Geoscience Reference
In-Depth Information
Table 11.4
Impacts of education investments on GDP growth rate and regional income ratio
(unit: %)
0 %
3 %
5 %
8 %
10 %
11 %
12 %
(1) GDP growth rate
2006
0.21
0.28
0.34
0.42
0.48
0.51
0.54
2010
1.22
1.18
1.16
1.17
1.19
1.21
1.23
2015
2.40
1.92
1.60
1.16
0.89
0.76
0.64
2020
4.84
3.37
2.87
0.87
0.93
2.15
3.48
Average
2.37
1.92
1.67
1.11
0.60
0.27
0.06
(2) Ratio of regional domestic products of ROK to SMA
2006
1.389
1.388
1.388
1.388
1.387
1.387
1.387
2010
1.302
1.292
1.285
1.276
1.269
1.266
1.264
2015
1.254
1.217
1.194
1.162
1.141
1.131
1.122
2020
1.255
1.179
1.131
1.064
1.022
1.001
0.980
Average
1.277
1.240
1.217
1.183
1.161
1.151
1.140
SMA
Seoul metropolitan area,
ROK
Rest of Korea
the population aging; rather, it would worsen the problem in the early stage of
investment periods (2006-2010). It would take 6 years to see a net positive change
in the GDP through investments in the universities. This consequence is attributed
to a pronounced mismatch or timing discrepancy between the cost input and the
output generation, where the slope of cost curve is constant over all simulation
periods and the GDP increases in a logistic trend. So the GDP gap (
ΒΌ
increase in
GDP
expenditure costs) could be negative from the first period (2006) to the fifth
period (2010), and positive after the sixth period (2011). On the other hand, the
improvement in labor productivity through educational investments is expected to
reduce the economic losses in terms of national economies but also increase the
income difference between the two regions. For example, the ratio of the GRP of
the ROK to the SMA decreases from 1.277 in the simulation with null growth rate
to 1.140 in the simulation with a 12 % annual growth rates on the investments. This
disparity is caused by different elasticity values of education by age cohort with
respect to the labor productivity for two regions: 1.062 for the SMA and 0.819 for
the ROK. More investments in the ROK could be a solution to tackle this regional
problem, but the consequence is unclear due to the chronic brain drain from the
ROK into the SMA, according to Shim and Kim (
2012
), who argue that the latter
region had a pulling effect on the college graduates of the former.
11.4.3 US Midwest Analysis
Drawing on some innovative proposals by Sadahiro and Shimasawa (
2002
) and
Ludwig et al. (
2007
), Kim and Hewings (
2013a
,
b
,
c
) explored the role of options
for enhancing productivity through investment in additional training. However, the
timing of the training and its frequency were not considered. A multiregional model
