CONTENTS
Abbreviations
List of Table
Acknowledgements
Introduction ...............................................................................................................1
Chapter 1 Overview of education and liberalizing the movement of natural
persons in education sector ......................................................................................8
1. What is education? ................................................................................................8
2. The relationship between education sector and economic growth ...................9
3. Benefits of education to a national society ........................................................11
3.1. Consumption Benefits of Education...........................................................11
3.2. External Benefits of Education ...................................................................13
3.3. Education, Inequality and Poverty ............................................................14
3.4. Education and Rural Development ............................................................16
4. Overview of liberalising the movement of natural persons in education sector
...................................................................................................................................17
4.1. International context of liberalising the movement of natural persons in
education sector...................................................................................................17
4.2. The legal framework of the movement of natural persons ......................19
4.3. Definition of liberalising the movement of natural persons in education
sector ....................................................................................................................20
5. Measures of liberalizing the movement of natural persons in education sector
...................................................................................................................................21
5.1. Immigration related regulations concerning entry and stay of service
providers. .............................................................................................................21
5.2. Regulations concerning recognition of qualifications, work experience,
and training. ........................................................................................................22
5.3. Differential treatment of domestic and foreign service personnel. .........24
6. Factors affected by liberalizing the movement of natural persons in education
sector .........................................................................................................................25

Chapter 2 The liberalizing the movement of natural persons in education
sector in Singapore ..................................................................................................27
1. Overview of Singapore ........................................................................................27
1.1. Political system .............................................................................................27
1.2. System of Government ................................................................................28
1.3. Foreign policy ...............................................................................................29
1.4. The legal system ...........................................................................................30
1.5. Languages .....................................................................................................30
2. Singapore’s education and movement of natural persons in education sector .30
2.1. Educational structure ..................................................................................30
2.2. Singapore education development phases .................................................34
2.3. The movement of natural persons in Singapore education in recent years
...............................................................................................................................36
3. The measures of liberalizing the movement of natural persons in educational
sector in Singapore ..................................................................................................38
3.1. Immigration related regulations concerning entry and stay of service
providers. .............................................................................................................38
3.2. Regulations concerning recognition of qualifications, work experience,
and training. ........................................................................................................41
3.3. Differential treatment of domestic and foreign service personnel ..........44
4. Factors affected by liberalizing the movement of natural persons in education
sector in Singapore ..................................................................................................47
4.1. In short term (1965-1990) ...........................................................................47
4.2. In long term (1990-2015) .............................................................................50
5. Experiences of Singapore in growing education ..........................................60
5.1. A forward-looking, integrated planning system .......................................61
5.2. Close links between policy implementers, researchers and educators ...62
5.3. Policies with the means to implement them ..............................................63
5.4. Commitment to equity and merit ...............................................................63

5.5. A strong focus on mathematics, science and technical skills ...................64


5.6. Human resource management which matches the demands of the system..64
5.7. A system which is continuously being improved ......................................65
6. Lessons from Singapore ......................................................................................66
6.1. Lesson 1: Curriculum changes for human resource growth in each stage...66
6.2. Lesson 2: Human resource policies in education sector are connected
closely with the real.............................................................................................67
6.3. Lesson 3: Vocational Technical Education (VTE) for Economic
Development goal ................................................................................................70
Chapter 3 Application of Singapore’s lessons for Viet Nam in liberalising the
movement of natural persons in education sector................................................74
1. Overview of education in Viet Nam...................................................................74
1.1. Education in Vietnam during Feudal and Colonial Periods....................74
1.2. Education in periods of 1945-1954 .............................................................75
1.3. Education in years of temporary separation (1955-1975) ........................75
1.4. Education in years of Pre-Reform (1975-1985) ........................................76
1.5. Education in Twenty Years of Reform (1986-2005) .................................77
2. The Current Vietnamese Education System ....................................................78
2.1. Goals of Education for All (EFA) – Building a Learning Society ...........78
2.2. System Structure - School Network ...........................................................79
2.3. Early Childhood Care and Education (ECCE) ........................................79
2.4. Primary Education ......................................................................................80
2.5. Secondary Education ...................................................................................81
2.6. Vocational Education ..................................................................................82
2.7. Higher Education .........................................................................................82
2.8. Continuing Education .................................................................................83
2.9. Investment into Education ..........................................................................83
3. The status of liberalizing the movement of natural persons in Viet Nam .....85

