Education

Amidst all the chaos in Bangkok over the Pitak Siam rally —a group of monarchists opposed to the Yingluck government who were supposed to bring hundreds of thousands of supporters into the streets— another, similarly important piece of news about Thailand’s decline emerged. As it turns out, the Pitak Siam rally was mostly a bust. Only about 20,000 supporters actually turned out to rally sites in Bangkok, a far cry from the hundreds of thousands of people who came out in 2006 for anti-Thaksin rallies that ultimately helped precipitate the 2006 coup. Although the Yingluck government overreacted by employing the Internal Security Act in fear of the Pitak Siam rallies, the fact that the Pitak Siam leaders were openly calling for a “freeze” of democracy and for a military coup, and had close ties to senior military leaders, were worrying enough to the government to take severe measures. As it turns out, those were not really needed, and the level of violence between protestors and the security forces was relatively low, at least by recent Thai standards. Now, General Boonlert, the rally’s main organizer, says that he is stepping down as Pitak Siam’s leader. On New Mandala, graduate student Aim Simpeng has a fine analysis of the busted rally. It’s unlikely Thailand has heard the last of the Pitak Siam leaders, no matter what the general says. The monarchist yellow shirt movement that helped topple the Thaksin government and helped install the Abhisit-led Democrat government remains powerful, if clearly not as able to turn out large street numbers as in the past. Even if not, it remains a huge distraction for the prime minister, a constant threat, and a serious impediment to governing. Yet the continuing political strife overshadowed the news, reported in the Bangkok Post and elsewhere, that Thailand’s education system was ranked thirty-seventh out of fortydeveloped nations in a global ranking of education systems produced by publishing house Pearson. This is just the latest confirmation that the country’s education system, which was fine for producing widespread basic literacy in the 1950s, 1960s, and 1970s, and producing workers for low-end manufacturing, construction, and agriculture, is failing badly to keep pace in the global economy. Thailand has been slipping behind regional competitors like Vietnam in terms of producing workers competent in English and high-tech skills, and with the introduction of Myanmar into the global economy, a country whose universities had basically been shut for years, Thailand will face even tougher competition in lower-end manufacturing than it already does. Yet the Thai education system continues to prioritize rote learning, offers weak instruction in English, and provides low social status to teachers. In addition, in the deep south, where an insurgency is raging, many schools are closed altogether, and the government has not figured out an effective way to protect teachers. All in all, a sad story. With Indonesia growing strongly, Myanmar emerging, Bangladesh becoming a powerhouse in textiles, and neighboring nations like Vietnam, Singapore, and Malaysia upgrading their education systems, Thailand risks being left behind. This education deficit, even more than the constant political wrangling today, could be the country’s long-term downfall.

Last week I introduced the SERF Index, a new measurement tool my colleagues Susan Randolph, Sakiko Fukuda-Parr, and I have built to evaluate social and economic rights fulfillment. The new index sheds important light on the issues facing the Universal Periodic Review at the UN Human Rights Council, where Argentina, Gabon, Ghana, Peru, Guatemala, Benin, the Republic of Korea, Switzerland, Pakistan, Zambia, Japan, Ukraine, and Sri Lanka will be evaluated on their human rights practices under applicable international human rights conventions from October 22 to November 5. This year’s session will be the fourteenth meeting of the Universal Periodic Review since its first session in March 2006. UN Secretary-General Ban Ki-moon has underlined the importance of the upcoming session, noting that the Universal Periodic Review “has great potential to promote and protect human rights in the darkest corners of the world.” Yet the review process faces trying challenges, and wide scrutiny, in effecting real change in human rights situations on the ground. The SERF Index can help us analyze performance in the countries up for review. Some highlights: Overall, Argentina performs well, ranking thirteenth out of 98 countries on the SERF Index. Argentina consistently meets 80 percent or more of its obligations on the right to food, education, work, and health, which is surprising given the challenges the country faced during its economic crisis almost a decade ago. Nonetheless, Argentina could do better by focusing resources on its weakest area: the right to housing, for which the government meets only 78 percent of its potential. Data on Gabon reveals that even when limited state capacity is taken into account, the government is still underperforming in meeting its obligations to fulfill social and economic rights. Gabon achieves only 52 percent of its potential in providing citizens with the right to food—with 26 percent of its population stunted or not receiving adequate nutrition. Gabon’s fulfillment of the right to education is also quite low. Gabon’s performance in the right to housing is particularly bad, scoring a 20 percent fulfillment rate—ranking second to last on the SERF Index. Instead of dismissing Ghana as a middle-of-the-road development country, it should be commended for its efforts in some areas and supported in refocusing attention to others. Ghana is an example of a country that is, in general, meeting the rights of its citizens even with very little. Ghana reaches 80 percent or more of its obligations in the rights to work, food, and education, despite its median ranking on human development indicators. However, the SERF Index parses out the country’s weaknesses as well as its strengths. The Ghanaian government fulfills the right to health at only 60 percent and the right to housing at an unimpressive 52 percent, showing that although the government is successful in providing certain rights, it could perform much better in others. Benin struggles to meet its capacity for fulfilling the social and economic rights of its populace—ranking in the bottom fifteen of all the countries analyzed on the SERF Index—with a fulfillment of 52.5 percent. Benin’s categorization is also similar on the HDI, which ranks Benin as a “low human development” country. However, a closer examination of Benin’s fulfillment of specific rights shows that, in comparison to other indicators, the country is most successful in providing the right to education, at roughly 68 percent, versus the right to work (at 41 percent) or the right to food (at 46 percent). Peru seems like a a middle-of-the pack country at first glance, but SERF indicators offer a more nuanced perspective that can be useful for UN human rights evaluators to determine how the Peruvian government can close the gaps in human rights fulfillment. Peru performs especially well on the right to education at a high rate of 97 percent fulfillment, but struggles in the area of housing rights, meeting only 58 percent of its obligations. Guatemala, in most regards, scores at an above average rate when compared to other countries in the SERF Index. But while HDI characterizes Guatemala as a medium human development country, SERF reveals that the country is failing to address its food crisis. Although Guatemala fulfills the right to education (at 72 percent) and work (at 76 percent), the country scores above only two countries—Yemen and Afghanistan—on the right to food, meeting a mere 17 percent of its obligations. Switzerland is not currently ranked by the SERF Index. Overall Pakistan appears to be doing poorly. The government fails to meet even half of its obligations for fulfillment on the rights to education, food, and work. However, the SERF Index shows that Pakistan is not a hopeless case. Despite its limited resources, the country does relatively well in meeting its obligations for the right to housing (at 74 percent) and is about average in its fulfillment for healthcare, at 66 percent. Zambia barely meets 57 percent of its rights fulfillment capacity. But when we look in detail at the right to education, the country does remarkably well. It meets almost 92 percent of its capacity, given available resources. This presents a different picture that the one seen when only looking at HDI measurements, which neglect the great resource constraints Zambia faces and fail to take into account the country’s efforts on the right to education. However, the government could do better on other SERF indicators, particularly the right to food and work, where it meets only 44 and 39 percent of its capabilities, respectively. Japan is not currently ranked on the SERF Index. Ukraine ranks seventh overall on the SERF Index, with approximately a 91 percent fulfillment rate. The country also ranks highly among those assessed by the HDI, but an analysis of individual SERF indicators shows that while Ukraine performs well on the rights to work and education, efforts should be concentrated on improving the right to food, for which the country’s fulfillment currently stands at roughly 77 percent. Sri Lanka is another example of a country performing well in spite of limited resources. Ranking in the top thirty on the SERF Index, Sri Lanka meets 84 percent of its capacity overall. Specifically, the country reaches 85 percent of its capabilities or higher on the rights to housing, health, education, and food. However, the country falls short on the right to work, meeting only 63 percent of its capabilities—a nuance that is missed when looking at the country’s medium human development ranking on the HDI. While the SERF Index can help provide a fuller picture, it is by no means a complete one. No one index can perfectly capture the realities on the ground, and multiple sources of information should be used simultaneously to provide a complete picture. Nevertheless, the SERF Index can help global governance institutions and civil society organizations hold states accountable for meeting the social and economic rights of their people.

