Education

Conventional wisdom states that education in South Africa is failing to prepare learners for entry into the modern economy. On the one hand, South African employers complain about the lack of qualified job applicants, while on the other youth unemployment can be as high as 70 percent in certain neighborhoods. There would appear to be a direct relationship between very high unemployment levels and the persistence of poverty among about half of the population. It may be surmised that there is a relationship between high unemployment, persistent poverty, and very high crime rates. (South Africa’s murder rate is approximately six times that of the United States.) What to do about education–especially primary education in the rural areas and the townships–is the focus of lively debate in South Africa. This week, the minister of Basic Education announced an improved matric pass rate for this year–the number of South African students who have graduated from high school. This is the fifth consecutive year that the matric pass rate has increased. A total of 78.2 percent of students passed matric this year. Some commentators take this as evidence that education is in fact improving in South Africa. Others, however, argue that the matric pass rate is a poor indication of educational quality, while others still argue that far from an indication of improving education quality, the system is failing its learners while serving as a political back-slapping strategy; crucial in an election year. The ongoing woes of the education system do not appear rooted in money. South Africa devotes almost a quarter of its national budget to education. Instead, conventional wisdom lays the blame for poor performance of South African learners with a range of issues from an under-developed culture of learning to very poor quality teaching. There is also an important political dimension. The powerful South African Democratic Teachers’ Union (SADTU) is among the largest elements in the Congress of South African Trade Unions (COSATU), which with the African National Congress (ANC) and the South African Communist Party (SACP) is part of the tripartite alliance that governs the country. SACP and COSATU do not contest under their own names for seats in parliament; they run under the auspices of the ANC. The argument is that SADTU is highly resistant to change. What to do about South African education and whether it is improving or not, is by no means simple. If it were, comprehensive reforms would have been introduced a long time ago, there being no lack of political will or concern for education reform among the politically influential in South Africa. George Ward, a former U.S. ambassador to Namibia, now at the Institute for Defense Analyses, has just published an excellent overview of the relationship between education, unemployment, and poverty. He includes useful links to recent sources.

Closing the “skills gap” is high on the list of priorities for Washington policymakers. But the debate behind the skills gaps—whether it exists, how large it might be, and what to do about it—is much less clear-cut than a casual reading of the papers would suggest. A skills gap means that there are plenty of jobs (or strong labor demand), but not enough of the right kind of workers to fill them (or weak labor supply). References to a skills gap are often coupled with the buzzwords "STEM” and "manufacturing"; we are told there are not enough scientists and engineers to fill the glut in high-tech and manufacturing jobs. Then there is the skills gap at the lower end of the skill spectrum, this time coupled with “unemployed”; if only unemployed Americans had the right skills, we are told, they would be employed. In the media, the most widely cited evidence for this skills gap is employer surveys; around half of U.S. employers say they have difficulty filling positions—a higher proportion than nearly any other country in the rich world. They say the most common types of jobs going vacant are a mix of high-skilled and STEM positions like engineers and IT staff, as well as middle-skilled jobs like “skilled trade workers,” mechanics, or nurses. The manufacturing sector, where international competition is tight, purports to have the hardest time finding workers. According to one survey, 67 percent of responding manufacturers reported a “moderate to severe shortage of available, qualified workers.” But definitive, hard evidence of a skills gap is actually hard to come by. It is true that job vacancy rates have increased slightly in the past few years amid persistent unemployment. The vacancy numbers, however, are small, as is the increase. In 2009, about 2 percent of the labor market was vacancies. Today, it is about 3 percent. The rate for manufacturing is thought to be higher, perhaps 5 percent. But even an informed observer could be forgiven for confusing a 3 to 5 percent vacancy rate as being natural turnover and churn in a healthy labor market. A labor economist would locate a skills gap by watching wage trends. If employers are having difficulty filling a job, they would increase wages to entice more prospective employees. While there has been some wage growth in specific middle-skilled jobs like healthcare technicians, this is not the case for high-skilled STEM or engineers. And in manufacturing, wages have been flat. Could it be that anxiety over a skills gap is overblown, and employers are saying one thing and doing another? Two researchers at MIT tried to answer that question. They looked at how long job openings remained vacant at manufacturing firms. Though their study suffered from a low response rate of just 36 percent, they still found some telling trends among the 900 manufacturing firms that did respond: only about one-quarter show any signs of hiring difficulties, and high-tech firms that demanded the highest skills had the least difficulty. These findings fly in the face of employer opinion surveys and conventional perceptions about skills gaps. Or it could be that the skills gap is being masked in other ways that are tricky to parse out. Measuring labor shortages has long been a challenge for economists. The Bureau of Labor Statistics has an infamously poor track record at predicting what kinds of jobs will be in the highest demand just a few years out. For the high-skilled STEM fields, it could be that employers are unwilling to pay what a lot of well-educated Americans have come to expect. In a labor market that is less closed and more global, employers can move STEM jobs to lower-wage India, for example, instead of stomaching the high cost of American employees. This could also help explain why such a large proportion of American STEM PhDs end up working in non-STEM fields for the likes of McKinsey and Goldman Sachs, which pay handsomely. For less-educated Americans, some economists say the skills mismatch presents itself in the form of rising income inequality. This is the theory most famously posited by Claudia Goldin and Lawrence Katz in their seminal study The Race Between Education and Technology. They claim that up to half of the growth in inequality since the 1950s can be attributed to an education-technology mismatch, with technology advancing much faster than educational attainment. But the policy implications are not so consoling. A wholesale upskilling of the U.S. workforce may be plausible for future generations, but it is wishful thinking for today’s unemployed. The big idea in Washington is to retrain the unemployed. But unfortunately most retraining programs have had disappointing results for dislocated workers, especially when they are older. The retraining programs that work best tend to be in locations where jobs already exist and the person being retrained is highly motivated because they can see the job at the end of the tunnel. The fact of the matter is that the unemployed are often trapped in locations where there are not enough jobs for them. This is less a skills mismatch than a location mismatch.

