A Comparative Study on
Education and Technology Adoption Policies for Growth in US, EU and East Asia
Jinsil Kim
Comparative Regionalism: Europe and Asia
Professor Moon
May, 2010
GSIS Seoul National University
1. Introduction:
This paper attempts to compare the different cases of US, EU and East Asia on the matter of Technology, Research and Universities in relation to economic growth. In the study of Comparative Regionalism, finding similarities and differences between the regions is essential for sound analysis and appropriate policies. Thus, a comparative study between the different regions regarding their education and technology adoption policies would be helpful for learning about Comparative Regionalism.
This paper is built on the premise that education (notably university) as an important driver for economic growth[1]. This is because productivity is associated with the quality of human resources, a factor mainly influenced by the education system. Also, at the technological frontier, innovation is the critical factor for growth and this is directly related to education because one of the vital instruments of the technological frontier is excellent universities with best minds[2]. Along with education, a business environment with “creative destruction” is also necessary for economic growth. Thus it is important to understand and explain the management and organizational practices in firms.
The first part of this paper observes education, technology, corporate structures and their related policies across Europe, the US and East Asia to draw out analyses and conclusions. The current trends in Europe are compared with those of US and East Asia in attempt to glean lessons for East Asian countries. The latter part of the paper is devoted to observing and analyzing to what extent the regions in question have achieved coordination of the corresponding policies. I believe that the US and Europe’s experiences in their process of integration would be a valuable source for East Asia in delineating a roadmap for future steps toward regional integration. The US and EU have already reached a high level of integration and their experiences in education and technology could useful for East Asia which is in the developmental stages of integration.
2. Comparison between education and technology in the US and EU
A major European decline is underway and this phenomenon could mainly be explained by politics and technology[3]. This paper focuses on technology as an explanation of the weak European economic growth compared to the US since the 80s[4]. The slowdown in the European growth rate of per capita GDP and labor productivity was accompanied by a lag in technology adoption, resulting in a “technology gap” compared to the US. This phenomenon could be explained in several reasons, linked by a vicious circle or a chain of events.
Europe is perceived to lag behind the US in converting its academic results into economic outcomes[5]. The fundamental problems of European countries regarding technology are 1) Universities and RTOs ineffective in producing new technology, 2) Companies lacking the ability to adapt to new technologies. Thus education policies coupled with labor market rigidity and some other policy differences could be suggested to be responsible for the US-Europe growth differences[6]. Although the European focus on specialized, vocational education might have been effective during the 1960s and 1970s, it was one of the main reasons for the growth gap relative to the US during the following information age[7]. The information age required another form of education policy (perhaps similar to the US model) because new technologies emerged more rapidly. Moreover, a less systematic and professional management of knowledge and intellectual property by European universities compared to their US counterparts led to the European weaknesses in its system of scientific and industrial research. The educational and corporate structures of Europe to those of the US show significant differences.
Deep down, this problem of structure could find its roots in the fact that Europe, by trend, heavily relied upon government support for education and technology innovation compared to the US. There is a lack of reform of the incentive structure in European universities and private sector to develop new technologies. In Europe, there has been more public funds support than competition in hiring of educators and researchers. For example, Italian economic growth owed largely to IRI[8], which was created in 1933 in order to rescue banks and firms that had collapsed during the depression. Put in simple terms, IRI was a government owned industrial conglomerate that controlled half of the country’s manufacturing activities and banks. The Italian public enterprise system was thus called the IRI formula, under which the individual operational firms were joint-stock companies under law, but were controlled by a public body, established by special laws[9]. Also in France, public administrators trained in national school of administration could shift from government jobs to running large companies[10].
This government intervention in technology initially led to Europe’s success in the 1970s. However, today Europe is closer to the technological frontier where innovation is the critical factor for growth. It now must grow through innovation pushing the frontier out rather than simply adopting and updating US innovations[11]. Imitation is not enough for EU countries anymore because the closer to the technology frontier, the less room there is for copying and adoption of well-established technology[12]. However, past government interventions in Europe have created a culture that is ill prepared to innovate and have become hindrances to innovation.
