Welcome back to our second lecture in module 3. We are talking about economic development, economic wealth. And we've discussed GDP per capita and we've talked about natural resources potentially as an explanation for why ca, some countries have a higher GDP per capita than others. And we've kind of dismissed that and said that G, natural resources doesn't seem to explain very much at all. And this is a very complex topic, I'm sure we could talk at great length, and there are books and, and numerous papers and articles written about each of the subjects that we're discussing, so we're, we're doing only of the briefest justice to each of these topics. So I encourage you to spend your own time studying a little bit more on this and I'll provide you a, a resource that may be helpful to some of you at the end of the module if you want to learn more. Let's talk about in this lecture. A second reason that might exist for the differences across nations and across time in economic wealth creation. What I often hear from students when I ask this question is, will quickly say it must be, if it's not natural resources, it must be something like education, and we're talking about education, we're talking about human beings. We're talking about something that is sometimes referred to as human capital, which is the power of education or learning to allow humans to create wealth, to add value, to innovate, and that's a very attractive answer to this question. Obviously as a professor I believe in education. So I just want that to be out there very clear from the get go, so you don't misunderstand what we'll discuss here. So when we ask, when we talk about that, it seems that it would be very attractive if education were the answer. And I've already told you there's not an answer, so don't expect there to be one from this from this factor either. But it would be very enticing if, if education were the answer because it would simply be very easy for countries if they start to develop some resources to invest much more in education. And perhaps they should do that, in fact there is a lot of data that indicates that investment in, in education is very important to economic wealth, but what we want is a formula for an answer to this to this question, the model or something that would let us know simply what we had to do to create wealth. And I don't think you'll find as we discuss this that education is that simple of an answer. Let's show you why. When we come over to our list of countries we, we see again this great diversity. How would we measure though, we, we're measuring wealth, with GDP per capita. How would we measure knowledge creation or education? There are a lot of ways to do that. We could look at the completion rates of primary or secondary education even tertiary, higher education, completion rates across countries perhaps the simplest measure would be to look at something like literacy rates. And what I have here is one source from the central intell, Central Intelligence Agencies world fact book data on literacy rates. So this is simply the percentage of people in economy who are 15 years or older who can read or write. And as we look at this list we see some countries that report a 100%, or almost a 100%, of their citizens being able to read. And as you look at this list you see some countries that were not at the top of our other list of GDP per capita. For example, North Korea is not generally considered to be one of the wealthiest countries in the world. In fact, it is one of the poorest countries in the world. When we see others, we see Norway. Which is, was one of the wealthiest countries in the world that, that also has a high literacy rate. So that, that we see kind of some confusion. We had, we see a, a, a less developed country, North Korea, with a high literacy rate and we see a very well off country Norway, with a very high literacy rate. So right, that right there should show us that it can't be the case that we simply educate everyone in a society and instantly the society will be well off. Looking a little further, we see Cuba, which is a country that's also at the bottom of the list when we look at economic wealth. And we also see an interesting correlation we see a high number of countries from the former Soviet Union, including Estonia, Latvia, Georgia, and I could keep going. Many of these countries here, where formally part of the Soviet Union, and these countries had free education not only, you know, educating people to read and write, to make them literate, but free education all the way up to college and despite those high literacy rates and those high education rates and the investment. Those countries are not at the top of the list of wealthiest countries in the nation. These, these countries from this former Soviet Union some struggle quite a bit if you look back at our GDP per capita list. So, it can't be the case that all you have to do is simply provide books and teach people. Now it's not saying that, that's not very important. Once again, do not get me wrong. I'm a professor, I believe in education. But being a intellectually honest professor, I know that it's not that simple. It is the case though, that there does seem to be some complex relationship over time between investment in education, development of other factors like in infrastructure developing a, a great road system, communication system over time seems to be correlated along with education, with economic development over time, so it's not sufficient. So, for example, if a country just said, hey let's teach everybody for free. We'll invest, but there aren't any jobs, they haven't created an infrastructure. They don't have a, a system set up it, it won't be enough. It's not sufficient to guarantee or even be highly correlated ultimately with economic success, unfortunately. We wish it were that simple, but it's not.