In the beginning of the twentieth century, “manufacturing” brought to mind burly men shaping metal with forges or stamping presses; in the twenty-first century, that mental image may become workers typing at a computer terminal as a laser shapes a product tiny layer by tiny layer.  Additive manufacturing—also known as 3D printing—is expected to revolutionize production, and a new public-private partnership aims to accelerate change. Launched in August 2012, the National Additive Manufacturing Innovation Institute (NAMII) is based in Youngstown, Ohio at the center of the “TechBelt” which runs between Pittsburgh and Cleveland.  NAMII’s placement could not only help revitalize manufacturing in the “rust belt” but draws upon regional talent and expertise; both major metro areas rank in the top six nationally for metal manufacturing employment. As Mike Garvey, CEO of M7 Technologies, a Youngstown-based maker of precision measurement tools, explained to Forbes: “Many people don’t realize this region has also developed significant expertise in software and advanced materials, which puts us in an excellent position to develop next generation manufacturing technologies.” Additive manufacturing is not one technology, but includes an array of processes and material.  However, the overall idea is the same: a computer model guides the layer-by-layer creation of a complex design.  In one approach, a laser draws out the first layer by fusing powder particles in a bed, another layer of powder is added, and the laser goes to work again.  Once all layers are complete, the excess powder is removed, leaving behind the completed object. Additive manufacturing has been around for decades, and was first used by design organizations for “rapid prototyping”.  The technologies have continued to progress while costs have plummeted; today 3D printing can even construct an acoustic guitar and MakerBot’s $2,199 desktop 3D printer can create complex designs.  Still, the industry is small with worldwide additive manufacturing only expected to reach $3 billion in sales in 2016. NAMII’s goal is “to transition additive manufacturing technology to the mainstream U.S. manufacturing sector and create an adaptive workforce capable of not only meeting industry needs but also increasing domestic manufacturing competitiveness.”  To accomplish this it brings together federal and private funds with leading research universities such as Carnegie Mellon and Case Western Reserve, and dozens of industrial powerhouses such as General Electric, IBM, and Northrop Grumman. While existing federal agencies have pledged $45 million to NAMII, the Obama administration expects NAMII to be a proof of concept for the National Network of Manufacturing Innovation (NNMI), a program proposed earlier this year.  NNMI would invest $1 billion to create up to fifteen manufacturing innovation institutes to “serve as regional hubs of manufacturing excellence that will help to make our manufacturers more competitive and encourage investment in the United States." Critics of NNMI contend that the free market should drive R&D with direct commercial applications, while the government should focus on basic research and reforms to reduce costs borne by businesses.  While not disagreeing with the need for reforms to corporate taxes and trade policy, NNMI proponents see it as way to address a U.S. competitive disadvantage, a growing gap between early stage public research and later stage R&D by firms. NAMII will use internal competition to ferret out and fund the projects that address the industry’s pressing needs.  As Gary Fedder, the head of Carnegie Mellon University’s Institute for Complex Engineered Systems, explained to Science Magazine, NAMII’s goals are different than a typical research center: “What the government wants is an entity to bridge the gap between applied research and turning something into a product. We know that what won’t work is a typical center, because there’s no productization and no money for companies to do any research.” As manufacturing technology changes, so will the demands on workers.  Fedder also observed that "there are a lot of misconceptions about what modern manufacturing is.  Instead of sparks flying, these processes are computer-driven, and people need to learn those new skills.”

