OECD-ECLAC Regional Consultation on Inclusive Growth in Latin America and the Caribbean

1. OECD/ECLAC REGIONAL CONSULTATION
Inclusive Growth in Latin America and the Caribbean
Education and Inclusive Growth in Brazil
Naercio Menezes Filho
Insper Institute and University of Sao Paulo

2. Introduction
Labor Market
Innovation Poverty
EDUCATION
Economic Growth
Inequality
Bolsa-Familia
S
D
Doing Business

3. Recent improvements in Education
Net Enrollment Rate
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Fundamental HighSchool College

4. Falling education wage differentials
Growth in differentials wrt 1992
1,25
1,20
1,15
1,10
1,05
1,00
0,95
0,90
0,85
0,80
1992 1993 1994* 1995 1996 1997 1998 1999 2000* 2001 2002 2003 2004 2005 2006 2007 2008 2009
Fundamental High School College

5. Leading to a fall in inequality
Income Ratios
80
70
60
50
40
30
20
10
0
1992
1993
1995
1996
1997
1998
1999
2001
2002
2003
2004
2005
2006
2007
2008
2009
20% richest/20% poorest 10% richest/10% poorest

6. Productivity still a major problem
Relative Labor Productivity (GDP per Worker) - 2010
0 20 40 60 80 100
Source: Conference Board (2011)
USA
France
UK
Canada
Finland
Korea
Portugal
Argentine
Mexico
Chile
South Africa
Brazil

7. Productivity Growth has been low
Productivity Growth - 2005/2010
Source: Conference Board (2011)
8
7
6
5
4
3
2
1
0
Labor Productivity Real Gdp Employment
%
Major Emerging Economies Brazil

8. Labor Productivity: Industry

9. Explanations
• Low productivity in the services sector
• Poor infra-structure & complicated tax system
• Doing business
• No international competition -> “close & protect”
• Universities distant from firms
• Bureaucratic incentives legislation
• Old-fashioned managerial practices
• Education

10. Quality of education still a problem
PISA 2009 - Share below level 1
60
50
40
30
20
10
0
Finland
Shanghai-China
Canada
United Kingdom
Korea
Singapore
United States
OECD average
Portugal
Chile
Mexico
Uruguay
France
Turkey
Brazil
Colombia
Argentina
Peru
Qatar
Panama
%

11. Quality Improving very slowly
190.6 190.8
181.0
176.3 177.1
182.4
193.5
204.3
209.6
253.2 250.0
246.4 243.4 245.0
239.5
247.4 248.7 250.6
281.9
288.7
280.3 276.7 278.7
271.3 272.9 274.7 273.9
300
280
260
240
220
200
180
160
140
120
100
1995 1997 1999 2001 2003 2005 2007 2009 2011
4a Série do E.F. 8a Série do E.F. 3a Série do E.M.

12. Leading to low rate of innovations
12
Patents per Population and PISA
USA
CHE
NOR JPN
SGP
DEU KOR
FRA
GBR
NLD
SWE
CAN
ITA
F IN
AUS
SPA
ISR
DNK
AUT BEL
BRA RUS
IRL
TUR
NZL
LUX
TUN
POL
MEX
CZE
SVN
GRC PT CHI
PAN URY
THA
L IE
ISL
HRV
QAT
COL
SVK
EST
BGR
LVA
KAZ SRB
ARG
IDN
LTU
ROM
TUN
PER
2,00
0,00
-2,00
-4,00
-6,00
-8,00
-10,00
350 400 450 500 550 600
PISA 2009 - mathematics
ln(patents/population) - PCT international applications

13. It is Possible to Change!
280
260
240
220
200
180
160
140
Quality of Education in Selected Municipalities
2005 2007 2009 2011
SOBRAL FOZ DO IGUACU RIO DE JANEIRO SAO PAULO

14. Demographic Transition

15. Implications of Demography
• Education -> more money, need fewer teachers?
• Health -> more money, more beds available?
• Crime -> less crime?
• Labor Market -> less people?
• Pensions -> public deficit?
• Imigration -> problem or solution?

16. Conclusions
1) Access to schools has improved substantially
2) Led to fall in inequality after a long time
3) But high productivity gap & low growth
4) Skills gap
5) Managerial practices, legislation, competition
6) Leading to low rate of innovations
7) Fall in potential growth rate
8) Management in public schools is essential

17. Naercio Menezes Filho
Professor of Economics
Insper Institute of Education and Research
University of Sao Paulo
naercioamf@insper.edu.br