How Japanese experience and economic theory provides a guidance for China’s educational development to promote economic growth ? Presented by Tianze Shi, Yuhang Liu, Tianyu Li, Jiayi Zheng

Japan’s experience of economic growth due to education Meiji period: 1. Thousands of students were sent to U.S. and Euro. 2. Hire large numbers of westerns to teach modern science, math, technology, etc. 3. Revised Education System Ordinance 4. Change in in the ideological context of education.

Japan’s experience of economic growth due to education Economic development in Meiji Period: 1. Industrializing 2. Rapid economic growth 3. Modernization development

Japan’s experience of economic growth due to education : The diversification of the education system: Vocational School Order & Professional College Order Compulsory education was extended from four years to six The expansion of secondary and higher education

Japan’s experience of economic growth due to education Postwar: The extension of compulsory education to 9 years Laws related to improving the school and learning environments Promotion of industrial education and science education

Japan’s experience of economic growth due to education Post war economic growth: 1. The hyper-rapid growth stage: from 1950s to late 1980s 2. Japan’s GDP exceeded UK in 1966, France and West Germany in 1967, became the second largest capitalist country; GNP exceeded the U.S in 1987

Education Reform in the 1990s Reduce the teaching of the mere knowledge or rote memorization material More flexibility in the curriculum Reduced teaching time volunteer work, work experience should be upgraded

Endogenous Growth Model Economic growth is generated from within a system as a direct result of internal processes. It holds that investment in human capital, innovation, and knowledge are significant contributors to economic growth. Development of new form of technology innovation, efficient and effective means of production.

Endogenous Growth Model (con’t) Contrasts with neoclassical economic model (external factors: Saving rate, Technological progression) Assume constant MPK if there is an increase in Human Capital

Human Capital One of the most important factor in endogenous growth model to facilitate economic growth Human Capital: Quality of workforce(Knowledge, skill, talent, value) through Education

Human Capital (con’t) Productivity growth is more rapid where countries have higher levels of average schooling At an early stage of economic development, the level of education plays an important role in technological catch-up( Japan Meiji period)

Current Situation of China In order to facilitate long-term economic growth, China needs to enhance human capital Take Xi’an, Jiangsu and Guangdong as examples. Guangdong: Low human capital, now high GDP growth, assembly industry( mainly depend on U.S., Korea,etc.), long-term economic growth??? Xi’an, Jiangsu: High human capital, economic growth is increasing, long-term growth

Adjusted savings: education expenditure (current US$): Education expenditure refers to the current operating expenditures in education, including wages and salaries and excluding capital investments in buildings and equipment

Adjusted savings: education expenditure (% of GNI) Education expenditure refers to the current operating expenditures in education, including wages and salaries and excluding capital investments in buildings and equipment.

Education expenditure Tertiary school enrolment gross rate: China: 24% Japan: 60% (from world bank) Even though Education expenditure is increasing, the expenditure in some poor areas( Gansu, Ningxia) is not increasing significantly. Teachers wage: China much lower than Japan Also high-performing teacher gets more reward in Japan Japanese tertiary education institutions are more attractive than Chinese Chinese talents loss higher than Japanese

Recommendation: Expand expenditure on education: i) Perfect educational software and hardware facilities. Attract more overseas students, reduce domestic talents leave. ii) Equal distribution of expenditure in different areas and fields. Narrow rural-urban education gap, including quality of teaching, teaching environment, teachers wages, etc.

Education Reward(Fellowship) Importance of Education Reward: 1. Motivate the students to study hard, 2. Offer opportunities to students who are not able to continue further study. 3. Attract foreign students to study in China( attract talent)

Education Reward In Korea, the life of a student who enters the Seoul National University(best university in Korea), is guaranteed. However, in China, the situation is quite different. This kind of “reward” helps to enhance the human capital better in Korea than in China.

Application in Education Reward Education reward contributes to literacy which helps to enhance Human capital China needs to increase public spending on education reward. Level up the reward of creativity to promote innovation. (As in Japan, even though high education reward, the creativity is not increasing rapidly: patents are not increasing much every year)

Monthly Average Salaries of Public Higher Education Faculty, Using U.S. PPP Dollars

Salaries of public higher education faculty 1.Salaries of public higher education faculty in China is the lowest(nearly 1/5 of Japan’s, 1/10 of Canada’s) 2.Education faculty is a very important factor to influence human capital: low salaries → high skilled people not prefer to teach → Teachers with low skill → Students are not well educated → Weaken human capital

Salaries of public higher education faculty Recommendation: 1. Government take actions(raise salaries, respect for teachers) to improve status of teachers in order to attract more skilled people to be teachers. 2. Increase public spending on teacher training to enhance the quality of teacher

current situation of oversea study AS the increased number 1.High capital outflow Because of the global downturn, many developed countries treat international students as the important educational investment source. Almost, the scale of Chinese overseas students consumption market is 40 billion US dollar, most of these are cash, China also has become the largest overseas students exporting country.

current situation of oversea study AS the increased number 2.High brain drain rate Only a quarter amount of people choose go back to China. Foster at Home, harvest out home, a Chinese education official said.

Skilled Labor Force Job-hopping- technical personnel management personnel Innovative talents

Expatriate Environment Others Financial Remuneration Development Opportunity Reasons of not coming back

Precedent Japanese main experiences ： 1.Increase the wage level, especially for the top talents. 2.Corporation makes contracts with talents.

Precedent Korea main experiences: Allow to dual nationality in (No obvious effect, but have a nice expectation )

Suggested Solution 1.Policy: Performance reform, not by seniority Promote social equality and justice Support the corporation, create work opportunities Contract with high cost of training Maybe try dual nationality

Suggested Solution 2.Financial: Increase the wage level Subsidy Money award

Suggested Solution 3.Culture and environment. Enterprise cultural construction Promote the environment development and life quality.

Brief Conclusion 1.Economic growth and Japanese experiences show that human capital plays an important role in economic growth 2.China needs to do some reformation to enhance human capital to promote economic growth: Enhance education expenditure, increase education reward, raise the social status of teachers, attract students who study in abroad to come back, retain skilled labor force.

Questions? Thank you !