On October 15, the Renewing America initiative hosted the BBC's The World Tonight radio program at CFR in Washington for a special event, "American Decline or Economic Renewal?," which was broadcast as part of The World Tonight's program, "Rebuilding America." Panel members discussed issues highlighted by CFR's Renewing America initiative including education, innovation, and the state of U.S. infrastructure, as well as the ability of the U.S. political system to address these challenges. The World Tonight's Robin Lustig presided, and panelists included CFR's Edward Alden; Douglas Holtz-Eakin, president of the American Action Forum and formerly the chief economic advisor to Senator John McCain during his 2008 presidential run; Andrew Stern, the Ronald O. Perelman Senior Fellow at the Richman Center at Columbia University and the former president of the Service Employees International Union; and Jennifer Hillman, a Transatlantic fellow at the German Marshall Fund and former member of the WTO Appellate Body. Check out the audio, transcript, or the watch the video below: http://youtu.be/IeLkxxdtlUY

I had the pleasure of hosting an event last week for Vivek Wadhwa to discuss his important and troubling new book, The Immigrant Exodus. Wadhwa, an entrepreneur turned scholar, has done more than anyone else to call attention to the critical role that immigrants played in the rise of Silicon Valley and the vibrant tech economy that is rightly such a source of pride for many Americans. And his warning that we are now in danger of killing the goose that laid the golden egg needs to be widely read and addressed with urgency in Washington. The importance of immigrant scientists, engineers, and entrepreneurs to the U.S. economy is now generally accepted, but much of what we know today is the result of pioneering survey work done first by AnnaLee Saxenian of the University of California, and later by larger teams assembled by Wadhwa, Saxenian, and other scholars. In a seminal 1999 study, Saxenian found that immigrants, particularly Indians and Chinese, comprised roughly one-third of the total scientific and engineering workforce of Silicon Valley. A 2007 survey by Wadhwa and others discovered that from 1995 to 2005, more than half of all Silicon Valley startups had at least one foreign-born founder; across the country the figure was just over one-quarter. These were astonishing findings given that just 13 percent of the U.S. population is foreign-born. In theory, immigrant entrepreneurship should be growing even stronger. Wadhwa’s work has suggested that, on average, an immigrant who launches a company does so roughly 13 years after moving to the United States – a period of time long enough to build the skills and contacts necessary for entrepreneurial success. In the late 1990s, there had been a big surge in skilled immigration due to a temporary increase in the cap for H-1B visas. In theory, that should have resulted in an explosion in new immigrant founded companies over the past several years. Instead, their latest survey – Then and Now: America’s New Immigrant Entrepreneurs -- shows a drop in the number of immigrant-found companies in Silicon Valley, from 52.4 percent from 1995 to 2005 to 43.9 percent from 2006 to 2012. What is going on? Some of it certainly reflects the growing opportunities for Indian and Chinese students and immigrants who wish to return home. The explosive growth in China and the opening of the Indian economy, especially in high technology sectors, has created possibilities for engineers and entrepreneurs that were unthinkable fifteen or twenty years ago. But much of the wound is self-inflicted, created by quotas and other restrictions that have made it increasingly difficult for talented immigrants to remain in the United States. How much harder is it? Vivek writes that when he moved to the United States in 1980 after graduating from the University of Canberra in Australia, he immediately found work as an entry-level programmer at Xerox and had his green card in eighteen months, allowing him to pursue better jobs. Today, he notes, if he had come on an H-1B visa, he would have been stuck in his entry-level job for as much as a decade waiting for his green card, and his wife would have been unable to work for the duration. He writes in the book about one young Indian immigrant, Anand Chhatpar, who graduated at the top of his class in computer engineering in Mumbai and entered the University of Wisconsin-Madison in 2001. By his junior year he had launched a company, and was named by Business Week as one of the “top 5 young entrepreneurs” in the country. In 2008 he and his new wife jointly created Fame Express, which grossed about $1 million in two years building Facebook applications. But in September 2010 – still without permanent status in the United States -- they had to return to India to apply for EB-1 temporary visas, reserved for skilled workers. Despite having companies and employees back in the United States, they were denied. Today, they are trying to run their companies from Bangalore. Some of Wadhwa’s recommendations for clearing away these immigration hurdles are familiar – increasing green card quotas for skilled immigrants, eliminating the current cap that only permits 7 percent of green cards each year for any one country (huge ones like India and China included), and allowing spouses of H-1B holders to work. These remedies generally enjoy bipartisan support, but in the funhouse mirror politics of Washington, they still can’t get through Congress. Just before the congressional recess, Judiciary Committee chairman Lamar Smith proposed an increase in green cards for skilled workers, but tied it to elimination of the diversity visa, which is supported by many Democrats. No serious effort was made to cut a deal, resulting in just one more symbolic vote. But Wadhwa has some novel approaches as well. Instead of “stapling a green card” to the passports of foreign students who graduate with science and engineering degrees from American universities (which he fears would create “diploma mills”) he would extend the Optional Practical Training program to allow students to remain and work in the United States for up to four years. Those who are successful would then be able to apply for a green card on the merits. And he supports changes to the H-1B program that would allow visa holders to switch jobs and advance their careers without risking their immigrant status. In all likelihood, this would raise wages as companies vie to retain talented workers, addressing the legitimate concerns of some American tech workers that H-1B holders comprise a kind of captive, low-wage workforce. There is much more in the book, and I urge you to read it. You can also see the full October 5 discussion with Vivek Wadhwa at the Council on Foreign Relations here: The Immigrant Exodus.