The Organisation for Economic Co-operation and Development (OECD) released the results of its fifth Programme for International Student Assessment (PISA) study yesterday, with few surprises. Conducted every three years, the test compares the performance of 15-year-olds in reading, mathematics, and science in countries and cities around the world. Once again, Asian students dominated the top rankings, with those in Shanghai, China scoring the highest marks across the board. The United States showed little change, but its rankings have fallen as other countries have done better. This year it was even surpassed by a newcomer to the test - Vietnam. Critics love to bash the PISA tests, saying they have serious conceptual errors, are culturally biased, and measure little more than how well kids do on one specific test. But PISA has become a global yardstick for measuring education systems, in part because few other comparable comparative tools exist. Over 500,000 students in sixty-five countries participated in the most recent PISA 2012 test. PISA also supplies data to track performance over time. The report, for example, notes that several countries - including Mexico, Poland, Portugal, Tunisia, and Turkey – have demonstrated "consistent improvement" in math performance. Among the countries that dropped in rankings, several are wealthy Western nations. The United States, for example, fell across the board from its already mediocre position – down a full seven places in reading and five in science – as other countries leapfrogged it. Also notable is the widening gap between the best and worst performers: the report finds that “the equivalent of almost six years of schooling…separates the highest and lowest average performances of the countries that took part in the PISA 2012 mathematics assessment.” Interestingly, the report finds that income differences account for only 30 percent of the variation in mathematics performance between countries, and 21 percent of variation overall. Indeed, some poorer countries do quite well on the test. Vietnam, for example, scored well above the mean (and the United States) in mathematics, yet has a GDP per capita of just $4,000. In contrast, the wealthy Gulf countries of Qatar and the United Arab Emirates (UAE) performed poorly. Qatar, for example, is ranked sixty-third overall out of the sixty-five countries that participated. The four Arab countries that took the test (Jordan, Qatar, Tunisia, and the UAE) all scored below average – a disappointment given their significantly increased levels of spending on education over the past decade. Tunisia, for example, has tripled spending on students in secondary school since 2001. Although the report notes positive trend lines in the Arab countries, Tunisia, Jordan, and Qatar are still stuck in the bottom decile. Even though the PISA test is far from a perfect measure, it is an important indicator of how students compare across borders and can provide an indication of future work-force competitiveness. Those at the bottom would be well served by understanding the educational reforms of countries such as Ireland and Poland that have seen strong gains.

The Space Race of the 1960s spurred groundbreaking investments in research and education, inspiring a generation of Americans to enter the fields of science and engineering. These investments not only propelled the United States to preeminence in space exploration, but also planted the seeds for future innovation and economic competitiveness in many industries. A new backgrounder, Space Exploration and U.S. Competitiveness, explores the advancements produced by the U.S. space program, and discusses the challenges and opportunities that the program faces today.

