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Trends in Human Capital Formation in Developing Countries: Background

 
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Trends in Human Capital Formation in Developing Countries: Background
   

The level of human capital in developing countries has on average improved over the past three decades, owing to enhanced government commitments in formal education and vocational training as well as increased incentives of firms to provide enterprise training. Section II.3 describes recent trends in human capital formation, highlighting general trends and regional disparities. Trends in human capital are reflected in numerous educational indicators including adult literacy and educational attainment of the adult working age population. While education level of the working age population provides a picture of the current state of human capital, focusing on the present state of education among students and training activities among enterprise workers sheds light on the future prospects of human capital. To this end, the current state of education and training is also described.

Trends in Human Capital Adult literacy is one of the common indicators used to capture an important, yet limited, aspect of human capital in developing countries. The benefit of this indicator is that it is, in general, readily available in most countries and is relatively easy to compare across different countries and regions. It is, however, also quite a limited indicator in the sense that it fails to capture many intricate features implied in worker skills and productivity. Adult literacy is thus considered to be a good indicator to capture some extent of human capital for least developed countries where a large fraction of the adult population lacks basic education. For these countries, alternative indicators such as educational attainment are not informative since it tends to be very low in many countries with small variances. According to UNESCO (2002), adult literacy7 in developing countries has improved substantially over the past 20 years. That is, the literate working age population increased from 70 per cent (of total working population) in 1980 to 80 per cent in 2000. However, the remaining 20 per cent of illiterate adults in 2000, a large fraction of whom are female and are concentrated in highly populated developing countries in South and East Asia8, is yet a non-trivial concern among policy makers.

Formal education in developing countries has become widespread over the past three decades, owing to an increased awareness among policy makers and individuals of the importance of this issue. The major event in this context is the global initiative called Education for All, an intergovernmental effort to increase quality and quantity of basic schooling in developing countries. All these past efforts have led to an increased educational attainment among the working-age population in developing countries.

Table II.5 shows cross-regional trends in average years of schooling among the workingage population. It indicates that all developing regions show substantial gains in average school years. There are, however, large cross-regional disparities, with Latin American and the Caribbean (LAC) and East Asia and the Pacific (EAP) regions making significant gains while South Asia (SA) and sub-Saharan Africa (SSA) achieve only modest gains.

Since most workers in developing countries, and in particular the least developed countries, have at most basic schooling, numbers in Table II.5 do not clearly indicate the extent of an adult’s school attainment at the upper-secondary and tertiary level. Table II.6 thus presents an adult’s educational attainment at the post-basic schooling level.

Although sample countries are rather limited, it provides some insights to the extent and the regional disparities of post-compulsory schooling. First, consistent with trends in the average school attainment (Table II.5), the LAC-region shows the highest post-basic school attainment for the working-age population. The African region is presumably largely behind LAC and EAP regions, in the light of the fact that Tunisia is among the countries in Africa with relatively high educational attainment. Table II.6 also indicates large intraregional disparities with stark differences in post-basic school attainment between Chile and Paraguay for the LAC-region and between Malaysia and Thailand for the EAP-region. To learn more about this author, visit OECD Development Centre's Website.

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OECD Development Centre
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Created in 1962 by the Organisation for Economic Co-operation and Development (OECD) in Paris, the Development Centre is an interface between OECD Member countries and the emerging and developing economies. The Development Centre occupies a unique place within the OECD and in the international community. It is a forum where countries come to share their experience of economic and social development policies. The Centre contributes expert analysis to the development policy debate. The objective is to help decision makers find policy solutions to stimulate growth and improve living conditions in developing and emerging economies.
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