an empirical growth model for major oil exporters this paper develops a long run output relation for a major oil exporting economy where the oil income to output ratio remains su ciently high over a prolonged period it extends the stochastic growth model developed in binder and pesaran 1999 by including oil exports as an additional factor in the capital accumulation process the paper distinguishes between the two cases where the growth of oil income g 0 is less than the natural growth rate the sum of the population growth n and the growth of

natural resources curse or blessing are natural resources a curse or a blessing the empirical evidence suggests that either outcome is possible this paper surveys a variety of hypotheses and supporting evidence for why some countries benefit and others lose from the presence of natural resources these include that a resource bonanza induces appreciation of the real exchange rate deindustrialization and bad growth prospects and that these adverse effects are more severe in volatile countries with bad institutions and lack of rule of law corruption presidential democracies and underdeveloped financial systems another hypothesis is that a resource boom reinforces rent grabbing and civil conflict especially if institutions are bad induces corruption especially in nondemocratic countries and keeps in place bad policies finally resource rich developing economies seem unable to successfully convert their depleting exhaustible resources into other productive assets the survey also offers some welfare based fiscal rules for harnessing resource windfalls in developed and developing economies

country specific oil supply shocks and the global economy a counterfactual analysis abstract this paper investigates the global macroeconomic consequences of country specific oil supply shocks our contribution is both theoretical and empirical on the theoretical side we develop a model for the global oil market and integrate this within a compact quarterly model of the global economy to illustrate how our multi country approach to modeling oil markets can be used to identify country specific oil supply shocks on the empirical side estimating the gvar oil model for 27 countries regions over the period 1979q2 to 2013q1 we show that the global economic implications of oil supply shocks due to for instance sanctions wars or natural disasters vary considerably depending on which country is subject to the shock in particular we find that adverse shocks to iranian oil output are neutralized in terms of their effects on the global economy real outputs and financial markets mainly due to an increase in saudi arabian oil production in contrast a negative shock to oil supply in saudi arabia leads to an immediate and permanent increase in oil prices given that the loss in saudi arabian production is not compensated for by the other oil producers as a result a saudi arabian oil supply shock has significant adverse effects for the global economy with real gdp falling in both advanced and emerging economies and large losses in real equity prices worldwide

how to effectively stabilize china s commodity price fluctuations abstract the bulk commodities are basic goods and their price fluctuations are directly related to the stability of a country s macro economy investigating the main driving forces of the commodity price fluctuations is the key to stabilizing the macro economy ignoring the objective facts that there are a large number of nonlinear relationships between economic variables most of the existing scholars use the linear models to commodity price fluctuations to compensate for the shortcomings of existing research this paper uses the nonparametric additive regression model with data driven features to investigate the main driving forces of china s commodity price fluctuations the results show that exchange rate has an early promotion late inhibition inverse u shaped nonlinear effect on commodity price fluctuations because the renminbi appreciates in the early stages but depreciates in the later stages the nonlinear impact of the real economy also appears an inverted u shaped pattern due to the changes in growth mode of the real economy similarly international oil price produces an inverted u shaped nonlinear effect owing to the rise in international oil prices in the early stages and the decline in the later stages however the money supply has an early inhibition late promotion positive u shaped nonlinear effect on commodity prices therefore government departments should formulate targeted policies over time to effectively stabilize china s commodity prices

the 40 neoclassical aggregate theory of production the assumption that production in an economic system may be described by an aggregate neoclassical production function is at the heart of most modern equilibrium neoclassical business cycles and growth models its validity requires stringent assumptions on individual production functions and market structure in this article the likelihood that an aggregate neoclassical production function could emerge from a simple heterogeneous production system is assessed by the use of computer simulations the conclusion is that there exists a world of significant size for which the aggregate neoclassical theory of production does not hold

the elusive curse of oil abstract our goal is to show that contrary to the claims made in several recent papers the effect of a large endowment of oil and other mineral resources on long term economic growth of countries has been on balance positive moreover the claims of a negative effect of oil and mineral wealth on the countries institutions are called into question