While it is easy to despair at the many failings of the U.S. political process, it is important sometimes to celebrate the amazing resilience of American society. My cause today is the latest annual Open Doors report from the Institute of International Education, which examines foreign students studying at American universities and U.S. students studying abroad. The encouraging news is that last year nearly 820,000 international students attended U.S. colleges and universities, a record high and an increase of 7 percent over the previous year. New enrollments were up 10 per cent. That’s nearly a million smart young people who will either remain in the United States after they graduate and strengthen this country, or return home and bring with them the values and skills they learned at some of the world’s greatest schools. U.S. universities are a magnet for talent. In the most recent ranking by Times Higher Education, 15 of the world’s top 20 universities are in the United States. The U.S. government did its best for several years after the 9/11 terrorist attacks to drive those students away by making the process for obtaining a student visa far more difficult, and the number of foreign students did not grow between 2001 and 2006. Other countries like Canada and Australia took advantage by expanding their programs for foreign students. But the State Department has ironed out most of the problems in the student visa process, giving priority to assuring that student applications are considered in a timely fashion. And the number of foreign students in the United States is again growing at record rates (though to keep the numbers in context, less than 4 percent of all higher education students in the United States are international students). The benefits to this country are extraordinary. As former Secretary of State Colin Powell put it, foreign students “return home with an increased understanding and often a lasting affection for the United States. I can think of no more valuable asset to our country than the friendship of future world leaders who have been educated here.” Foreign students earn 40 percent of the science and engineering PhD's and 65 percent of computer science doctorates in the United States, and those who remain make very important contributions to the U.S. economy. So the news that foreign student numbers are again growing steadily is a cause for celebration. What is not is how difficult we continue to make it for them to remain here and build careers if they wish. Our outdated immigration rules block foreign students at every turn. When they first apply for the visa, a student must persuade the U.S. government that he or she has no intention of remaining in the United States. If they later change their mind, there are strict quotas on the number of foreign students who can stay on temporary visas. And for the truly determined, they can face waits of many years to move from a temporary visa that restricts work opportunities to a permanent resident green card and eventually citizenship. The comprehensive immigration reform bill passed by the Senate and now languishing in the House deals with all these issues. It would allow students to declare “dual-intent” when they apply for a visa (ie. the student might return to his country, but he might also choose to stay in the United States after graduating). It would increase the number of temporary work visas based on the strength of the economy, would make those visas less tied to a single employer, and would permit the spouses of visa holders to work in the United States. It would lift per country limits on green cards that produce waits of as much as 10 years for would-be immigrants from big countries like China and India. And it would offer a new fast track to green card status for foreign students who earn advanced degrees in the STEM fields. All of these provisions enjoy strong support from both Democrats and Republicans. If made into law, they would multiply the potential gains to the United States from foreign students. But -- to return to the despair bit -- the Congress remains unable to get past the politics. The Senate bill has gone nowhere in the House, and the House’s promised alternative (piecemeal reform) appears to be a campaign talking point rather than a genuine strategy. Happily, international students are ignoring the nation’s capital and flocking here regardless. That is encouraging news, but we could do so much better if Washington would start working for the country rather than against it.

This is a guest post by Emily Mellgard, research associate for the Council on Foreign Relations Africa Studies program. The UNFPA’s 2013 “State of the World Population” report, published today, focuses on “Motherhood in Childhood.” It puts a very necessary spotlight on the alarming rates of girls and young women, mostly in developing countries, who continue to give birth to children while they are still children themselves. The UN states that eighteen is the universal legal age of adulthood and of marriage. About 19 percent of young women in developing countries give birth before they are eighteen. Of those births, 90 percent occur within marriages. Eliminating child marriage is therefore crucial to eliminating adolescent motherhood. And education remains the single most important factor in delaying marriage, and therefore childbirth, until girls are mentally and physically capable of carrying that responsibility. One of the main arguments in the UN report is that it is not just the attitudes and behavior of the girls that must change. The report finds that girls often don’t have the power to make choices over their own bodies, and so their families, peers, and communities must be a part of the change. UNFPA terms this “an ‘ecological’ approach to adolescent pregnancy, [which] is one that takes into account the full range of complex drivers of adolescent pregnancy and the interplay of these forces.” The tragedy of adolescent motherhood is especially widespread in Africa. In Niger for example, 51 percent of girls give birth before they are eighteen. In Zimbabwe it is 20 percent. Indeed out of forty countries that report more than 20 percent of girls giving birth before eighteen, 70 percent are in Africa. West and Central Africa report the highest levels of girls (28 percent), now aged twenty to twenty-four, who gave birth before eighteen. Six percent of those gave birth before they were fifteen. Eastern and Southern Africa report the second highest levels (25 percent) of adolescent childbirth. Sub-Saharan Africa was also the only region in the reporting areas where reports of adolescent motherhood have increased. Adolescent motherhood is considered both a breach of a girl’s human rights, and also a cause of further degradation of their rights. It impedes their personal education and development. Premature motherhood also makes girls more vulnerable to some debilitating medical conditions, and to increased levels of oppression. But this is not just a social and humanitarian issue. The report found that “the lifetime opportunity cost related to adolescent pregnancy—measured by the mother’s foregone annual income over her lifetime,” was a full 30 percent of the annual GDP in Uganda. That is about U.S. $15 billion. In Ethiopia the GDP loss was 15 percent, and in Malawi, 27 percent. In Kenya’s case, “if all 1.6 million adolescent girls completed secondary school, and if the 220,098 adolescent mothers there were employed instead of having become pregnant, the cumulative effect could have added $3.4 billion to Kenya’s gross income every year.” These are formidable reasons to halt adolescent motherhood and encourage girls, their families, and communities, to hold off on childbearing and to stay in education. Women are crucial drivers of social, political, and economic development. They should be encouraged to participate to the fullest.

