Trade and divergence in education systems

This article presents a theory on the endogenous choice of education policy and the two-way causal relationship between trade and education systems. A country’s education system determines its talent distribution and comparative advantage; the possibility of trade by raising the returns to the secto...

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Bibliographic Details
Main Authors: HUANG, Fali, CHANG, Pao-Li
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2014
Subjects:
Online Access:https://ink.library.smu.edu.sg/soe_research/1534
https://ink.library.smu.edu.sg/context/soe_research/article/2533/viewcontent/trade_edu_2012_pp.pdf
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Institution: Singapore Management University
Language: English
Description
Summary:This article presents a theory on the endogenous choice of education policy and the two-way causal relationship between trade and education systems. A country’s education system determines its talent distribution and comparative advantage; the possibility of trade by raising the returns to the sector of comparative advantage in turn induces countries to further differentiate their education systems and reinforces the initial pattern of comparative advantage. Specifically, the Nash equilibrium choice of education systems by two countries interacting strategically are necessarily more divergent than their autarky choices, and yet less than what is socially optimal for the world.