solvency rule versus taylor rule an alternative interpretation of the relation between monetary policy and the economic crisis one of the more debated interpretations of the economic crisis that started in 2007 08 is based on the taylor rule equation namely the idea that over the period 2002 05 the fed has implemented a low interest policy that has led to the housing bubble and finally to the great recession this paper shows that the taylor rule equation not only rests on the so called new consensus macroeconomics but also on the neoclassical theory of growth the various criticisms raised against these theoretical foundations suggest that interpretations of the great recession based on the taylor rule equation are building their arguments on shaky theoretical premises furthermore this paper shows that an equation formally similar but logically alternative to the taylor rule can be regarded as the expression of a general condition of solvency of firms and workers according to this solvency rule the prevailing outcome of monetary policy decisions is the regulation of insolvencies

oil price volatility financial institutions and economic growth abstract theory attributes finance with the ability to both promote growth and reduce output volatility and therefore increase energy security but evidence is mixed partly due to endogeneity effects for example financial institutions themselves might be a source of volatility as the events of 2008 suggest we address this endogeneity issue by using periods of extreme oil price volatility as a source of nearly exogenous volatility to study the effect of finance to do this we develop a quasi natural experiment and study the effect of the dramatic decline of oil prices in 2014 using a synthetic control methodology our hypothesis is that the ability of oil rich countries to mitigate the effects of this decline rested on the quality of their financial institutions we focus on 11 oil rich countries between 2006q1 and 2016q4 that had poor measures of financial development treatment group out of 20 such countries and synthetically create counterfactuals from the remaining control group with superior financial development we subject both to the oil price shock of 2014 and find evidence that better financial institutions do indeed reduce output volatility and mitigate its negative effect on growth in the year that showed a sustained decline in oil price to address any remaining potential endogeneity between oil prices and finance we use a cross sectionally augmented autoregressive distributed lag model with data on 30 oil producing countries over the period 1980 2016 and confirm that the effects of oil volatility on growth is mitigated with better financial institutions our results make a strong case for the support of the positive role of financial development in improving energy security and fostering growth

what is this school called neoclassical economics what is this school called neoclassical economics does it exist should it where does the term neoclassical economics come from and is there any connection between any of the current interpretations of the term and its original meaning how do we make sense of competing current interpretations is there a sustainable formulation these and related questions are raised and answered in an attempt to bring clarity to ongoing economic discussion and debate thereby to under labour for a more relevant academic economics discipline

the impact of terms of trade and real exchange rate volatility on investment and growth in sub saharan africa abstract specialization in primary product exports reduces growth but why adverse trends in and the high variance of primary product prices are possible explanations the impact on investment and growth of the level and volatility of the terms of trade and the real effective exchange rate is estimated for a panel of 14 sub saharan african countries over 1980 1995 growth is negatively affected by terms of trade instability and investment by real exchange rate instability both growth and investment increase when the terms of trade improve and real exchange rate overvaluation is eliminated

resource richness and economic growth in contemporary u s abstract we study the effects of energy innovation and policy on income growth between 1997 and 2014 us corn soybean and cotton production almost fully converted to genetically modified crops starting around 2007 improved tight oil and shale gas technologies turned the declining us fossil fuel production into a booming industry we study the effects of these two resource technology revolutions on us state income we find that the shale revolution increased income in states abundant in oil and gas resources states dependent on agricultural production also saw an increase in income which we however attribute not only to the gm innovation but to a demand increase brought by the energy policy act of 2005

pasinetti versus rebelo two different models or just one abstract pasinetti s pasinetti l l 1960 a mathematical formulation of the ricardian system review of economic studies 27 78 98 model formalizing ricardian growth theory and one of the simplest models developed within the new growth theory rebelo s 1991 long run policy analysis and long run growth journal of political economy 99 500 521 are shown to share the same structure this enforces the thesis according to which many endogenous growth models have a classical flavour the main difference from pasinetti s to rebelo s framework may be interpreted as reflecting the change in the consumption pattern of workers from early to late industrial societies