This is a guest post by Diptesh Soni. Diptesh is a master’s degree candidate at the Columbia University School of International Public Affairs (SIPA) studying economic and political development. You can read more by him at: https://dipteshsoni.contently.com/. Recent statistics by the Economist Intelligence Unit forecast growth in sub-Saharan Africa–specifically South Africa, Angola, Kenya, and Nigeria–to increase from 3.7 percent to 6.0 percent within the next five years. Indeed, there are many reasons to be chirpy about the continent’s growth trajectory: improved fiscal management, sustained crude oil prices, and the high start-up costs for mining ventures mean that the slow shift from export-led to consumer-led growth in China will not be devastating to African economies. Others have cited rapid urbanization and a “demographic dividend” as further reasons to expect big things in upcoming years. But much of the optimism surrounding future growth rests on weak assumptions. The “demographic dividend,” for example, caused by a “youth bulge” that will provide cheap labor is a huge hypothetical. African economies already suffer from a severe shortage of adequate skills in the labor force, and while countries have made strides in increasing access to basic education, the quality of the instruction that students receive in the classroom remains poor. As the 2013 Human Development Report highlights, high fertility rates within Africa were likely a direct consequence of expenditure cuts in education. If Africans are not given a proper education, fertility rates will remain high and the “demographic dividend” will become a youth burden. The belief that rapid urbanization will yield rapid development is also suspect. While it may be true that “large urban centers allow for innovation and increase economies of scale,” as Wolfgang Fengler of the World Bank claims, African urbanization has been ad hoc and chaotic. Governments and donors across the continent have been unable to provide growing urban populations with basic services, let alone viable employment, and as a result many of the poor are stuck in slums. Khayelitsha in South Africa and Kibera in Kenya serve as merely two examples out of far too many. The purported rise of the African “middle-class” also warrants clarification: The African Development Bank deems as “middle-class” anyone earning between $2 and $20 a day, 60 percent of whom fall into the “floating” middle-class between $2 and $4. These people could easily slip back in to poverty. Others such as Citigroup’s David Cowan cite high levels of inequality, which leaves opportunities for businesses to cater either to the emerging wealthy elite or the consuming poor, with little room for a middle-class. American giants such as IBM, WalMart, and General Electric are making inroads into African markets, to say nothing of Chinese investors. While these movements might be harbingers of growth to come, the danger of assuming big growth figures lies in the possibility for complacency. Demographic trends will not yield dividends, nor will large urban centers yield attractive economies of scale, if governments and donors do not step up to Africa’s problems of human and physical development. Africa is well positioned for a grand takeoff, but transforming deeply agrarian economies into global manufacturers will entail transforming large urban and youth populations into productive assets. This will require greater and more innovative investments in infrastructure, energy, education, and social services.