Many Europeans think that European universities needs more public funds allocated to basic and industrial research, and that the reason why their technology is behind the US is because they don’t get as much funding as the American ones. However, after the analysis above, the truth is that it is quite the opposite. Government support and subsidy is not the answer to all problems Europeans face regarding technological innovation. It is far more important to reform the incentive structure in European universities and private sector to develop new technologies. Moreover, in the hiring of educators and researchers, more competitions rather than more public funds support is the way to ensure this progress[13].
Along with education policies, the corporate structure also needs to be addressed to see whether European firms can adapt their practices and structures to become more innovative and capable of accelerating international technology transfer. The link between competitions on innovation with a special emphasis on M&A activities[14] should also be observed. Adopting innovations in the corporate setting requires the ability to make big changes in the way firms are organized[15]. A big difference between American and European companies is the ability to change the organization of the firm fast enough to adapt it to new technologies. The aspects of European education and corporate culture mentioned in this paper could be generalizations, but similar patterns are found throughout the region, as in the case of UK and Italy.
3. Comparison between education and technology in East Asia, US and EU
East Asia has seen rapid economic growth in the 1990s, catching up with the earlier industrialized countries and leaving the rest of the developing world[16]. Many economists agree that the most important reason for the Asian success, other than the implementation of export-oriented industrialization, is technological progress owing to education and culture. The 1993 World Bank report states that one important factor of Asian success is getting the basics right including the accumulation human capital by providing universal primary and secondary education while tertiary education are largely met by self-financed system[17]. Likewise, many studies argue that East Asian miracle is stimulated by remarkable development in human capital, which is financed by efficient resource allocation[18]. East Asian economic growth is indebted to the human capital investments in education by private and public sector.
One interesting difference in education between the West (EU, US) and East Asia would be the role that Confucian values plays in the East Asian case. Confucian values emphasize on collectivist and philosophical axioms, as opposed to the West′s individualism. In addition, it teaches the virtues of discipline, harmony, obedience, duty and hard work, along with filial respect and a formal deference to elders. Confucianism also elevated the view of education, leading East Asian countries to adopt practical rather than prestigious educational policies aimed at educating the mass of the population rather than just a university-trained élite[19]. A technically adept and highly numerate workforce has evolved as a result.
This difference in education affects the corporate culture as well. The collectivist education which emphasizes social cohesion underpins the employer-employee relationship, and the close relationships that exist between firms, e.g. Japan′s keiretsu and South Korea′s chaebol business groups. This cooperation resulted in high productivity rates which helped to contain unit labor costs. With Japan being the pioneer in using efficient production and management methods, other East Asian countries also reinforced this positive effect made by human capital in the growth.
The East Asian keenness on savings and investment has also facilitated technological innovation. East Asians are the world′s top savers with saving rates of 30 to 40%. This produced impressive rates of investment, which in turn has explained the steady increase in indigenous physical capital accumulated. Technological improvements and innovation have been facilitated, among other things, by the availability of such funds[20].
East Asian (notably Korean and Japanese) growth and technology could be easily compared with the European one because they both are largely of the catch-up type. Korea and Japan experienced the same type of growth that Europe did after the war. They also had success from imitating the technological breakthroughs of US. Koreans and Japanese also awarded government subsidies to imitate (ex: keiretsu, MITI[21]in Japan). In Korea, chaebol have been important in generating large investments and rapid technological development. Thus many aspects of the technology structure could be compared between Asia and Europe. As in the case of Europe, many countries in Asia have an extensive and diverse system of public research institutes. Research shows that between 40 and 50% of all publicly funded research is done in non-university public research institutes both in Europe and in Asia[22].
