Presentacion Michael Crawford

Human Capital for Innovation and Competitiveness in Chile
What Next?
Michael Crawford
The World Bank
Santiago, January 22nd, 2010

Figure 1. Average PISA 2006 Math Scores and per Capita GDP, by Country

The Race Between Education and Technology
“The authors skillfully demonstrate that for more than a century, and at a steady rate, technological breakthroughs — the mass production system, electricity, computers — have been increasing the demand for ever more educated workers. And, they show, America’s school system met this demand, not with a national policy, but in grassroots fashion, as communities taxed themselves and built schools and colleges.”
--The New York Times, October 4,2008

Why Did the US do Well in the 20th Century in the Race between Education and Technology
Two percent real productivity growth for 100 years; 7x GDP; large and relatively open market
1900-45: High School movement prepared large numbers of individuals to assume quasi-managerial jobs that emerged through industrialization
1946-76: When the challenges became more complex (post WWII), the GI Bill provided a second wave of more advanced HC
1900-76: Wage differentials decreased because provision did not lag demand
1976-present: Supply of high quality HC plateaued in the 1980’s, reigniting large wage differences

Where is Chile in this Race?
A few new sectors (Salmon, Fruit, Wine, Processed Foods) added almost 10B USD to GDP – [4% of output] but while relying mostly on knowledge embodied in capital, not in people. Growth based on “low hanging fruit.”

Chilean Growth Spurt (1985-98)Was Natural Resource Based

Efficiency Should Precede Innovation

Do Returns to Higher Education Reflect Productivity or Rent?
Return on a year’s additional education by type of education (%)
Source: based on Mizala & Romaguera (2004) for1990-2000; www.futurolaboral.cl for 2003 and 2006

Is Tertiary Education Compensating for Weaknesses in Basic Education?
Overall learning achievement is low (PISA 430)
Tertiary education makes up for poor development of cognitive skills at secondary level
TE Grads earn high salaries because skills are scarce
Decent returns can be earned without risk, firms do not have abundance of skills needed to innovate/expand
Risk aversion by entrepreneurs lowers the demand for skills

Reaching Long-term goals depend on mitigation of disconnects in productivity

Three Main Questions
What is Chile doing right in HCP?
Where can Chile do better?
What should the priorities be for the next 5 years?

Things Chile Does Well Now
Overall--
Has a long-term(15-20 year) perspective for policy
Significant efforts to improve primary and secondary –
Significant investments in human capital (tertiary education, adult education and life-long learning)
Important attempts to create a qualifications framework
Pilot for certification of competencies

Things Chile Does Well Now
In Tertiary and Innovation
Appropriate goals for tertiary coverage [50% and beyond]
Combination of market dynamism with reasonable quality assurance
Labor market info for student through Futurolaboral
Overcome the institutional resistance to provision of accurate data on tertiary education
Vast expansion of student aid with policy levers
Accreditation of CFTs/Ips linked to student lending
Experiments with results-based financing for universities
Incentives for retirement of retirement-age university professors
Bold program for adding an international dimension to technicians, master’s, PhD, and post-doctoral training
Increases to R&D funding/enhanced role for CORFO

What Can Chile Do Better?
Improve PISA and TIMSS scores as an indicator of success for basic and secondary education policy;
Vice Minister for Tertiary Education/Research– strengthened ability to lead policy implementation
Shorten duration of university degree programs
Emphasizes CFT/IPs and create pathways for life long learning
Keep the spotlight on accreditation as a true driver of quality within tertiary education.
Strengthen the financial rewards to efficient, high quality tertiary institutions
Monitor closely delinquency and default rates as students begin to enter repayment to protect the funding base of the CAE;
Encourage defacto profit-making by private universities
Clarify CONICYT’s mandate to support relevant R&D

Gaps in Knowledge for Policies
What is driving job creation?
Who is hiring graduates and why: CFTs/Ips/Universities – by sector?
Are tertiary graduates adding value?
What are the employment and educational profiles of EMTP and ESHC graduates ?
Can young people with good ideas start businesses?
Will certification of labor competencies improve productivity?
What Impacts have policy pilots initiatives had?

Where is the HC Going?
Futurolaboral is improving the availability of information, but the sector understanding of where HC is employed is still very partial

Learning from Experiments
MECESUP
Chile Califica
Labor Competencies

Priorities Going Forward
Improve basic education as a gateway to all other gains
Increasing labor force skills – adult education and certification of labor competencies
Document what has worked in Chile Califica and FC
Emphasizes the role of CFTs/IPs and pathways to higher degrees
Accreditation, student aid, and community college model
Stronger Mineduc for tertiary and research policy
Integrate MECESUP, BCP and CONICYT policies
Revitalize Accreditation
Increase Performance based funding and reward efficient universities
Take Mission-related research seriously – decrease investigator-driven research

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Presentacion Michael Crawford

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