The Currency of Knowledge: Education and economic growth in Latin America

Abstract

In the early 1960s, Latin America was on the brink of significant economic growth, with
school attainment and income levels well ahead of East Asia. However, by 2000, despite
greater financial and political efforts to develop their education system to the standard of
fully developed countries, Latin America had already been well surpassed by East Asia. By
considering the influence of education and human capital accumulation, this paper
endeavours to rationalise the disparities between the economic failures of Latin America by
comparison to the economic prosperity of East Asia. Internationally standardised cognitive
testing consistently shows Latin America below East Asia, indicating a greater quality of
education in East Asia. Moreover, Latin America appears to experience some degree of
difficulty in retaining its human capital due to ‘brain drain’. As such, whilst the Latin
American labour force continues to grow, the average level of education is deteriorating,
which in turn adversely affects economic prosperity.