Keeping girls in school has become a priority for those fighting poverty around the globe, and for good reasons. Research shows that the longer a girl stays in school, the more likely she is to delay marriage and avoid early pregnancy. This means lower maternal and child mortality rates, fewer abortions, and improved child health. In addition, a 2011 World Bank study shows that investing in girls’ continued education can boost labor force participation, lifetime earnings, and GDP. However, even though it is clear that investing in girls’ education spurs economic growth and lessens poverty and social instability, millions of girls around the world still face cultural and economic barriers that keep them out of school. One way to counter this phenomenon is to offer poor households conditional cash transfers. CCTs give money to poor people in return for fulfilling specific conditions, such as accessing basic health services, vaccinating children, or sending daughters to school. These programs offer a two-fold approach that breaks the poverty cycle by both providing the poor with additional income and also strengthening human capital with healthcare and education services. The success of one education-specific CCT program, the Female Secondary School Assistance Program (FFSAP), illustrates that providing girls with a small stipend to stay in school has far-reaching benefits. FFSAP, a joint program founded by the World Bank, Asian Development Bank, and Government of Bangladesh, provided female students in grades six through ten with a monthly stipend on three conditions: that the girls maintained a 75 percent attendance rate, scored at least 45 percent on their exams, and remained unmarried. According to a study assessing the FFSAP, CCT money enabled girls to extend their education up to two years, which in turn had significant economic and social impacts. Continued education for girls in Bangladesh led to a 3.6 to 10.6 percent increase in women’s labor force participation. Girls enrolled in the program also delayed marriage by 1.4 to 2.3 years, which is particularly meaningful given that Bangladesh has one of the highest child marriage rates in the world; 66 percent of Bangladeshi girls are married before the age of eighteen. Some data even suggests that the age of marriage for men also went up in part thanks to the program. The initiative in Bangladesh is just one of many impactful CCT programs that have been implemented around the world. International development leaders should consider expanding the types of programs; it is clear that giving every girl the opportunity to complete her education benefits not only women, but entire communities and economies.

Keeping girls in school has become a priority for those fighting poverty around the globe, and for good reasons. Research shows that the longer a girl stays in school, the more likely she is to delay marriage and avoid early pregnancy. This means lower maternal and child mortality rates, fewer abortions, and improved child health. In addition, a 2011 World Bank study shows that investing in girls’ continued education can boost labor force participation, lifetime earnings, and GDP.However, even though it is clear that investing in girls’ education spurs economic growth and lessens poverty and social instability, millions of girls around the world still face cultural and economic barriers that keep them out of school. One way to counter this phenomenon is to offer poor households conditional cash transfers. CCTs give money to poor people in return for fulfilling specific conditions, such as accessing basic health services, vaccinating children, or sending daughters to school. These programs offer a two-fold approach that breaks the poverty cycle by both providing the poor with additional income and also strengthening human capital with healthcare and education services. The success of one education-specific CCT program, the Female Secondary School Assistance Program (FFSAP), illustrates that providing girls with a small stipend to stay in school has far-reaching benefits. FFSAP, a joint program founded by the World Bank, Asian Development Bank, and Government of Bangladesh, provided female students in grades six through ten with a monthly stipend on three conditions: that the girls maintained a 75 percent attendance rate, scored at least 45 percent on their exams, and remained unmarried. According to a study assessing the FFSAP, CCT money enabled girls to extend their education up to two years, which in turn had significant economic and social impacts. Continued education for girls in Bangladesh led to a 3.6 to 10.6 percent increase in women’s labor force participation. Girls enrolled in the program also delayed marriage by 1.4 to 2.3 years, which is particularly meaningful given that Bangladesh has one of the highest child marriage rates in the world; 66 percent of Bangladeshi girls are married before the age of eighteen. Some data even suggests that the age of marriage for men also went up in part thanks to the program. The initiative in Bangladesh is just one of many impactful CCT programs that have been implemented around the world. International development leaders should consider expanding the types of programs; it is clear that giving every girl the opportunity to complete her education benefits not only women, but entire communities and economies.