3.1. The legal framework ....................................................................................85
3.2. The process of liberalizing of the movement natural persons in Viet Nam
...............................................................................................................................86


4. Assessment on the similarities and differences between Singapore and Viet
Nam; and the ablity of Viet Nam for adaptation experience of Singapore in
developing education. ..............................................................................................87
4.1. Similarities ....................................................................................................87
4.2. Differences ....................................................................................................92
5. Application of lessons from Singapore for Viet Nam ......................................94
5.1. Lesson 1: Curriculum Changes for humnan resource .............................94
5.2. Lesson 2: Human resource policies in education sector are connected
closely with the real.............................................................................................96
5.3. Lesson 3: Vocational Technical Education (VTE) for Economic
development goal.................................................................................................99
6. Some recommendations for Viet Nam in liberalising the movement of natural
persons in education sector ..................................................................................100
6.1 Quality Assurance (QA) Framework for Private and Public Schools ...100
6.2 Mutual recognition of professional qualifications ...................................102
6.3 Recommendations on Manpower ..............................................................103
6.4 Educational Material Facilities Recommendations .................................103
6.5 Cooperation and International Integration in Education.......................103
6.6. Investment into Education - Mobilization of all Resources for Educational
Development ......................................................................................................104
CONCLUSION ......................................................................................................106
REFERENCES ......................................................................................................108


Abbreviations


TMNP

Temporary movement of natural persons

MOM

Ministry of Manpower

R&D

Research and Development

GATS

General Agreement on Trade in Services

AEC

ASEAN Economic Community

PSLE

Primary School Leaving Exam

PRs

Permanent residents

VITB


Vocational and Industrial Training Board

ASEAN

Association of Southeast Asian Nations

UN

The United Nations

AFAS

The ASEAN Framework Agreement on Services

ACIA

ASEAN Comprehensive Investment Agreement

MP

Members of Parliament

NIE

The National Institute of Education

ILO

International Labour Organization


UNESCO The United Nations Educational, Scientific and Cultural Organization
LDCs

Less developed countries

GDP

Gross Domestic Product

FDWs

Foreign domestic workers

CPF

the Central Provident Fund

TFR

Total Flerility Rate


EPA

Economic Partnership Agreement

PEB

Professional Engineers Board


SAFTA

the free trade agreement between Australia and Singapore

MRA

Mutual Regconition Agreement

CDIS

the Curriculum Development Institute of Singapore

VTE

Vocational Technical Education

ITE

Information Technology Education

EDB

The Singapore Economic Development Board

MNCs

Mutination Cooperations



List of Table

Content

Page
No.

Table 1.

Different Eligibility Schemes for Employment-Pass Holders

46

Table 2.

Number of teacher in years of 1965-1990

47

Table 3.

Foreign Staffs in Singapore, 1970-1990

48

Table 4.

Number of teachers in years of 1991-2015

51


Table 5.

Academic qualification in period of 1990-2015

53

Table 6.

The public expenditure on education from 2007 to 2013

57

Table 7.

The comparation of Viet Nam and Singapore

88

No.


Acknowledgements
It has been a period of intense learning for me, not only in the research arena,
but also on a personal level. Writing this thesis has had a big impact on me. I would
like to reflect on the people who have supported and helped me so much throughout
this period.
I would first particularly like to thank my supervisor Dr. VU Thi Hien who
has supported me though-out my thesis with her patience and knowledge whilst
allowing me the room to work in my own way. This thesis would not have been

completed or written without her, a friendly supervisor.
I cannot finish without thanking my family. I warmly thank and appreciate
my mother and my parents-in-law for their material and spiritual support in all aspects
of my life.
And finally, I would like to thank my dear who support and encourage me to
finish this thesis.