Having yet to take a finance or economics course, most high-school juniors and seniors could be forgiven for an ignorance of the principle of “return-on-investment” (ROI). However, the concept could scarcely be more practical as many young people prepare to make one of the most important investments of their lives. Decisions over where to go to college, how much to spend, and whether to take on debt will almost certainly influence their economic futures for decades to come. And the stakes have never been higher. Over the last two decades, college tuition has increased at 20 times the rate of an average graduate's wages. A typical student at a four-year public school can now expect to finish with about $28,000 in debt—a financial burden that, for many, will hinder their ability to purchase a home as a young adult. Meanwhile, pursuing higher education has never been more essential to success. For the past thirty years, virtually all job growth for people over 25 has occurred in positions that require some post-secondary education, according to the Bureau of Labor Statistics. By 2020, roughly two-thirds of all U.S. jobs will demand education past high school. So, if you're hunting for ROI, where do you look? Well, a recent report from Smart Money has a surprising answer: the state of Georgia. In a survey of the 50 top-priced schools, the magazine ranked Georgia Tech and the University of Georgia first and fourth, respectively in return-on-investment. The study calculated ROI by measuring the median income for recent grads (3 years out) and mid-career alumni (15 years out) as a percentage of tuition costs. While this is obviously great news if you're a Yellow Jacket or Bulldog, it doesn't tell the full story because the survey does not account for in-state tuition or for financial aid. Only by including these two factors, particularly the latter, can one understand just how good college students in the Peach State have it. Most U.S. students can receive substantially discounted tuition at their state's public universities, but few states sweeten the deal as much as Georgia. Celebrating its twentieth anniversary next year, Georgia's HOPE scholarship, which is funded through the state lottery, pays close to 90 percent of public university tuition costs for resident students who earn at least a 3.0 GPA in high school and maintain this level of achievement during college. Nearly 75 percent of the students attending Georgia technical schools receive HOPE (or Helping Outstanding Pupils Educationally) scholarships, and the number is about one-third for schools within the University of Georgia system. HOPE scholars can also use the award to pay for a fraction of tuition costs at private school in the state, like Emory. With this type of largesse, it should come as no surprise that Georgia ranks number one in grant dollars per population and grant dollars per undergrad enrollment, according to the National Association of State Student Grant and Aid Programs. Since its inception, HOPE has kept about 75 percent of Georgia students who score 1400 or above on the SAT in state for college, compared with less than a quarter before the program. HOPE's widely-acknowledged success has inspired similar lottery-funded, merit-based scholarships in other states such as Tennessee, Florida, and West Virginia. But the program also has its critics. Many argue that because there is no income eligibility cap, the great majority of HOPE scholars don’t actually need the aid and would have attended college regardless. Furthermore, others suggest that because the program is lottery-funded, the poor and minority populations end up subsidizing affluent families, whose children tend to win HOPE scholarships at higher rates. Many Georgia residents fear the window of HOPE, at least in its current form, may be closing. The Georgia lottery, which doled out $748.1 million in awards for 2010-2011 (compared with $21.4 million in 1993-1994), has been unable to keep pace with ballooning tuition and enrollment rates. Indeed, state lawmakers were forced to reduce HOPE's award in 2011, and official projections indicate that further, significant reductions (or other sources of funding) will likely be needed in the very near future. The ROI for many future Georgia college students may not be quite so peachy.

In the wake of the recent economic crisis, many state and local governments confront significant fiscal stress that could have national ramifications. The flow of federal stimulus funding is drying up before tax revenues fully recover and forcing many statehouse and city halls to consider tax hikes and/or spending cuts that could slow recovery and, in some cases, undermine long-term growth and global competitiveness. In particular, funding for infrastructure and education—of which states and cities are by far the primary sources—are under the budget knife. This Backgrounder examines the fiscal woes at the sub-national level and some of the troublesome budget cuts being made. In addition, it explores some innovative initiatives states and cities are taking to do more with less.

One of the more serious and lasting consequences of the Great Recession and its aftermath has been the sharp rise in the number of long-term unemployed.  Nearly 45  percent of the unemployed –or more than five million people -- have now been out of work for six months or more.  That is up from less than 20 percent in 2007. Persistent joblessness atrophies skills and discourages risk adverse employers who are unlikely to take a chance on someone out of work for so long.  Few federal programs provide help for the long-term unemployed, though the recent growth in social security disability insurance may be a response to persistent joblessness. Some interesting initiatives are under way at state and local levels, however.  In March 2012, Michigan Governor Rick Snyder announced Community Ventures (CV), a program aimed at encouraging employers to hire and retain the long term unemployed.  The program is administered by the Michigan Economic Development Corporation (MEDC), which also markets the state to expanding companies, talented workers, and tourists. MEDC President and CEO Michael A. Finney said in an interview that CV is part of the governor’s public safety program, so the initiative targets those with limited training and opportunities who are often most susceptible to crime, including ex-offenders and the teenage children of unemployed single parents.  Military veterans are also a focus. The approach starts with employers rather than with the unemployed. CV first approaches potential employers to get them to make a commitment to hire new workers from the program's pool if the state assists in preparing them for the job. Finney said that “most programs trying to get job opportunities for the least employable tend to start with getting people up to speed with high school degrees, GEDs, or other skills training.  When you do all those things and there’s not an employer that’s committed to taking them and creating a sustainable job for them, it’s a bigger lift to get it done.” Instead, the state “decided to go to employers and do a deep dive on the challenges employers have in taking on our targeted audience.” One example.  At one firm, only 10 percent of applicants from CV’s target population were able to pass a mechanical aptitude test. CV instituted job coaching and raised that to 40 to 50 percent, dramatically increasing the hiring pool. To retain hired workers, CV is also planning to assist in child care and will give generous reimbursements to those with cars who pick up fellow workers, to prevent otherwise good workers from arriving late to their jobs due to Detroit’s unreliable bus system.  Uniforms are another hidden issue that CV uncovered.  One firm requires employees to wear a simple uniform, a company t-shirt and dark slacks, but the cost is a high burden for these new workers.  CV will simply purchase a week’s worth the uniforms for new employees. Michigan’s 2013 budget allocated $10 million to CV, starting in October.  CV has discretion over the ultimate use of the funds, something that Finney recommends that federal policymakers consider: “We would love to have more block grant, fungible money, from the federal government with a primary metric being an outcome that we have to deliver. Design a program at a high level without too much detail—like CV—and allow us to get it done without a lot of restrictions.” This flexibility distinguishes CV from programs such as Georgia Works and Platform to Employment that continue to pay unemployment insurance benefits to workers while they attend company training programs for up to eight weeks.  While employers can thoroughly evaluate and train applicants, and workers learn new skills, hiring commitments are not made. There is controversy over the merits of these “bridge to work” programs, with some critics saying they are subsidies that offer employers free labor, and others saying that the federal guidelines for the program are too onerous for states  No states have accepted federal aid to try similar programs. The Community Ventures initiative, while still in its early stages, has some modest gains to show. Three months in, MEDC has already received—or is negotiating final numbers for—commitments for 600 new jobs, well along the way to a 14-month goal of 1,000 jobs.  A Detroit automotive supplier has already begun hiring local workers with CV’s help. Steven J. Markovich is a contributor to CFR.org.