When people talk about what holds Brazil back, education tops the list (along with infrastructure). The poor quality of Brazil’s public education system limits students’ capabilities and adaptability, creates mismatches between workers’ skills and companies’ needs, and stifles productivity and entrepreneurship. These limits affect the entire economy—hampering economic growth, competitiveness, research & development, and even oil production (as Petrobras has struggled to find skilled workers for its pre-salt finds). Brazil now ranks fifty-third (out of sixty-five countries) in reading, math, and science in the PISA exam, up from dead last in 2000 but still behind Mexico, Romania, Thailand, and Russia. But perhaps most striking in the education system are the country’s great disparities. Brazil’s several high quality public universities—including the University of São Paulo, an internationally recognized university—juxtapose a notoriously weak system of primary and secondary schools. In part it has to do with funding. A sizable chunk of the federal education budget—some 5.5 percent of GDP—goes to tertiary education. Brazil spends almost five times more per college student (with its free public university system) than per elementary school pupil. This top heavy investment disproportionately benefits the rich, whose children perform better on the university entry tests after spending their elementary, middle, and high school years in private schools. The lack of money at the lower levels has translated into too few elementary and secondary schools. With more pupils than classrooms, Brazilian students rotate through schools in shifts, with some attending class for just four hours a day. There are also not enough teachers; with twenty-three Brazilian children for every elementary school teacher, far above the OECD average of fifteen. Brasilia began to address this lopsidedness in the years following democratization. President Fernando Henrique Cardoso created a National Education Plan, which worked to systematize the nation’s sprawling school network. He redirected educational resources toward the lower grades, and improved access to and attendance at primary schools through programs such as Bolsa Escola, which pay poorer families to send and keep their kids to school. At the university level, Cardoso’s administration introduced the first racial quota system. President Lula further increased educational funding—now through Bolsa Familia—more than doubling government spending per student, and opened over 200 technical schools. President Rousseff has followed suit, allocating 75 percent of pre-salt oil reserve revenues to fund Brazil’s education system. Today Brazilians stay in school longer than ever, and nearly double the number of young students go on to graduate from college compared to previous generations. Comparative results are improving as well, with Brazil’s international PISA scores slowly rising from the bottom. Still, big challenges remain. Teachers have protested reforms that would mandate a forty-hour work week (right now only 6 percent of teachers work full-time), and create merit-based bonuses. Teacher absenteeism also remains pervasive, disrupting learning in 32 percent of schools in 2008. For now, though Brazil’s education system is moving forward, many feel it is not moving quickly enough.

I am not a supporter of the faddish idea that America is in decline. Despite all the hullabaloo about the rise of China, the United States still boasts the most formidable military force and the largest, most innovative economy. But as a student of international studies, I am keenly aware that the rise and fall of great nations are often associated with significant historical events. It is hard to deny that the 2008 financial crisis exposed the Achilles’ heel in our economy and accerlated the shift of international power balance. This month, the self-inflicted U.S. government shutdown highlighted the partisanship and immobilism in our political system and undermined our ability to engage with the outside world.  China for example lost no time in questioning U.S. global leadership, urging all the emerging countries to consider building of a “de-Americanized world.” At the same time, an OECD report forecasted that China will overtake the United States in 2016 to become the world’s largest economy. One might argue that these developments do not represent a permanent setback to U.S. global leadership—after all, we continue to enjoy unrivaled advantage in the ability to innovate, a critical pillar of U.S. superpower status. Since the mid-19th century, the United States has been the engine of almost all the major technological advancements. Indeed, nine of the eleven 2013 Nobel Prize winners in science and economics are U.S.-based.  In a 2012 article, Gary Shapiro attributes the U.S. strength in innovation to “[a] can-do attitude, a free market system that rewards savvy risk takers[,] an education system that encourages questions rather than rote learning [, and a] First Amendment that promotes different views without government censorship.” In contrast, any major innovation efforts in China have to struggle with a social-political system that supports censorship and corruption, and suppresses curiosity and creativity. The miraculous economic growth in China, to paraphrase Paul Krugman, was largely the result of perspiration (manufacturing capacity) rather than inspiration (technology innovation).  Take Chinese pharmaceutical industry: despite the size of Chinese pharmaceutical exports—averaging $67 billion annually—virtually none of the revenue is derived from truly innovative products. Up until 2007, roughly 97 percent of chemicals produced in China were generic, and only two drugs—artemisinin and dimercaprol—were developed domestically. The past decade, however, has witnessed the rapid erosion of the financial and institutional underpinnings of innovation in the United States. Our free market system rewards risk takers at the expense of the general public, many of our politicians (and the political system itself) seem to have lost their ability to be effective, and our kids lag globally in math and science. Simply, we have been increasingly unable to innovate, compete, and get things done. As Tom Friedman observed, “too many of our poll-driven, toxically partisan, cable-TV-addicted, money-corrupted political class are more interested in what keeps them in power than what would again make America powerful, more interested in defeating each other than saving the country.” The sapped U.S. strength in innovation is epitomized by the NIH research funding trends. Between 2003 and 2013, the number of applications increased from nearly 35,000 to more than 51,000, while NIH appropriations shrunk from $21 billion to $16 billion (in 1995 dollars). As a consequence, it has become increasingly difficult for our scientists to garner an NIH grant. Overall application success rates fell from 32 percent in 2000 to 18 percent in 2012. This is particularly bad news for the new applicants, most of whom are young scientists who are at their most productive age and are most in need of grant support: not only have the number of research project grants dropped in absolute numbers, but the success rates for first-time award recipients has dropped from 22 percent to 13 percent. The story is dramatically different on the China side. The government is determined to be the next technology innovation center in the world. In 2011, China had already become the world’s second highest investor in R&D. Government research funding has been growing at an annual rate of more than 20 percent. At the end of 2012, for example, 7.28 billion yuan was spent on promoting life and medical sciences, nearly 10 times the 2004 level. Even more troubling (for the United States), in 2011, 21 percent of the applications were supported, and for young scientists, the application success rate was 24 percent, both of which were higher than the U.S. level. It was predicted that if the U.S. federal government R&D spending continues to languish, China may overtake the U.S. to be the global leader in R&D spending by 2023. Of course, being the leader in R&D spending does not automatically make China the next innovation center.  China’s research culture suffers problems of cronyism, mismagement, and ineffectiveness.  But continuing to cut U.S. research funding while China’s research spending soars could lead to a brain drain and even further, the abdication of the United States as an innovation leader. If you still think this sounds alarmist, just read what a professor from George Mason University said: “I have just laid off my technician and will lose my postdoc in six months. My Ph.D. students need funds to finish their degrees, and now they are working in the lab without pay. The lab may have to be closed. I will move my lab to China.” That said, the trend can be reversed, provided that we stop bickering over divisive social-political issues and move forward to strengthen our economy, restructure our education, and renew our democracy. The time is now.