1

Introduction
1. Rationale of the research
Education is acknowledged as a main contributory factor to boost productivity
of workers by generating skills that raise their working capacity, leading to economic
growth (Hill et al, 2005:1; Bloom et al, 2006; Galiani et al, 2008:437). The World
Bank Policy Paper on Primary Education (1990, 1995, 1999) embraced human capital
theory, observing that education, particularly at the primary level increases the
productivity of the work force through improved literacy, numeracy, and health
status. Similarly, research on China reports evidence of a significant, positive
relationship between higher levels of education and GDP, using aggregate data at the
national and provincial level (Fleischer, 2002:6). Estimates by Chen and Fang (2000)
shows that, the stock of higher educated population has had a statistically significant,
positive, and robust relationship to economic growth across provinces of China in the
1980s and 1990s. In addition, the improvement of the knowledge of the people leads
not only to the economic growth but also to enhance the social development (improve
the health, decline of growth rate of population, reduce crime rates, greater civic
participation, higher voting rate, understanding the responsibility etc.). As
emphasized Lopez et al (1998), no country has achieved economic development
without investing in education development.
More intensive global trade and investment links in the last two decades of the

20th century were associated with a steady rise in international migration world-wide,
although on a smaller scale and different to patterns experienced during the golden
era of international migration a century ago. Now, flows are dominated by temporary
labour migration (TLM), in contrast to the earlier prevalence of permanent settlers to
the new world (Hatton and Williamson, 1998).
There has been some attempt to establish rules for migration through
regulations regarding multilateral trade in services. The GATS – General Agreement
on Trade in Services – found it necessary to incorporate a set of clauses on labour
migration (the movement of natural persons, or MNPs) to facilitate trade and


2
especially investment in services. In 2002, the ASEAN countries agreed to work
towards the formation of an ASEAN Economic Community by the year 2020,
modelled on the European Union, although with a 9 more limited political authority.
The union community would allow free movements of goods and investment within
its borders. Its initial conception has also countenanced free movements of labour,
although it is envisaged that these will only extend skilled manpower, in addition to
professionals and business travellers (Soesastro, 2003).
The globalization of labour markets around the world has highlighted the need
for coordinated action. The number of migrants crossing borders in search of
employment and human security is expected to increase rapidly in the coming
decades due to the failure of globalization to provide jobs and economic
opportunities. The ILO sees today’s global challenge as forging the policies and the
resources to better manage labour migration so that it contributes positively to the
growth and development of both home and host societies, as well as to the well being
of the migrants themselves. In 2004, the International Labour Conference of the ILO
adopted a Multilateral Framework on Labour Migration which is part of a plan of
action for migrant workers agreed by ILO constituents. The Framework is part of an
ILO plan of action which aims at better managing labour migration so that it

contributes positively to the growth and development of both home and host societies,
as well as to the well being of the migrants’ themselves”.
Singapore has become one of the main destination areas for migrants from
within and outside the region. Migrants has effected positively on Singapore’s
economy and education. When Singapore became independent in 1965, it was a poor,
small (about 700 km2 ), tropical island with few natural resources, little fresh water,
rapid population growth, substandard housing and recurring conflict among the ethnic
and religious groups that made up its population. At that time there was no
compulsory education and only a small number of high school and college graduates
and skilled workers. Today, Singapore is a gleaming global hub of trade, finance and
transportation. Its transformation “from third world to first” in one generation is one
of Asia’s great success stories (Yew, 2000). All children in Singapore receive a


3
minimum of 10 years of education in one of the country’s 360 schools. Singapore’s
students were among the top in the world in mathematics and science on the Trends
in International Math and Science Study (TIMSS) in 1995, 1999, 2003 and 2007.
Their excellence is further underlined by the fact that Singapore was one of the topperforming countries in the 2009 PISA survey, the first PISA survey in which it
participated. Singapore was rated as one of the best performing education systems in
a 2007 McKinsey study of teachers (Barber and Mourshed, 2007), and was rated first
in the 2007 IMD World Competitiveness Yearbook (IMD, 2007) for having an
education system that best meets the needs of a competitive economy. At the higher
education level, the National University of Singapore was ranked 34th in the world
and 4th in Asia in the Times Higher Education Supplement Rankings of World
Universities in 2010 (Times Higher Education Supplement, 2010). How has this little
red dot on the map, as Singaporeans frequently refer to their country, a nation that is
not even 50 years old, evolved from a backwater undeveloped economy into a world
economic and educational leader in such a short period of time? What education
policies and practices has Singapore employed? And are the lessons from Singapore’s

