Link education to industrial upgrading: a comparison between South Korea and China

Abstract

Purpose – Why is the “education to industrial innovation” equation not working in China? Why has education development contributed to South Korea’s success but not promoted technology development and industrial upgrading in China? The purpose of this paper is to compare South Korea and China and try to address that puzzle. The author will also identify which mediating factors are crucial in linking education development to industrial innovation and industrial upgrading. Design/methodology/approach – This study will use the historical comparative method to compare South Korea and China. The author will try to explore the differences in education and industrial upgrading in the two countries, and identify which factors are producing different educational development effects, mainly by narrative comparison. Data will mainly come from online databases such as Statistics Korea, the Center on International Education Benchmarking, the UNESCO Institute for Statistics, China Education Statistics and the World Bank, as well as from second-hand resources. Findings – In summary, this research has revealed that education itself or the production of human capital may not be sufficient conditions for technology innovation or industry upgrading. For human capital to affect industrial upgrading positively, it is not enough for the Chinese government just to invest in education. Other intermediating market and social contexts are crucial too, especially the allocation of resources between the private and the public sectors, and the existence of a proper employment structure. Originality/value – The role of education in economic development for the developing world is debated a lot. However, there is little development study research which directly explores the relationship between education and industrial upgrading via macroeconomic analysis. In a globalized world, the situation of international industrial value chains is an important element for sustainable long-term development. Industrial structures and their transformation are becoming more and more important for developing countries. While most past research has treated the absorbing economy’s structure as a condition that determines education’s contribution to development, this paper will treat the industrial structure as the dependent variable, and analyze how education would contribute to the upgrading of industrial structure and, in turn, be of benefit to sustainable economic development.

Interaction between Higher Education Outputs and Industrial Structure Evolution: Evidence from Hubei Province, China

“…Fourth, none of the indicators of HEO contributes to industrial structure upgrading, partly due to the lack of effective channels between HEO and ISE. In addition, as revealed by He [5] higher education itself is not a sufficient condition for industrial structure upgrading, since other intermediating markets and social contexts are crucial too, especially the rational allocation of educational resources to both the private and public sectors, rather than one or the other. Thus, to advance the industrial structure, it is crucial to develop a friendly and fair environment and optimise the resources between different sectors.…”

“…On the other hand, scholars have highlighted the importance of higher education for ISE, and have demonstrated that higher education can accelerate ISE through knowledge spillovers, technological innovations, and entrepreneurial ecosystems [18,19]. He [5] and OECD [9] claimed that a large pool of creative human capital is crucial for making such approaches possible; this capital tends to include masters and doctoral students. Some empirical examples confirming the above-mentioned viewpoints focus on South Korea, Hong Kong, Singapore, Taiwan, and Japan, all of which, through massive investments in higher education, have realized industrial upgrading and a successful transformation from low-value-added exportation to high-value-added exportation [20].…”

“…HEO was originally conceptualised as a component of the theory of educational production functions, which considers schools as sites where various educational resources interact to produce educational outputs [31]. Scholars mainly measure HEO using the gross enrolment rate [5], the educational achievement levels of university students [32], and the graduation rate [33]. A few have considered other approaches such as employment rates [30], course evaluations [34], and the proportion of university students in the labour force [35].…”

“…By using Equations (3)- (5), the values of industrial structure upgrading and rationalisation in Hubei province from 2004 to 2013 were obtained ( Figure 5). Overall, the level of industrial structure upgrading in the Hubei Province is improving and can be classified into stages.…”

“…Benhabib and Spiegel [4] indicated that higher education has both a direct impact on the economy through the generation of worker skills and indirect effects through the facilitation of technology diffusion. Existing empirical studies have mostly concentrated on the statistical relationships between aggregate economic growth rates and education levels [5] while neglecting the relationships between the quality of economic development and other higher education outputs (HEO). Minsky [6] indicated that the industrial structure embodies the level of development in an economy, and its rationality directly determines whether the economy has the potential for rapid growth.…”