Sticker shock was rampant among many freshmen in the class of 2017. The annual price of a private four-year university is now edging toward $60,000. As a result, federal student loans will play a key role in allowing millions of students to afford college. However, as CFR Contributing Editor Steven J. Markovich notes in his new Renewing America backgrounder Student Loans and U.S. Prosperity “many graduates are concerned about encountering a weak job market and the consequences that lingering debt may have on their financial futures.”

It is old news that average American student performance is mediocre on international tests. With the recent release of the OECD’s first survey of adult skills, we now know that American adults continue that mediocre track record. And once again, the big achievers are Japan and small Nordic countries like Finland. There will be columns written about the grave threat this constitutes to U.S. economic competitiveness. But the picture is far more complicated. The internal dynamics of the U.S. labor market and how it creates and treats winners and losers for different skill sets may be the more relevant policy issues. To be sure, these adult test results—which measure literacy, numeracy, and digital problem-solving—do point to some weaknesses in the U.S. human capital development system. The average American adult is the equivalent of half a year of school behind the average OECD adult. The average Japanese adult is three years ahead. Especially troubling in the U.S. case is the lack of progress over time. In nearly every other advanced economy, young people joining the labor market are substantially more skilled than those retiring. Not so in the United States—and this lack of progress holds for high school and college attainment as well. U.S. dominance in the global pool of high-scoring workers is also eroding. Among OECD countries, the United States is home to 42 percent of high-scoring adults aged 55 to 64, but only 28 percent of high-scoring adults aged 16 to 24. But in other ways, the pool of U.S. human capital does not look hugely different from other countries. One fascinating finding from the survey is that, taken broadly, there is far more variability in performance within countries than between them. The score spread between the highest skilled adults and lowest skilled adults is more or less the same across countries. Even Japan has a significant subset of low-skilled adults who are far behind their high-skilled brethren. According to Andreas Schleicher, who is the master architect of the survey, the consistency of this achievement gap across countries is far more compelling and powerful in the data than any differences between the average American and Japanese worker. What makes the United States stand apart from the rest is the way in which its labor market efficiently uses and rewards skilled workers, and punishes those who lack such skills. The U.S. economy is exceptionally good at extracting value from its workforce. Although Japanese adults test better, they are far less likely to use their skills at work than Americans. This helps to reconcile how the United States can at the same time have mediocre average human capital and a high-performing economy. One consequence of such an efficient labor market is more generous rewards for talent and more brutal punishments for the unskilled. Put simply, the U.S. labor market is good in that it promotes more productivity, but bad in that it generates more inequality. A big challenge for the United States is how to cushion the blow of such a productive labor market on its unskilled adults. Unfortunately the same OECD study suggests that more adult education may not be a great solution to this problem. In most countries, continuing education tends to reinforce existing inequalities. The highly skilled are more likely to amp up their qualifications mid-career than the unskilled who need it most. In a world where education is highly rewarded, it’s always better (and cheaper) to start early.