experience relevant for other countries?
In Vietnam, Article 35 of the current Constitution (issued in 1992)
stipulates: Education is the first priority of the national policy. The Second Plenary
Session of the Central Party Standing Committee VIII has issued the Resolution on
the strategic orientation for the development of education and training during the
period of industrialization and modernization.
Article 86 of the Education law stipulates the framework of governmental
management of education, including firstly the formulating and guiding, scheming
and planning strategy and policy for educational development. Therefore,
Vietnamese Government, in pace with other socio-economic development strategies,
has planned a strategy to year 2020 with steps to year 2025 for the national education
and training development.


4
In the recent years, Vietnam’s education system has steadily developed. The
number of education schools and institutions has increased and the training quality
has gradually improved. From the system consisting of only narrowly specialized
schools, voacational institurions, colleges, universities and higer education with
different degrees have changed a lot facilitate programs.
As far as we are concerned, the new educational programme's curriculum has
eight educational fields, which are language and literature, mathematics, morals and
citizen education and physical education, as well as art, social science, natural science
and technology and IT.
Although having gained certain achievements, our country's education and
training sector has still not caught up with the requirements of socio-economic
development and shown its weaknesses in a number of aspects: The quality of
education and the effectiveness of educational activities at all levels are still low; The
manpower training structure is not reasonable in terms of qualifications, careers and
regions; The social equity in education has not been carried out sufficiently; Some

negative and undisciplinary phenomena in education are not prevented promptly. One
of the key causes of the weaknesses is slownness in education and training
management due to poor socio-economic aspect. How and what can Viet Nam get
over this weakness? And Can Viet Nam learn anything from Singapore, a country
with many similarities with Viet Nam. With the hope to aim finding answers for these
questions, the researcher opts thesis titled “Liberalizing the movement of natural
persons in education sector: Experiences of Singapore and lessons for Viet Nam”.
2. Literature review
No-one can deny the key role of education to national economic growth. There
is a vast of research on education and educational related issues. Yet most of research
focus on educational issues rather than labour in education, such as thesis of Bùi Trần
Phương Chi, “Australian higher education onshore export and lessons for Viet Nam”,
thesis of Nguyễn Huy Cường, “United States’ colleges and university system and
lessons for Vietnam”, thesis of Nguyễn Thị Xuân Hường, “Exporting educational


5
services in Singapore”, thesis of Phạm Thị Thùy Linh, “Growing higher education in
Australia and lessons for Việt Nam”.
Recent and widely publicised studies by Alan Winters et. al. (2003) and Dani
Rodrik (2002) have drawn attention to the large potential gains from liberalisation of
migration of temporary workers, both for developed and less developed countries.
Temporary labour migration (or the movement of ‘natural persons’, in trade policy
jargon) has also received considerable attention in the Doha round of trade
negotiations, including representation at the World Trade Organisation Ministerial
Meeting held in Cancun in September 2003. International migration of temporary
workers has for some years been included in multilateral negotiations on trade
liberalisation through ‘Mode-4’ in the General Agreement on Trade and Services
(GATS) and related regional agreements. The issues have been addressed in
negotiations at the regional level, such as through ASEAN in Southeast Asia, as well

as in preferential trading agreements like NAFTA. In part, interest in temporary
labour migration (TLM) has been sparked by political and economic reality of large
international migration flows that takes place outside multilateral trade negotiations,
many of which are undocumented or illegal (Stalker, 2001).
In future, it is assure that Viet Nam will face many problem relating
liberalizing the movement of natural persons, especially in education sector. For that
reason, this research on liberalizing the movement of natural persons in education
sector is choosen to aim to find out the solution for Viet Nam‘s labour market in
education sector in process of international and regional integration. Some issues
relating the movement of natural persons, tendency of the movement of natural
persons in the world in education sector as well as experiences of Singapore in
liberalizing the movement of natural persons are mainly concerned in this research.
It will be a preliminary research of movement of natural persons in general
(sometimes referred to as the ‘temporary labour migration’). The research is set in the
context of global patterns of international migration and policies towards migration
in a multilateral context. And then the inter-relationship between movement of natural
persons and education sector, status of liberalizing the movement of natural persons