oil exporters dilemma how much to save and how much to invest summary policymakers in oil exporting countries confront the question of how to allocate oil revenues among consumption saving and investment in the face of high income volatility we study this allocation problem in a precautionary saving and investment model under uncertainty consistent with data in the 2000s precautionary saving is sizable and the marginal propensity to consume out of permanent shocks is below one in stark contrast to the predictions of the perfect foresight model the optimal investment rate is high if productivity in the tradable sector is high enough

profit rent and the terms of trade a reply abstract andrews 1985 investigates the theoretical coherence and policy relevance of our 1982 model and concludes contrary to our own findings that a positive rate of profit is not necessary to obtain a two signed derivative of the profit rate with respect to agriculture s terms of trade she characterizes the model as neo ricardian on the grounds that the technology is the culprit and also questions the empirical relevance of our fixed profit equilibrium or land price treadmill we show here that if a viability condition stated in our original paper holds parameter values of the model must yield a positive rate of profit if the profit rate is to fall following an improvement in the terms of trade we then contrast our model with a more neoclassical one in which the sign of the derivative does strictly depend on the technology that is upon factor intensities finally we present empirical evidence from a detailed study of the u s economy based on our original model these data support the existence of a land price treadmill in agriculture especially for countries in which workers are successful in defending a given real wage

resource intensity institutions and development summary we examine the relationship between resource abundance and several indicators of human welfare consistent with the existing literature on the relationship between resource abundance and economic growth we find that given an initial income level resource intensive countries tend to suffer lower levels of human development while we find only weak support for a direct link between resources and welfare there is an indirect link that operates through institutional quality there are also significant differences in the effects that resources have on different measures of institutional quality these results imply that the resource curse is a more encompassing phenomenon than previously considered and that key differences exist between the effects of different resource types on various aspects of governance and human welfare 2005 elsevier ltd all rights reserved

the classicals and the neoclassicals a rejoinder to frank hahn refutes the classical and marxist analysis of prices and competition presentation of an intertemporal equilibrium model in a simple formalism possibility of locating prices of production and a distributed profit rate in an intertemporal equilibrium relationship between prices in intertemporal equilibrium and prices of production ebsco

commodity prices and growth an empirical investigation whereas empirical evidence on the effect of higher commodity prices on the long run growth of commodity exporters is ambiguous time series analyses using vector autoregressive var models have found that commodity booms raise income in the short run in this paper we adopt panel error correction methodology to analyze global data for 1963 to 2008 to disentangle the short and long run effects of international commodity prices on output per capita our results show that commodity booms have unconditional positive short term effects on output but non agricultural booms in countries with poor governance have adverse long term effects which dominate the short run gains our findings have important implications for non agricultural commodity exporters with poor governance especially in light of the recent wave of resource discoveries in low income countries

persistent gaps and default traps we show how vicious circles in countries credit histories arise in a model where output persistence is coupled with asymmetric information about output shocks in such an environment default signals the borrower s vulnerability to adverse shocks and creates a pessimistic growth outlook this translates into higher interest spreads and debt servicing costs relative to income raising the cost of future repayments thereby creating default traps we build a long and broad cross country dataset to show the existence of a history dependent default premium and of significant effects of output persistence on sovereign creditworthiness consistent with the model s predictions