Many of the things the United States needs to do to strengthen itself economically are hard. Improving education is a lengthy, complex undertaking with no obvious road map. Bringing the deficit under control involves politically perilous decisions to cut spending and raise taxes. Streamlining burdensome regulation requires difficult trade-offs between business efficiency and environmental and consumer protection. So it’s encouraging to see the Obama administration and Congress finally doing some of easy things. The White House Wednesday released a six-month progress report on its efforts to speed up visa processing, and there has been significant progress in easing the burden facing overseas travelers eager to come to the United States. Wait times are down and visits are up. And last night, by unanimous consent, the House passed the “Global Investment in American Jobs Act of 2012,” which directs the Secretary of Commerce to “develop recommendations to make the United States more competitive in attracting and retaining strong investment flows from abroad.” Senator John Kerry (D-MA) has introduced similar legislation, and Senate action is likely in the lame duck session. What these initiatives have in common is that they leverage existing American strengths. Travelers from around the world want to come to the United States to see the great cities like New York and San Francisco and explore natural wonders like the Grand Canyon (or more likely, just to shop). Foreign investors want to be on the ground in what is still the largest and most dynamic consumer market in the world. Small steps to clear away obstacles and encourage tourism and investment can pay outsized dividends. The Obama administration has made travel and tourism a top priority, with the president announcing in January a new initiative that blessed efforts already under way in the State Department and the Department of Homeland Security. Between October 2011 and July 2012, the State Department added 220 temporary consular officers in Brazil and 48 in China to help with visa adjudications, and is expanding the number of permanent positions. Similar efforts are kicking off in India. There is a new pilot project to waive visa interviews for very low-risk travelers, which has already benefited 63,000 travelers. And there has been new investment in consular facilities and streamlined procedures to speed up visa processing. Currently, 85 percent of visa applicants are being interviewed within three weeks, compared with just 57 percent a year ago. Word seems to be getting out. Overseas travel to the United States is up 8.6 percent over last year, even as the U.S. dollar remains strong, and demand for tourist visas is expected to grow by 20 percent this year. In Brazil, visa applications are up 38 percent this year; in China they are up 48 percent. This is easy money for the United States. International tourism supports about 1.2 million jobs. Foreign investment is a similar story. After a lost decade in which the U.S. share of global direct investment dropped from more than 40 percent to less than 20 percent, FDI was up 14 percent in 2011 and is growing strongly so far this year. The Commerce Department has stepped up its investment promotion campaign through what is known as SelectUSA, but most of the effort to lure foreign companies is still done at the state level. A 2009 World Bank study put the United States near the bottom of the wealthy countries in the effectiveness of its investment promotion efforts. A 2012 OECD study on openness to foreign investment put the United States 34th out of 55 countries studied, behind such countries as Brazil, South Africa and Argentina. Even small improvements in “attracting and retaining investment,” as envisioned in the House legislation, would have large payoffs. Foreign companies that invest in the United States already employ more than 5 million Americans, and including spin-off jobs the number is probably more than 20 million. Certainly the United States has no choice but to tackle the hard challenges that must be faced to create stronger future growth. But if we tackle the easy problems – and reap the benefits of more money flowing into the U.S. economy – the hard ones become much easier to solve.

In all sub-Saharan Africa, only South Africa contributes universities to the top seven hundred worldwide.   In a recent report published by Quacquarelli Symonds (QS), a leading consulting firm on higher education and careers information, the University of Cape Town (UCT) ranks 154 out of seven hundred universities. The University of the Witswaterand (Wits) ranks 364. Also within the top seven hundred--but low down--are the universities of Stellenbosh, Pretoria, and KwaZulu-Natal.  Number one is MIT, followed by the University of Cambridge.  Yale is number seven and Caltech number ten.  The University of Virginia is 123.  Just before UCT at 153 is L’Ecole Normale Superieure de Lyon and just after it at 155, the University of California at Irvine. University rankings are indicative, not definitive.  But the QS World University Rankings are usually regarded as one of the more influential and widely observed of the university ranking scales.  Its criteria is conventional:  according to its website, a score is determined 40 percent by academic reputation; 10 percent by employee reputation; 20 percent by faculty/student ratio; 20 percent by research and other citations; 5 percent by international faculty numbers; and 5 percent by international student numbers.  Nhlanhia Cele, director of strategic planning at the University of the Witwatersrand, is quoted by the South Africa Press Association as saying, "Rankings matter because they undeniably create a perception about a university.  For example, when top students, academics and researchers are looking worldwide as to where they would most like to study or work, they use the leading ranking systems as a key point of reference." All five South African universities were white only during apartheid times, but now have significant numbers of non-white students. University level education is mostly funded by the state and through tuition payments--there is little tradition of large, private endowments to educational institutions.  Nevertheless the absence from the QS list of South African universities that enroll large numbers of non-white students--University of Johannesburg, University of the Western Cape, and Ft. Hare University, etc.--highlights the persistence of apartheid patterns. Other historically white universities also failed to make the cut. University level education remains predominately a white prerogative.  Nearly 20 percent of all students enrolled in universities are white, while whites make up only 9 percent of the national population.  South Africans recognize that if their country is to compete successfully in the information-technology age, not only are more university graduates necessary, but the quality of the institutions that graduate them needs to be higher, with UCT and Wits being the exceptions.