6
in Singapore is taken consideration. The research also examines national policies
towards migration, and in particular how Singapore can ultilise the movement of
natural persons to develop education and at last economy. The research closes with a
few suggestions regarding education growth by liberalizing the movement for
Vietnam.
3. Objective
The research is to recommend some solutions for liberalizing the movement
of natural person in Viet Nam’s education by studying Singapore’s education and the
measures that Singapore has made use of liberalizing the movement of natural
persons for promoting education.

4. Subject and study scope
- Subject: Singapore’s education, the measures and effected areas of
liberalising the movement the natural persons in education sector in Singapore, Viet
Nam’s education.
- Study scope:
(1) Singapore: The study addresses Singapore governmental policies on
liberalizing the movement of natural persons in education sector from 1965 to 2015,
especially immigration policies and its impacts on education sector.
(2) Viet Nam: The study takes mainly consideration of education system in
Viet Nam from 1997 to 2015.
5. Methodologies
The study approach for this study basically is qualitative research, in which
exploratory and comparative study are mainly used. As we have seen, the topic does
not exactly offer too many previous studies although there are many research works
that deal with the related issues. The methodology including selection and discussion
of theoretical material and descriptive material, publication research, law research,
include both present and historical information, and detailed comparison of
regulations, theories in terms of their applicability. Theories on education and


7
liberalising the movement of natural persons were basic researches, in which some
issues were addressed to find answers the following questions:
1. What is education?
2. What is liberalization?
3. What are the measures of liberalizing the movement of natural persons in
education sector?
4. How does liberalising of the movement of natural persons in education
sector affect education growth?
The aboved theoretical researches would be applied for studying Singapore,

in which the main concerns were the secret of Singapore to develop education
successfully in a short time and the obstacles of Singapore on the way to success.
6. Structure
Besides the acknowledgement, abbreviation, table list and figures, conclusion,
references, the thesis consists of the three main parts as following:
Chapter 1. Overview of education and liberalizing the movement of
natural persons in education sector.
Chapter 2. The liberalizing the movement of natural persons in Singapore
in education sector.
Chapter 3. Application of Singapore’s lessons for Viet Nam in liberalising
the movement of natural persons in education sector.


8

Chapter 1
Overview of education and liberalizing the movement of
natural persons in education sector
1. What is education?
When talking about education people often confuse it with schooling. Many
think of places like schools or colleges when seeing or hearing the word. They might
also look to particular jobs like teacher or tutor. The problem with this is that while
looking to help people learn, the way a lot of schools and teachers operate is not
necessarily something we can properly call education. They have chosen or fallen or
been pushed into ‘schooling’ – trying to drill learning into people according to some
plan often drawn up by others. Paulo Freire (1973) famously called education as a
banking – making deposits of knowledge. Such ‘schooling’ quickly descends into
treating learners like objects, things to be acted upon rather than people to be related
to.
According to the national registration, education is the process in which

individual brings about a claimed change in his behavior deliberately and by
means of his experience (Ertürk, 1972). The origin of this term dates back to
the program enhancement studies carried out in the USA in 1940 and it extends to
the experimental psychological studies carried out on the monkeys and mice in the
early 20th century.
Şimşek (2009) claimed that this term focused on the education planned by
somebody and focused on achieving expected behavior, however this process is
contrary to human nature. According to Şimşek, education is the process in which a
person himself contributes to his improvement by changing his behavior by means of
his potential in consistent with social aims (Şimşek, 2009).
According to Gökalp, education is the process which individual shapes. An
individual is aimed to be socialized and to improve social attitudes via education. In
this respect, education is that a person adjusts to his environment (Celkan,