However, we are witnessing the emergence of a model in East Asia that is rather different from the one adopted in Europe and the US in the realm of industry-government-academia collaboration for technological innovation. The East Asian model’s most important characteristic is that small and medium sized enterprises are the main recipients of technology transfer. The technology transfer in East Asia is also characterized by fragmentation of knowledge. An observation of the position and role of the research institutes and RTOs in a comparative perspective provides a better picture. There are two models: model A consists of stimulating and assisting accumulation of technological and innovative capabilities within firms. The firms are the main actors and RTO[23]s are intermediaries. Examples are Japan’s (AIST), Taiwan’s ITRI, and Korea’s KIST. Model B consists of building up technological capabilities on behalf of firms. RTOs and universities are the main actors and the firms are merely users[24]. This is used by many developing countries in Asia. Many European RTOs started along the lines of model A but now cherish the characteristics of model B. In Asia, a predominant number still follows model A.
4. Integration of education and technology policies in EU, US and East Asia
The globalization of higher education with the rising mobility of students and scholars through the expansion of distance learning is challenging traditional governmental roles and policies. Already, many think that individual states are no longer the appropriate level of government to tackle policy problems arising in a global, technology-intensive higher education market. There are worldwide pushes for a collaborative, rather than in individual state policies as well as non-governmental mechanisms. The US and EU have been especially concerned about coordinating education and technological policies because those will support and harmonize the economic and political integration process.
In this paper, a comparison matrix has been used as an effective analytic tool to help in making comparisons between the three regions’ policy convergence. This matrix determines the basic characteristics of the policies in question. Using the aggregation method, it outlines the most typical features of the policies, simplifying the process of analysis. The compared items are the education/technology policies and their level of integration.
Federal (common) policies | Coordination of both policies | Individual state policies | |
US | -In the U.S., the federal role in education is limited. | -as needed | -Because of the Tenth Amendment, most education policies are at decided at state level. -States allocate money to local schools. |
Europe | -common “Technology Policy in the EU” -common policies to stimulate research in Europe: Erasmus and Leonardo -ERA, TEN -New European Institute for Innovation and Technology -EU funds supporting research (1.9% of EU GDP) -FP7, common budget of €50.5 billion | -Collaborative research programs, such as the EU's Framework program -the intergovernmental EUREKA program -Joint programming pools and research efforts -EU's Joint Research Centre | -different, yet similar policies across different European countries such as UK and Italy -The National Foresight Programme in Greece |
East Asia | -NO common policies, except for similarities in research policy trends -similarities in policies can be found due to similar culture (ex: Confucian values led to high savings for all 3 countries) and common challenges faced | -integration and collaboration in education and technology policies without surrendering national autonomy -Symposiums between 3 countries to propose a future framework to bridge a gap between knowledge and global issues | -Japan is the 2nd investor in R&D after the US (Japan’s National Institute of Science and Technology Policy) -Japanese Keiretsu and Korean Chaebol -substantial gap between Korea, Japan, China |
a. The case of US
In 1950, the US had no federal education policy to puzzle about. Individual states made education policies, appropriated local school funds, broadly regulated them, and set certification standards for teachers. The Federal office of Education did little besides collecting data, and most state education agencies were quite weak. Today, the fundamental principles have remained: the federal role in education is limited. Due to the Tenth Amendment, most education policy is decided at the state and local levels. If citizens still have questions about policies or issues besides the Federal legislation, regulations, guidance, and other policy documents such as the American Recovery and Reinvestment Act, No Child Left Behind, ED budget and ED strategic plan, they would have to check with the relevant organization in their own state or school district.
b. The case of Europe
Education, research and technology are essential for Europe's future so related policies play a central role in the EU's Lisbon Strategy. Europeans are aware that it is important to establish innovation-enhancing institutions and policies for Europe as a whole, both on common and individual state level. Because R&D contributes to economic growth and job creation, it is especially needed by the EU to address its social challenges arising from integration.