Inequality in the United States today is substantially higher than almost any other developed nation, and even some developing countries such as Russia and India. According to the Congressional Budget Office, the average real after-tax household income for the top 1 percent of Americans rose 275 percent from 1979 to 2007, while income for the majority of the population--21st through 80th percentiles--grew just 37 percent over the same period. Complex causes--including globalization and technological change--have led to greater disparity, as it becomes increasingly less likely that an individual will reach a higher economic status than his or her parents. This Backgrounder examines the causes and impact of rising inequality, and the debate it has sparked in the United States.

I spent a fascinating day this week at the Techonomy conference in Detroit, and came away with a new appreciation for why I should get out of Washington more than I do. The conference, the brainchild of Techonomy founder David Kirkpatrick and co-hosted by the Detroit Economic Club, was a fascinating and inspiring look at some of the efforts under way to revitalize a city that has probably been hit harder than any other in the country by, among other things, international trade competition, technology that has shed workers, poor governance, and the exodus to the suburbs. The focus of the conference was the current, accelerating wave of technological change and how it can be made to work in revitalizing American cities. Here’s what I learned: Necessity is truly the mother of invention. Over the past 40 years, Detroit has lost almost two-thirds of its population, shrinking from a city of 2 million residents in the 1950s to one of just over 700,000 today, with the steepest drop in the past decade. The city government is effectively bankrupt, and the schools are some of the worst in the country. In such an environment, there is no such thing as a bad idea. Imitation is the sincerest form of flattery – at least until we figure out how to do it better. For too long many Americans have been reluctant to look outside our borders for different, maybe better, ways to compete economically. Detroit seems to have shed that sort of crippling pride. Timothy Bryan, the chief executive of GalaxE.Solutions, an IT services company that is expanding in the city, has launched a campaign called “Outsource to Detroit” to encourage other companies to follow his lead. Bryan argues that the advantages of proximity to U.S. customers who need complex services and a well-trained, English speaking U.S. workforce can offset the cost advantages of outsourcing to India. Among other initiatives, his company has been working closely with the city's community colleges to help redesign training programs to fit the company’s needs, with the promise that a job will be waiting for new graduates. He got the idea, he said, from studying how the Indian IT companies such as Wipro and Infosys work with their colleges at home. Political leaders are catching one as well. Michael Finney, president of the state’s Michigan Economic Development Corporation, said that he had recently spent some time in Germany with Michigan governor Rick Snyder, looking at the country’s “dual apprenticeship” system which mixes formal education and training with on-the-job experience. The state is set to launch a new pilot program in several community colleges. Cities, even ones that have fallen on hard times, are still cool. Richard Florida of the University of Toronto and Atlantic Cities wrote in the Wall Street Journal last month that the high-tech industry is taking “a decidedly urban turn,” with the fastest growth occurring in cities like New York, London, and Los Angeles rather than in the suburban sprawl of Silicon Valley. Detroit, which has a magnificent downtown core filled with many empty art deco era office and apartment buildings and a wonderful downtown baseball stadium, Comerica Park, offers many attractions for young, smart people looking for urban life on the cheap. Dan Gilbert, a native son and chairman of Quicken Loans who spoke at the conference, has been buying up many of these buildings and offering up cheap office space for young entrepreneurs trying to build businesses in the downtown. "People in their 20s and 30s coming out of university want to be in a vibrant, exciting urban core," he told the conference. "We're not going to be competitive in getting those folks if we're in a nice building in the suburbs. That's not where this generation wants to be." Rome wasn’t built -- or rebuilt -- in a day. Diversifying an economy like Detroit’s will take a long time. While the tech start-up scene in the city is exciting and promising, it has not created many jobs so far. Indeed, the slight brightening of the city’s economic prospects is almost entirely due to the revival of the auto industry from its near-death experience in 2008, thanks in no small measure to the Obama administration bailout. A sturdier turnaround will take time. For a policy wonk, there were plenty of eye-opening, gee-whiz moments at the conference. If you haven’t yet, check out Ben Kaufman's Quirky.com to see crowd-sourced product innovation in action, or MIT’s Senseable City Lab for the ways in which big data could transform urban living. But most of all, there was a much-needed commodity – a sense of hope and optimism that even one of the most troubled cities in America may have a much brighter future on the way.