winners and losers in the commodity lottery the impact of terms of trade growth and volatility in the periphery 1870 1939 abstract most countries in the periphery specialized in the export of just a handful of primary products for most of their history some of these commodities have been more price volatile than others and those with more volatility have grown much more slowly relative to the industrial leaders and to other primary product exporters this fact helps explain the growth puzzle noted by easterly kremer pritchett and summers more than a decade ago that the contending fundamental determinants of growth institutions geography and culture exhibit far more persistence than do the growth rates they are supposed to explain using a new panel database for 35 countries this paper estimates the impact of terms of trade volatility and secular change on country performance between 1870 and 1939 volatility was much more important for growth than was secular change and accounts for a substantial degree of the divergence in incomes within the sample of small commodity dependent periphery nations as well as under performance of the periphery as a whole relative to such nations as the us and western europe or core one channel of impact seems to be the adverse effect of volatility on foreign investment it appears that the terms of trade effects were asymmetric between core and periphery

natural resources education and economic development economic growth since 1965 has varied inversely with the share of natural capital in national wealth across countries four main channels of transmission from abundant natural resources to stunted economic development are discussed a the dutch disease b rent seeking c overconfidence and d neglect of education public expenditure on education relative to national income expected years of schooling for girls and gross secondary school enrolment are all shown to be inversely related to the share of natural capital in national wealth across countries natural capital appears to crowd out human capital thereby slowing down the pace of economic development

the narrow moving band the dutch disease and the competitive consequences of mrs thatcher notes on trade in the presence of dynamic scale economies abstract this paper presents a model of trade in which comparative advantage instead of being determined by underlying attributes of countries evolves over time through learning by doing in this model arbitrary patterns of specialization once established tend to become entrenched over time the model sheds light on three widely held views that do not make sense in more conventional models first is the view that temporary protection of selected sectors can permanently alter the pattern of comparative advantage in the protecting country s favor second is the view that seemingly favorable developments such as the discovery of exportable natural resources may lead to a permanent loss of other sectors and reduce welfare in the long run third is the possibility that a temporary overvaluation of a currency due to tight money can lead to a permanent loss of competitiveness in some sectors

booming sector and de industrialisation in a small open economy this paper presents a theoretical analysis of the dutch disease the phenomenon whereby a boom in one traded goods sector squeezes porfitability in other traded goods sectors both by directly bi

sraffa s system equal rate of profits and the notion of center of gravitation abstract this paper argues that the condition of uniform rate of profits in sraffa s system is not based on his implicit assumption that the system is at the equilibrium or the center of gravitation it is rather a logical requirement of a reproducing system of basic goods as long as prices are not imposed from outside the system this condition holds irrespective of supplies being equal to their respective effectual demands it conjectures that sraffa could have arrived at this conclusion through his analysis of the standard system on the basis of this result a critique of the received interpretation led by garegnani of sraffa s prices is developed

the role of economic theory in modelling the long run this argues for a closer link between the modelling of the long run relations in applied economics and the intertemporal equilibrium notion from economic theory this abstract was borrowed from another version of this item

sraffian indeterminacy in general equilibrium the indeterminacy claim for competitive price systems made by sraffa 1960 is examined by placing sraffa s work in an intertemporal general equilibrium model we show that indeterminacy occurs at a natural type of equilibrium moreover the presence of linear activities instead of a differentiable technology is crucial and the indeterminacy is constructed as in sraffa by fixing some or all of the economy s aggregate quantities on the other hand an extra condition that some factors have inelastic excess demand is necessary and unlike sraffa s model relative prices must be allowed to vary through time sraffian indeterminacy and the generic finiteness of the number of equilibria are reconciled by showing that indeterminacy occurs at a measure zero set of endowments we use an overlapping generations model to show that these endowments nevertheless arise systematically and that indeterminacy does not occur when relative prices are constant through time near the beginning of his production of commodities by means of commodities 1960 sraffa specifies a system of equations that prices must obey if the capital invested in each sector of an economy is to earn the same rate of profit the system contains one more unknown than equation leading sraffa to conclude that prices and wage and interest rates in particular are indeterminate sraffa s book has since been read as arguing that some outside non economic consideration must therefore set prices and the distribution of income part of the controversy the book has provoked is due to sraffa s apparent agreement with the neoclassical emphasis on optimization and competitive markets the standard sraffian system of equations is nothing other than the first order conditions that hold for price taking profit maximizing firms using linear activities but if sraffa s assumptions are in accord with neoclassical theory how can his assertions of indeterminacy be correct i examine sraffa s indeterminacy argument and his critique of neoclassical economics by embedding his equations in a general equilibrium model as we will see the indeterminacy claim properly interpreted correctly describes the equilibria with strictly positive prices moreover the indeterminacy demonstrated here closely duplicates the indeterminacy sraffa claimed first it is prices alone that are indeterminate i follow sraffa s striking procedure of fixing the quantities of goods produced an infinity of normalized price vectors support a single vector of aggregate quantities second sraffa seemed to claim and his advocates e g robinson 1961 have certainly claimed that his book is a critique of marginal productivity theory correspondingly indeterminacy in the present model hinges on marginal products not being everywhere well defined when there are linear activities with smooth production sets our indeterminacy arguments do not work third the dimension of the indeterminacy i demonstrate matches sraffa s accounting of the dimension of indeterminacy