Earlier this week, we hosted Mo Ibrahim, the global telecom magnate and founder and chair of the Mo Ibrahim Foundation, at the Council on Foreign Relations. Ibrahim spoke intelligently about Africa’s development and governance challenges. His insights are relevant to some of my earlier posts regarding inequality and the youth bulge in Africa. Ibrahim described how, thanks to mobile technology and growing internet access, today’s youth in Africa are better connected and informed than in previous generations. As Ibrahim pointed out, however, the youth population, which makes up roughly half of the continent’s total population, faces bleak employment prospects. The education system in Africa is broken and many young people do not receive useful job training. Unemployment and failing education threaten Africa’s future prosperity and stability. Ibrahim also delivered sober words on African governance. Although Africa is one of the most resource-rich continents, there is still rampant poverty and inequality. Ibrahim believes this is largely due to poor governance. The Ibrahim Foundation’s Index of African Governance (IIAG), a collection of quantitative data measuring eighty-eight governance indicators in every African country, reports that although there have been fewer cross-border conflicts in recent years, the number of internal conflicts has increased – in part fueled by jobless and frustrated youth populations. In addition, the index shows that the economic growth of the past decade has overwhelmingly benefited elites and has not trickled down to the larger population. To encourage better governance, the Mo Ibrahim Foundation not only publishes its IIAG report yearly, but it also awards the Ibrahim Prize for Achievement in African Leadership to a former African head of state who exhibited excellence in governance. Ibrahim hopes the prize will stimulate conversations in African countries about the value and meaning of good governance, and reorient the spotlight away from corrupt autocrats such as Robert Mugabe toward some of Africa’s better leaders such as Festus Mogae of Botswana. The Ibrahim Prize was most recently awarded to Pedro de Verona Rodrigues Pires of Cape Verde in 2011. Last year, with no qualified candidates, the award was not given out; nor was it awarded in 2009 or 2010 – highlighting Africa’s continuing governance problem. Economic growth is a promising development in Africa, but, as Ibrahim stressed, it is only one ingredient to Africa’s success. Substantial reforms in governance and education need to take place before Africa can truly thrive.

The following guest post was written by Curtis Valentine, a CFR Term Member and a 2013-2014 International Affairs Fellow (IAF). Curtis will be posted to the U.S. Department of Education's Office of International Affairs as a Resident Fellow for a portion of his IAF.   The first step in addressing a problem, goes the popular adage, is admitting you have one. Now more than ever—with the federal government shutdown—the United States could use a dose of that advice. Long accustomed to resting on its laurels as among the best on a host of demographic and social indicators, from equality to education to health, the United States has seen itself as the example of success with little need to look abroad for lessons learned. But the U.S. ranking in those basic indicators has fallen precipitously, so that the United States is middling at best compared with other advanced economies.  It is high time the United States begins to understand how other countries are succeeding where America is failing, and implement their best practices. Policymakers should be asking themselves: What are other countries doing right, and how can we learn from them? The global marketplace of ideas now makes it easier to locate and analyze best practices. Though the distinction between what ideas are uniquely American and what ideas originate outside U.S. borders is less clear than in previous generations, some of the most innovative policy ideas have originated abroad. Education provides some excellent examples. The United States should look to Canada, our demographically and culturally similar cousin. Canada implemented big education reforms in Alberta and Ontario that included active participation from both education reformers and trade unions—two groups U.S. policymakers have yet to unite. In their effort to improve their education system, Ontario Premier Dalton McGuinty employed Ben Levin, an expert in British education, as Deputy Education Minister. Under McGuinty’s leadership, Ontario implemented win-win policies for teachers and parents like reducing class sizes while also creating 5,000 new jobs. Another successful policy change included additional teacher preparation time for math and reading teachers and more student time in art or foreign languages. These policy reforms have contributed to Canada’s impressive gains in PISA exam scores, the gold standard for international comparisons of math, science, and reading. Fortunately, the U.S. Department of Education is working hard to study international best practices abroad. The Education Department’s Office of International Affairs was created to ensure “international benchmarking and applying lessons learned from other countries.” The office director travels 40 percent of the time to identify international best practices in public education. The recent adoption of Common Core State Standards, though controversial, is one example of how the United States has replicated an international best practice in education. Countries like Finland and Poland, both viewed as shining examples of how to improve educational outcomes for all with less money, implemented both common standards and a common curriculum prior to their recent dramatic improvements on the PISA exam. The United States is no longer first in the world in education and opportunity, but it could be again if it admits that some of the best policy solutions lie outside its borders. The private sector has done a great job of leveraging international best practices to compete; it’s time the federal government did the same in order to compete with the fast-pace of  social reforms happening around the world.