If there’s any issue in the immigration debate on which there is a broad consensus, it is that everyone wins when immigrants come to the United States and start new businesses. Successful entrepreneurialism cuts through all the convoluted debates over whether immigrants are taking jobs that might otherwise be done by Americans. Come to America, build a business, hire employees, and everyone is happy. In the new Renewing America Working Paper, "Latino Immigrant Entrepreneurs: How to Capitalize on Their Economic Potential," Alexandra Starr – a journalist and Emerson Fellow at the New America Foundation -- looks at how Latino entrepreneurs are building big businesses that are capturing export opportunities in Latin America and smaller businesses that are serving the growing Latino consumer market in the United States. The paper is an important addition to a literature that has been dominated by research on Asian immigrant entrepreneurs, led by the excellent work of AnnaLee Saxenian and Vivek Wadhwa documenting the contributions of the immigrants in Silicon Valley. It is true that, in percentage terms, Latino immigrants to the United States generally own fewer businesses than Asian immigrants. Measured broadly, for example, just 6.5 percent of Mexican immigrants own businesses, compared with roughly 10 percent of Indians and Chinese and over 22 percent of Koreans (though immigrants from some Latin American countries, like Cuba and Colombia, have business ownership rates of more than 10 percent). But the potential for growth in business start-ups and ownership among Latino immigrants is huge, and the benefits to the United States would be enormous. Immigrants from Latin America account for just over 53 percent of the total U.S. immigrant population, and nearly half of new legal permanent residents each year come from the region. The Latino population is by far the fastest growing ethnic group in the United States, with a population expected to top 125 million by 2050. And many economies in Latin America are booming, creating new and lucrative export markets right next to the United States. Starr documents how Latino immigrant entrepreneurs in the United States are taking advantage of these trends.  Brightstar, the Miami-based cell phone distributor launched by Bolivian-born Marcelo Claure, has become dominant in several South American markets. ITS Infocom, a brain child of Peruvian-born Andres Ruzo, provides IT and customer service support for U.S. multinationals operating across Latin America. Closer to home, Mexican-Japanese entrepreneur Alfonso Tomita has built a chain of sushi  restaurants across Texas, while Jesus Sebastian moved from his avocado plantation in Mexico to San Antonio to launch the Ole Avocado brand of packaged guacamole products. Starr’s policy recommendations are a case study of what economist Tyler Cowen has called “the low hanging fruit.” There are fairly small changes that could produce big payoffs in making it easier for Latino immigrant entrepreneurs to establish and expand businesses in the United States. Among the suggestions: Visa reform. The U.S. visa system – at least for those without family connections – is set up with an eye towards employees, not entrepreneurs. That should change. Foreign students should be encouraged to stay and try their hand at starting businesses; threshold requirements for the investor visa should be lowered; and immigrants who start and run successful businesses should be able to petition for permanent residency. Open financing doors. Too many immigrant entrepreneurs are unable to access bank financing, and governments at the federal, state, and local levels should do more to encourage the availability and awareness of non-traditional financing, particularly for small, start-up businesses. Re-engage on trade with Latin America.  The U.S. Latino immigrant population offers a big advantage for the United States in opening up market opportunities in Latin America. Yet the region has largely fallen off the U.S. radar in terms of trade expansion. Small-scale initiatives like the State Department’s International Diaspora Engagement Alliance (IDEA) for Latin America are encouraging, but a broader initiative to engage U.S. business with the region is needed. Entrepreneurial immigrants have long been one of the great economic advantages enjoyed by the United States. And it is an advantage that has only begun to be tapped.

I will be traveling to Detroit this week to speak on a panel at the Techonomy conference, which is an annual event normally held in Arizona. It's a gutsy decision by the organizers to shine the spotlight on a city that Techonomy founder David Kirkpatrick noted is usually considered "a gritty, depressed, financially troubled city that seems well past its glory." The conference will highlight the transformative economic potential of modern technologies, and as Kirkpatrick writes: "If technology is the key ingredient to rejuvenating the American economy, it has to work where the problems are biggest and the task the hardest." The post below, which looks at what governments should be doing to facilitate this transformation, first appeared on the Techonomy web site. Here’s a chicken and egg problem. Are companies failing to invest in the United States because of its decaying infrastructure, schools that don’t produce enough skilled workers, and a byzantine immigration system? Or has the reluctance of companies to invest in the United States led to decaying infrastructure, failing education, and growing political fights over immigration? The question is one with enormous implications for governments at all levels looking to create conditions for stronger growth. Should they invest more heavily in education and infrastructure and hope for future payoffs (build it and they will come)? Or should they hold down spending, keep taxes low, and hope that companies will invest, creating a faster growing economy that generates new revenues for education and infrastructure? The United States clearly has an investment problem, and it’s not just a cyclical one caused by weak consumer demand coming out of the Great Recession. The U.S. share of global foreign direct investment stock, for instance, fell from over 40 percent a decade ago to less than 20 percent today. U.S. headquartered multinational companies, which created more than 4 million jobs in the United States in the 1990s, cut more than one million in the 2000s even as they continued to expand rapidly overseas. The Harvard Business School earlier this year released an important survey of its alumni working in multinational companies, asking whether their companies were moving operations overseas, and if so why. Discouragingly, far more companies were still thinking about expanding abroad than adding jobs in the United States. And nearly half of those decisions involved research, development, and engineering activities, which are critical to maintaining the U.S. lead in innovation. Many of the respondents cited lower wages as a big incentive to move abroad, but other reasons included better access to skilled labor, fewer or less expensive regulations, and lower tax rates. The most popular recommendations for making the United States a better place to invest included a simpler tax code, immigration reform, strengthening education and training, and streamlining regulations. One obvious response, and one I generally support, is to try to address these concerns and make the United States a more attractive location to invest. Bolstering the skills of the workforce seems like a no-brainer, for example, but there’s no gain in training young people for jobs that aren’t available.  There are already too many college grads working at Starbucks. Immigration reform to attract more educated and skilled workers again seems obvious, but not quite so obvious in an economy where even U.S. college graduates are struggling to find good work. Infrastructure spending makes sense, especially when long-term borrowing costs are so low. But West Virginia has spent billions building roads, and total federal, state, and local spending accounts for more than half the state’s economy, the highest percentage in the country. And yet West Virginia is still among the poorest states. Roads alone do not make an economy. So what should governments be doing? For one, they should be competing aggressively for investment. While other governments court multinational companies, the United States has long taken a hands-off approach, though states often take this on themselves. In the Council on Foreign Relations Task Force on U.S. Trade and Investment Policy, released last year, we call for a National Investment Initiative that would set a target for increasing investment in the United States, both by domestically headquartered multinationals and by foreign multinationals. We urged action on a variety of fronts including “education, development of infrastructure, encouragement of high-skilled immigration, expanded government support for R&D, and other initiatives that enhance the United States as a primary destination for the location of higher wage employment.” And the task force recommended an overhaul of the corporate tax system to encourage the location of business in the United States. The idea for a National Investment Initiative was endorsed by President Obama’s Council on Jobs and Competitiveness. At the state and local level, Roland Stephen of SRI International, in a working paper for the Renewing America initiative at the Council on Foreign Relations, looked at the experience of North Carolina. The state has rebounded quite strongly from the devastating collapse of manufacturing employment over the past two decades, which was even worse there than in Michigan and Ohio. The state’s Research Triangle is a national success story. While there was no silver bullet, Stephen argues that long-term funding of education and infrastructure “are the foundation on which other policy initiatives rest.” He calls for more targeted investments as well, particularly in building regional partnerships, technology centers, and other institutions focused on economic development. But he cautions: “Success demands patience. Economies grow slowly and payoffs come slowly. The powerful and appropriate impulse to keep score on public spending should be weighed against the need for investments of an uncertain duration with hard-to-measure payoffs.” That’s a hard one to sell to the public in a time of fiscal constraint and diminished expectations. But if the United States doesn’t build for the future, it will pass us by.