EU is pursuing a common policy in spending for technology (3% of GDP in research by 2010[25]) to close the gap between itself and its counterparts overseas. EU also shares a common <European Institute for Innovation and Technology> which supports European education, innovation, research and improvement in translating scientific knowledge into patented products. Since 1987, EU has promoted the mobility of students, faculty, and content through its Erasmus Program. EU’s Bologna process brings over 40 European countries together to create a <European Higher Education Area>. EU has also created a single <ERA: European Research Area> which encourages knowledge transfer through networks of European researchers so that EU countries could address major challenges together. ERA was in effort to create an internal market for research and technology and to coordinate national and regional research activities. EU also boosts research through the <FP7[26]>, which is the most concrete manifestation of EU research and innovation policy with a common budget of €50.5 billion. <FP7> allocates a common budget for space to pursue a collaborative <Global Monitoring for Environment and Security> project and the satellite global positioning systems. This joint policy-making for research is to further encourage cooperation between European countries.
Besides the common policies and programs integrated at EU level, there are intergovernmental collaborative research programs, such as EUREKA and <EU's Joint Research Centre>, which is a network of seven research institutes across the EU which develops technologies like nuclear and remote sensing. Joint programming pools and research efforts are thus pursued to deliver results that individual EU countries cannot achieve without collaboration.
On the other hand, policies conducted at individual Member-State level live on. One interesting case is the <National Foresight Programme> in Greece. Greece is making efforts to close the gap with other EU states by achieving strong overall trends in research and innovation[27]. More recently, Greek research and technology policy has focused on international cooperation and opening up the national research community to international competition. This national technology policy of Greece is fortunately in line with the overall efforts undertaken at the European level for the establishment of the European Research Area.
c. the case of East Asia
No forms of education and technology policies exist at a common East Asian (Korea, Japan and China) level yet. However, East Asian countries derived great benefits from increasing integration and collaboration in education and technology policies without surrendering national autonomy. Intraregional cooperation and collective action in technology transfer and educational exchange are being conducted and have been proven to be beneficial on several occasions. Similar to EU, East Asian countries (China, Japan and South Korea) are also in the process of internationalizing their higher education sector with an increasing regional component. Led by Japan, the ASEAN+3 countries advanced a comprehensive report that strives for regional promotion of lifelong learning programs, credit transfer systems, scholarships and exchange programs, R&D cooperation, and curricular development as bases for common regional qualification standards among interested institutions[28]. However, national policies still predominate and each country has its own agenda and strategies to follow.
In Korea, education and technology policies are geared to support the national development to overcome the global economic crisis with sustainable development and job creation. Korea envisions green R&D policy, an investment direction for green technology R&D, and a green technology development strategy and future path.
Japan is perceived to be well-poised to provide technical, financial and organizational leadership in successfully building an East Asian community due to its large level of resources and expertise. Japan’s is now in evaluation of its current national Science and Technology and innovation policy and analysis of policy tools, which includes human resource development and collaboration between companies and universities. Its future framework is mainly to bridge a gap between knowledge and global issues.
China is striving to introduce potential strategies and policies that will boost the country’s innovation. Its particular focus is to promote the regional development of innovative cities and to stimulate sustainable and innovative development of a Chinese economy in economic crises.
5. Conclusion
To compete in the age of globalization, countries need strategies in order to reinforce the competencies of their companies. Some strategies are to foster a globalized manpower, introduce foreign technology and capital, and reinforce the infrastructure for growth. Countries also rely on research and technology for innovation to deliver jobs, prosperity and quality of life. This paper examines the different trends of US, EU and East Asia in adopting these education and technology policies as strategies for growth.
Although the US is the global leader in many technologies, it faces increasing challenges from traditional competitors and emerging economies alike. Europe had been a contender, but has lagged behind due to the weaknesses in the system, and is now trying to catch up. East Asia has also followed suit, mixing US and EU education and technology policies with its own distinct cultural methods. Today, all three regions face common challenges in higher education so they have reformed their systems in their own ways, somewhat similar to each other, to cope with the growing impact of globalization.
While observing the convergence of education and technology policies across the regions in question, one important point worth noting is that globalization has substantial effect on national policies and obliges them to collaborate. The international provision of higher education services in US, Europe and East Asia increases the regional dimension. European and East Asian countries are in the process of converging higher education within the regions through collaboration, which would advance inter-regionalism taken as a whole. One critical factor to bear in mind in this process is to maintain a delicate balance between the common and individual state policies. The heterogeneity of preferences across different countries in the region has to be respected to ensure proximity to citizen’s choices but at the same time, there is a need for not only national but regional policies. Continuing the process of integration calls for common curricula and programs. Contributions to education at the regional level would further the overall integration and bring benefits.
