Published by MIT Press, 2001
CDE Relevance: Parts of this book have been assigned as required reading for a CDE course on growth and development.
In particular, these include the following chapters:
2: "Aid for Investment"
3: "Solow's Surprise: Investment is Not the Key to Growth"
4: "Educated for What?
8: "Tales of Increasing Returns: Leaks, Matches, and Traps"
9: "Creative Destruction: The Power of Technology"
11: "Governments Can Kill Growth", and
12: "Corruption and Growth"
Citation: William Easterly, The Elusive Quest for Growth, MIT Press, 2001.
The Elusive Quest for Growth: An Economist's Adventures and Misadventures in the Tropics
In chapter four, on education, Easterly picks apart the traditional arguments for the role of increasing human capital in spurring growth. He notes that most countries have invested heavily in primary and secondary education in the three decades from 1960 to 1990, but that this educational investment has not been associated with any significant returns to growth. The World Bank, experts like Gregory Mankiw, and the world of academics had been supposing that education was a miracle cure, but the data just don't yield that conclusion.
Easterly argues that it's a problem of coordination. Without opportunities for people to use their skills, the increase in human capital won't lead to anything productive. In fact, in economies where there's little productive use for skilled labor, people will be most tempted to work in rent-earning sectors, which pretty much means in things where they can lobby the government. Somewhat tongue-in-cheek, he notes that economies with a lot of lawyers per capita grow slower than those with more engineers relative to the population.
That's not to say that education isn't a good thing. It just doesn't look to be the silver bullet for growth.