Before the Class of 2012 stepped off the dais and shed their caps and gowns, their prospects for a seamless transition into the American workforce looked poor. According to the Economic Policy Institute, the unemployment rate for recent college graduates (ages 21-24) hovered around 10 percent for the last year, while the underemployment rate (the proportion of grads that have either suspended their job search or aren't working up to their capacity) was nearly double that at 19 percent. Many 2012 grads are joining the existing ranks of jobless from the classes of 2009, 2010, and 2011. For those who do find gainful employment, their real wages are some 5 percent less than their peers who graduated in 2000. The employment woes of these young adults have not been lost on the "college admissions consultants." For the first time, The Princeton Review has included a list of rankings dedicated to "Best Career Services" in its 2013 annual big book of leading U.S. colleges. Topping out this list, which is based on thousands of student surveys, is Boston's Northeastern University. In particular, the school stands out for its strong embrace of cooperative (or "co-op") education. Northeastern's co-op program, which is one of the oldest and largest in the country, allows students, beginning in their sophomore year, to alternate semesters of academic study with semesters of full-time employment in fields relevant to their major. Roughly 100 U.S. colleges have co-op programs, including a number of technical schools, but only a few, like Northeastern, feature them prominently throughout their curricula. Other schools that do so include the University of Cincinnati, Drexel University, and the Rochester Institute of Technology. While most Northeastern students pursue co-op work in Boston, the school has opportunities with companies, including Fortune 500 firms and start-ups, in over thirty states and roughly 60 countries. Students can pursue up to three co-op semesters if they're on the school's five-year track. In this video, economics major Georgiy Kupovykh talks about his co-op experience at Brightcove, a Cambridge-based firm that produces an online video platform. The ultimate question is, of course: what are the particular merits of co-op education? A 2007 report from the Memorial University of Newfoundland cites research showing that co-op students benefited from higher starting salaries and "significantly more responsible jobs" after school. Employers also benefitted through better screening of new staff, hiring passionate employees, and increased cost savings. The report also indicates that co-op students believe their programs were both "positive and beneficial." A more limited study from Ohio State University, which compares the industry success of students from co-op programs at automotive technical schools with those from traditional auto tech programs, found higher rates of co-op grads employed in jobs related to their college program than traditional counterparts, as well as higher salaries. For its part, Northeastern reports that over 90 percent of its 2010 graduates were either employed or in grad school within nine months of graduation, and that more than half of these grads received job offers from a previous co-op employer of theirs. But more detailed research would certainly be helpful in making these assessments. General data on job-placement rates for college grads is often "fuzzy." A lack of standards means that schools' surveys can vary widely and often offer highly skewed portraits of employment prospects. As noted by the Chronicle of Higher Education, a "98 percent" job placement rate may actually account for only 22 percent of the recent graduating class, and those jobs may include the underemployed and those in jobs that don't require a college diploma. In contrast, an alternative "real-world" job experience that seems to be garnering an increasing amount of disdain from current and former college students is the internship. Unlike co-ops, many internships are unpaid and often involve unskilled "grunt" work that does little to prepare for future paid work. By U.S. fair labor standards, an unpaid intern can't substitute for regular employees, and companies can't derive an "immediate advantage" from intern labor. However, analysts say the enforcement of these standards is difficult and that there is little to prevent abuse. Many interns are of course aware of this reality, but take the jobs because the unpaid internship is at least a foot-in-the-door and prevents what would otherwise be a dreaded resume gap. "I knew this [internship] was going to be normal job and I wasn't going to be paid for it," a particularly disgruntled former intern told the New York Times. "But it started kicking around in my mind how unjust this was. It's become part of this unregulated labor market," he said. Co-ops, in contrast, are typically a joint undertaking between the school and the employer and are, therefore, closely monitored and evaluated. According to participants, the full-time positions provide students with greater responsibility and offer a real sense of progression. Perhaps equally important, co-ops give employers a more structured opportunity to recruit at an early age, and identify their staffing needs—perhaps even creating a new job in the process. "What Georgiy did in his role as a Northeastern co-op student," said Brightcove's director of recruiting, Elaine Pappas, "was to demonstrate for us that we had a legitimate business need to, now, create a position that is going to be for someone who is two or three years out to school."