9
1990). This definition considers education a formation formed by the external effects
and excludes internal formation.
According to Durkheim, education is the function of social institution and
social function (Banks, 1971). According to this definition, education includes
values, intellectual and physical skills which are supposed to be acquired by young
generation whereas according to Weber, education infers the preparatory period
for the statues which individuals will obtain in social structure (Ergün, 1992).
Education is, as John Dewey (1916) put it, a social process – ‘a process of
living and not a preparation for future living’. In this view, educators look to act with
people rather on them. Their task is to educe (related to the Greek notion of educere),
to bring out or develop potential. Such education is:
- Deliberate and hopeful. It is learning we set out to make happen in the belief
that people can ‘be more’;
- Informed, respectful and wise. A process of inviting truth and possibility;

- Grounded in a desire that at all may flourish and share in life. It is a
cooperative and inclusive activity that looks to help people to live their lives as well
as they can.
In conclusion, we end up with a definition of education as ‘the wise, hopeful
and respectful cultivation of learning undertaken in the belief that all should have the
chance to share in life’. What does education involve? First, we can see a
guiding eidos or leading idea – the belief that all share in life and a picture of what
might allow people to be happy and flourish. Alongside is a disposition or haltung (a
concern to act respectfully, knowledgeably and wisely) and interaction (joining with
others to build relationships and environments for learning). Finally, there is praxis –
informed, committed action (Carr and Kemmis 1986; Grundy 1987).
2. The relationship between education sector and economic growth
Till recently economists have been considering physical capital as the most
important factor determining economic growth and have been recommending that


10
rate of physical capital formation in developing countries must be increased to
accelerate the process of economic growth and raise the living standards of the
people. But in the last three decades economic research has revealed the importance
of education as a crucial factor in economic development. Education refers to the
development of human skills and knowledge of the people or labour force.
It is not only the quantitative expansion of educational opportunities but also
the qualitative improvement of the type of education which is imparted to the labour
force that holds the key to economic development. Because of its significant
contribution to economic development, education has been called as human capital
and expenditure on education of the people as investment in man or human capital.
Speaking of the importance of educational capital or human capital Prof.
Harbison writes: “human resources constitute the ultimate basis of production human
beings are the active agents who accumulate capital, exploit natural resources, build

social, economic and political organisations, and carry forward national development.
Clearly, a country which is unable to develop the skills and knowledge of its people
and to utilise them effectively in the national economy will be unable to develop
anything else.”
Several empirical studies made in developed countries, especially the U.S.A.
regarding the sources of growth or, in other words, contributions made by various
factors such as physical capital, man- hours, (i.e., physical labour), education etc.
have shown that education or the development of human capital is a significant source
of economic growth.
Professor Solow who was one of the first economists to measure the
contribution of human capital to economic growth estimated that for United States
between 1909 and 1949, 57.5 per cent of the growth in output per man hour could be
attributed to the residual factor which represents the effect of the technological
change and of the improvement in the quality of labour mainly as a consequence of
education.


11
He estimated this residual factor determining the increase in the total output
on account of the measurable inputs of capital and labour (man-hours). He then
subtracted this figure from the total output to get the contribution of residual factor
which represented the effect of education and technological change, the physically
immeasurable factors.
The contribution of education to economic growth has also been measured
through the rate of return approach. In this approach rate of return is calculated from
expenditure made by individuals on education and the measurement of the flow of an
individual’s future earnings expected to result from education.
The present value of these is then calculated by using appropriate discount
rate. This method has been used by Gary S. Backer who measured income differential
arising from the cost or expenditure incurred on acquiring a college education in the

United States. His estimates show that the rates of return on education in the U.S.A.
for urban white population were 12.5 per cent in 1940 and 10 per cent in 1950.
It is worth noting that estimates of rate of return on investment in education
are based upon private rates of returns to individuals receiving education. However,
by assuming that differences in earnings in a market economy reflect differences in
productivity, the rate of return on investment in education is taken to be the effect of
education on the output of the country.
3. Benefits of education to a national society
3.1. Consumption Benefits of Education
We have explained above the investment benefits of education and therefore
its effects on productivity and national output. But investment benefits are not the
only benefits flowing from education. Education also yields consumption benefits for
the individual as he may “enjoy” more education derive increased satisfaction from
his present and future personal life.
If the welfare of society depends on the welfare of its individual members,
then the society as a whole also gains in welfare as a result of the increased


