TY - JOUR
T1 - The political economy of education and development in an open economy
AU - Bourguignon, François
AU - Verdier, Thierry
PY - 2005/8
Y1 - 2005/8
N2 - If the price effect of opening up a developing economy may be expected to act as a disincentive for investment in human capital, the opposite is likely to be true of the income effect, especially in the presence of credit market imperfections among the poor. It is shown in this paper that this may no longer be the case in a society initially dominated by an oligarchic capitalist elite that is afraid of losing its political control in favor of an educated middle class. Although it may sometimes be in its interest to democratize by subsidizing education when the economy is closed, incentives to do so disappear when the economy is open to trade or factor flows.
AB - If the price effect of opening up a developing economy may be expected to act as a disincentive for investment in human capital, the opposite is likely to be true of the income effect, especially in the presence of credit market imperfections among the poor. It is shown in this paper that this may no longer be the case in a society initially dominated by an oligarchic capitalist elite that is afraid of losing its political control in favor of an educated middle class. Although it may sometimes be in its interest to democratize by subsidizing education when the economy is closed, incentives to do so disappear when the economy is open to trade or factor flows.
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U2 - 10.1111/j.1467-9396.2005.00522.x
DO - 10.1111/j.1467-9396.2005.00522.x
M3 - Article
AN - SCOPUS:28144453331
SN - 0965-7576
VL - 13
SP - 529
EP - 548
JO - Review of International Economics
JF - Review of International Economics
IS - 3
ER -