In sum, this paper makes the point through comparison that the quality of the education and technology policies is a crucial determinant of economic growth. And also, through the observation of efforts for convergence in policies, this paper asserts that in the age of globalization, regionalization and inter-regionalization of policies are rising to meet the needs and challenges entailed.
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[1] Foders, Frederico. 2003. Education policy for growth and employment. Kiel Institute for the World Economy hdl:10419/3059., : 1-8.
[2] Alesina, Alberto, and Francesco Giavazzi. 2006. Technology, research, and universities. In The future of Europe: Reform or decline. 10th ed., 65-78. Cambridge, Massachusetts: the MIT press.
[3] Ibid
[4] Krueger, Dirk, and Krishna Kumar. 2003. US-Europe differences in technology-driven growth: Quantifying the role of education. NBER JEL No. O40, O30, I21, (September).
[5] Conti, Anamaria, and Patrick Gaule. 2009. Are the US outperforming Europe in university technology licensing? A new perspective on the European paradox. IDEAS, CEMI Working Papers (Feb).
[6] Krueger, Dirk, and Krishna Kumar, “US-Europe”
[7] ibid
[8] Istituto per la Ricostruzione Industriale
[9] http://www.informaworld.com/smpp/content~content=a787758637&db=all The IRI in Italy: Strategic Role and Political Constraints
[10] Alesina, Alberto, and Francesco Giavazzi. 2006. Technology, research, and universities. In The future of Europe: Reform or decline. 10th ed., 65-78. Cambridge, Massachusetts: the MIT press.
[11] Explaining Productivity and Growth in Europe, America and Asia http://www.agf.org.uk/cms/upload/pdfs/R/2009_R2101_e_explaining_productivity_and_growth_in_europe_america_and_asia.pdf
[12] Alesina, Alberto, and Francesco Giavazzi, “The future”
[13] Ibid
[14] http://193.196.11.183/en/forschung/projekte.php3?action=detail&nr=564
[15] ibid
[16] Dent, Christopher M. Emerald FullText article : Europe and East Asia: A trade relationship examined. European Business Review 95, (2), http://www.emeraldinsight.com/Insight/ViewContentServlet?Filename=Published/EmeraldFullTextArticle/Articles/0540950201.html (accessed 3/31/2010).
[17] Permani, Risti. 2008. Education as a determinant of economic growth in East Asia: Historical trends and empirical evidences (1965-2000).University of Adelaide.
[18] Ibid
[19] Dent, Christopher M. Emerald FullText article : Europe and East Asia: A trade relationship examined. European Business Review 95, (2), http://www.emeraldinsight.com/Insight/ViewContentServlet?Filename=Published/EmeraldFullTextArticle/Articles/0540950201.html (accessed 3/31/2010).
[20] Ibid
[21] Ministry of Intl Trade and Industry: groupings of industrial firms and banks, played a crucial role in industrial activity by regulating import licenses, and the extent of competition, and by encouraging investment by the keiretsu
[22] Leijten, Jos. 2009. Comparative analysis of research institutes in Asia and Europe. Paper presented at Linkages in Innovation Systems: global and local perspectives, Hong Kong.
[23] Research & Technology Organization
[24] Leijten, Jos. 2009. “Comparative analysis”
[25] Activities of the European Union - research and innovation [cited 5/18/2010 2010]. Available from http://europa.eu/pol/rd/ (accessed 5/18/2010).
[26] Seventh Framework Programme, 2007-2013. Its four strands are: Cooperation, ideas, people, and capacities
[28] Prado Yepes, César. 2006; 2007. Regionalization of higher education services in Europe and East Asia and potential for global change Asia Europe Journal 5, (1): 83 <last_page> 92.
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