and secondary education, or expenditure per student at a given level of education as a proportion of GNP per capita).

In addition to the intra-sectoral pattern of expenditure, the balanced nature of educational investment becomes clearer if one looks at the ratios of unit costs of education at different levels and the degree of unevenness. In Japan and Korea, the differences in expenditure per student between higher and primary education are the smallest among East Asian economies. The differences in Singapore are not high either compared with many developing economies. It is only rapidly declining over the years.

Similarly, expenditure per student on secondary education is not all that different from the expenditure on primary education. These ratios are favourably comparable with those in the OECD (Organisation for Economic Cooperation and Development) economies. All these reflect the evenness in public spending on education, which is an important strength of balance in educational systems.

This is quite an impressive feature compared with many developing economies, where the degree of unevenness is alarmingly high.

A study of Indian human capital development in the last 50 years shows that it is in striking contrast with East Asian countries. As recently as 1981, the literacy rate in India was 52.21 per cent with males accounting for 64.13 per cent and females 39.29 per cent. This is for the country as a whole and there are wide variations among the States and the districts and between rural and urban males and females. Even in 1996 and 1997, only 3.8 per cent of GNP was spent on education. Further, in the five decades after independence, the share has risen to only 3.14 per cent of GNP in 1995-96.

Consequently, the level of educational development is low in terms of quantity, quality and equality of opportunity. Gross enrolment ratio was only 90.8 per cent with 98.5 per cent for boys and 81.5 per cent for girls.

For the 11-14 age group, it was only 58.5 per cent with 66.5 per cent for boys and 49.5 per cent for girls. India requires both rapid educational and economic development for which it can follow the East Asian model of human resource led development.

C. B. Padmanabhan

ex-UNESCO expert

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