12
consumption benefits of individuals from more education. Economic theory also
helps us in quantifying the consumption benefits derived from education.
In economic theory, to measure the marginal value of a product or service to
a consumer we consider how much he has paid for it. An individual would not have
purchased a product or service if it were not worth its price to him. Besides, an
individual would have bought more units of a product if he thought that the marginal
utility he was getting was more than the price he was paying.
Thus relative prices of various products reflect the marginal values of different
products and the amount consumed of various products multiplied by their prices
would, therefore, indicate the consumption benefits derived by the individuals.
It may, however, be pointed out that the prices in a free economy are

influenced by a given income distribution and the presence of monopolies and
imperfections in the market structure and therefore they do not reflect the true
marginal social values of different goods.
However, an objective measure of consumption benefits of education may be
difficult and has yet to be found out, but it should not lead any one to ignore the
consumption benefits of education and its policy relevance. It may also be noted that,
according to the new view, economic development is not merely concerned with the
growth of output but also with the increase in consumption and well-being of the
society. Therefore, consumption benefits of education may also be regarded as
developmental benefits.


13
3.2. External Benefits of Education
We have explained above the investment benefits and consumption benefits
flowing from more education both for the individual and for society. The analysis of
benefits has been based on the assumption that private interests of individuals are
consistent with the social good.
However, private and social benefits do not always coincide for instance social
benefits may exceed private benefits. This is the case with the education of an
individual which not only benefits individual privately but also others.
First, education makes people better neighbours and citizens and makes social
and political life more healthy and meaningful. Secondly, the most important external
benefit of more education is its effect on technological change in the economy. More
education, especially higher education stimulates research and thereby raises
productivity which undoubtedly benefits the society.
The individual inventor may not receive earnings equal to his contribution to
the research. Denison’s study of contribution of education to growth whose main
findings have been mentioned above clearly shows the external benefits of education.
After estimating the contribution of labour (including educated labour) and

physical capital to economic growth he obtained an average residual of 0.59
percentage point. Denison attributed this to the increase in knowledge which is the
direct result of research and indirectly of higher education. “If the entire residual
indeed stemmed ultimately from education, as some human capital enthusiasts have
implied, this would mean that education, directly or indirectly, contributed over 40
per cent of total output growth and 80 per cent of increased productivity from 1929
to 57.” If Denison’s residual is regarded as mainly due to research stimulated by
additional education then this is indeed a major external benefit of education.


14
3.3. Education, Inequality and Poverty
An evaluation of the role of education in economic development must not be
confined to judging its impact on growth in output but should also include its impact
on structure and pattern of economic development as well as on the distribution of
income and removal of poverty.
In the 1950s and 1960s, the most important objective of development was the
maximization of rate of economic growth, i.e. growth of material output and in
conformity with this the economics of education also focused on estimating the
contribution of education to the growth of national output. But now-a- days policy of
economic development has been increasingly concerned with the distribution of
income i.e., how gains of economic growth are distributed and whether poverty is
being reduced.
But recent studies have revealed that education, given the present education
system, has tended to increase the inequalities in income distribution rather than
reducing them. The adverse effect of formal education on income distribution has
been explained through establishing a positive correlation between level of education
received by an individual and the level of his life-term earnings.
It has been shown that those who are able to complete their secondary and
university education earn as high as 300 to 800 percentages more income in their life

time than those who complete a part or whole of their primary education.
“Since levels of earned income are so clearly dependent on years of completed
schooling, it follows that large income inequalities will be reinforced and the magnitude of poverty perpetuated if students from middle and upper income in their life
time than those who complete a part or whole of their primary education.
“Since levels of earned income are so clearly dependent on years of completed
schooling, it follows that large income inequalities will be reinforced and the magnitude of poverty perpetuated if students from middle and upper income brackets are
represented disproportionately in secondary and university enrolments. If for
financial and/or other reasons the poor are effectively denied access to secondary and


