Bulletin Spring‧Summer 1980

of higher education to economic growth. This of course was an idea which went back at least to the time of Adam Smith and his Wealth of Nations, in which he said the wealth of the nation was the annual output of its labour. He was then concerned with how to make labour productive, and one way of course was through education. The idea had been revived from time to time ； but it was particularly at the end of World War II that higher education was considered one of the great forces for economic growth that countries all over the world could use to raise themselves to higher levels. And reference was made to the fact that the first nation to be indus- trialized was Great Britain, which had relied on a system of higher education. The United States had gone farther with industrialization and economic growth than any place else in the world, and this was ascribed in part to the heavy emphasis upon education: our land grant to universities, etc. A second expectation at the time was that expansion of education in general, and higher education in particular, would help spread individual freedom and political democracy around the world. It was believed (in the United States it was looked upon as a Jeffersonian idea) that an educated citizenry was the best source of democracy, and the assumption was that as the world became more highly educated and more leaders had gone through higher education, democracy would flow around the world as a consequence. A third expectation was that through higher education, we will expand not only equality of opportunity, but also equality of income, as never before in the history of the world. It was also at that time quite frequently said that we were on a historic course which was leading us from elite higher education, where a very small number of people, usually chosen on a hereditary basis, were given higher education, to mass higher education, looking forward to the day when there would be universal higher education. I would like to turn to each of these and say what we have learnt in the meantime, where the expectations may have been correct and where they may have been quite exaggerated. First of all, on economic growth. It can be said that we have learnt that higher education, at least by itself, does not open the doors to economic growth ——or if it did, as once expected, we would then expect countries like Egypt, India and Ceylon ， which went absolutely all out in the expansion of their systems of higher education, to be much more productive nations than they have turned out to be. And we have quickly found that, while higher education might be a necessary condition of growth, it was not by itself a sufficient condition for growth. In fact we have found that some countries could undertake a great deal of economic growth without any higher education of their own at all, as in some of the oil countries in the Middle East like Kuwait, where they imported their educated labour from abroad and have only more recently begun training of their own. We have also quickly discovered that higher education could be rather overdone, and too many highly trained people became an economic liability to their nations, and to some extent the source of a good deal of political unrest as well. So we have come to realize (I am talking in very general terms and not with technical evidence at all at this point) that higher education makes a positive, but a rather modest, contribution to economic growth. There have been studies by now in a number of different countries of what economists call the residual factors in growth (education being one) and also rates of return. The general conclusion is that higher education, rather than causing growth, more nearly accompanies it. It is part of the growth process and the result of it; to some extent it is necessary to that process, to some extent it results from it, but it is not as great a source of growth as we once expected. Some of the early figures were really quite misleading: looking at rates of return on investment in higher education, without realizing that these private rates of return, which were calculated for countries all over the world, did not take into account the social costs of educating young people, but only the private costs, which were often highly subsidized. And then in many countries the rates of return initially done on highly educated people really reflected a very distorted salary structure, as the educated people in the country inherited the salaries of the expatriates who had been running the country. And so we have had many disappointments along the way. W e have probably had greater investment in higher education by and large around the world than was entirely justified by what we now know. However, it can be said that no industrialized system can progress very far without developing an adequate system of higher education. I would like to 5