15
higher education opportunities, then the educational system can actually perpetuate
and even increase inequality in Third World Nations.”
There are two important economic reasons why in the present education
system, children and boys belonging to the poor families cannot complete their
education up to the secondary level and in many cases even up to the primary level.
First, the private costs especially, ‘the opportunity costs’ of primary education
for the children belonging to the poor families are higher than for students belonging
to the rich families. Children of the poor families are needed to do work on their
family farms or in other family occupations, that is, cost of studying in school is
family work sacrificed. On the other hand, benefits of education to the poor students
are also lower as compared to those to the rich students.
This is because it is difficult for the poor students to be selected for the jobs
because of poor contacts and influences as compared to rich students, even though
they may possess the same level of education.
Even in agriculture where it can be said that more education can benefit all
equally because it raises the labour productivity, the more benefits of education and
consequently of higher productivity in agriculture are likely to be obtained by those
who own land and have adequate resources to modernise their agriculture. The
benefits of more education and consequently higher productivity of landless labour

may go to the landlords for whom they work.
It follows from above that as a result of higher private costs and lower expected
benefits from education of the poor students, the poor family’s rate of return from
investment in education of a child is much lower. As a result of this, the children of
poor families are likely to ‘drop out’ during the course of primary education.
The fact that children and boys of poor family are unable to complete their
secondary education coupled with the fact that there are large income or wage differentials between different persons of different levels of education explain that
education in underdeveloped economies tends to increase income inequalities and
perpetuates poverty rather than helps to reduce them.


16
3.4. Education and Rural Development
If the objective of raising the standards of living of the people in general and
removal of mass poverty is to be attained in less developed countries like India, then
rural development must get the highest priority.
In the 1950’s and 1960’s in most of developing countries, the modernization
and development of the urban sector was given the highest priority in the
development plans and more resources were allocated to this sector. But in recent
years the thinking among economists all over the world has undergone a significant
change, since the development of the large scale industries and the urban sector has
failed to solve the twin problems of poverty and unemployment.
It has now been increasingly realised that it is through the emphasis on
agricultural and rural development in the strategy of development that the problems
of poverty and unemployment can be solved. Since 80 per cent of the population of
less developed countries directly or indirectly depends upon agriculture, rural area
needs to be given the highest priority.
Now, education can play an important role in agricultural and rural
development provided it is suitably modified and given a rural bias. The present
system of education has a strong urban bias so that it is ill-suited to the requirements

of agricultural and rural development. Moreover, the emphasis in the present
education system in on general education rather than on vocational education.
A relevant and meaningful education can raise the productivity of the rural
labour in agricultural work. It can create new employment opportunities if during the
schooling students are educated and trained in some useful vocations.
Moreover, education to the poor people will induce in them desire to have
fewer children with the result that not only their private level of living will rise, but
it will also help the general economic development by checking the growth of
population. Above all, education will bring about improvement in their health and
nutrition. Phillip H. Coomb, an eminent educationist and economist, has classified


17
different types of education that should be provided to the rural people so as to
promote rapid rural and agricultural development.
4. Overview of liberalising the movement of natural persons in education sector
4.1. International context of liberalising the movement of natural persons in
education sector
There are flows of labour between pairs of developing countries and between
pairs of developed countries, but they are not ‘South-North’ movements.
- Developed to Developing Country Labour Flows
The main issue here is the ability of developed country firms to send their
specialists to their plants in developing countries. In some cases, it is highly skilled
technical workers who are required, often at short notice and for short periods. In
others, the interest is in the mobility of managers. Firms already see these various
flows as a means of increasing local efficiency and of integrating their operations on
a global scale. Tang and Wood (1999) have shown in a simple model that, as with
most migration driven by differences, business mobility increases world output and
narrows the skills gap in the developing host countries (unskilled wages rise) while
widening it in developed countries. In the latter, home country unskilled workers

suffer from having fewer skilled workers to work with and from the competition from
cheaper unskilled labour abroad. In the developing country, output increases, and
although part of it accrues to the mobile skilled workers who are domiciled in the
developed country, part accrues at home in terms of higher unskilled wages and tax
revenues.
- Developing to Developed Country Flows
Developed countries are now actively seeking to recruit skilled workers from
abroad to work in IT, education and health sectors. One immediate reaction is that if
the advanced economies gain, the developing countries from which these skilled
workers emigrate must necessarily lose. The loss of the services of skilled people,
even temporarily, reduces total output, and hence the taxes base. Depending on the