revisiting imf expenditure conditionality we study the long run relationship between expenditure conditionality in imf programmes and the composition of public spending we compile a granular dataset on government expenditure conditions in

the impact of energy price uncertainty on macroeconomic variables abstract this paper evaluates the macroeconomic implications of energy price volatility through the lens of a dynamic stochastic general equilibrium dsge model in an open economy the model develops a small open economy in which households consume energy products and firms use energy as productivity inputs where the country is so small that it needs to import energy the price of which is determined abroad whereas positive energy price shocks cause an economic slowdown due to higher costs for consumers and firms energy price volatility shocks generate an increase in gdp in the short run and a reversal in the long run these findings are empirically supported by estimates from a panel var model applied to 10 asian economies where energy price volatility has a positive impact on gdp in the short run moreover the paper finds that increasing demand or supply uncertainty also affect energy prices with amplified fluctuations relative to a model that abstracts from energy market volatility leads households to cut consumption for precautionary savings motives which in turn increases investment both energy price and uncertainty fluctuation lead to high macroeconomic volatility in the business cycle policy makers should encourage investment in energy security and renewable energy such that households and firms would become less responding to fluctuations in the non renewable energy market

real exchange rate uncertainty private investment in ldcs this paper examines empirically the link between real exchange rate uncertainty and private investment in developing countries using a large cross country time series data set the paper builds a garch based measure of real exchange rate volatility and finds that it has a strong negative effect on investment after controlling for other standard investment determinants and taking into account their potential endogeneity the effect of uncertainty is not uniform however there is some evidence of threshold effects so that uncertainty only matters when it exceeds some critical level in addition the negative effect of real exchange rate uncertainty on investment is significantly larger in economies that are highly open and in those with less developed financial systems

asymptotic properties of a leontief economy abstract in this paper we discuss the asymptotic properties of equilibrium quantities of a leontief economy when agents have additively separable utilities we estimate the rate of growth of equilibrium quantities and prices that either tend to zero or infinity or remain bounded below and above by strictly positive vectors in the case of homogeneous preferences we prove that the quantities of any equilibrium converge to those of an equilibrium that grows at a constant rate

the contemporary relevance of a cambridge tradition economics as political economy political economy as social theory and ethical theory in this review essay i set out key aspects of nuno martins the cambridge revival of political economy in so doing i also provide some comments on the current state of economics since these provide some context for an appreciation of what martins is trying to achieve martins is focused on making the positive case for classical political economy cpe as a form of theory that is quite different from the modern mainstream for martins that difference is based on its approach to the distribution of a surplus expressed through a social ontology that is based on historical open systems and in which the key aspect of open systems is the institutional and hence deliberative activity by which the surplus is decided which is ultimately an issue for ethics it is through a cambridge tradition focusing on sraffa keynes lawson and sen that cpe a classical social theory and ethical deliberation are brought together bringing them together is an act of synthesis and i conclude by providing a constructive critique of the terms of this synthesis

the neo ricardians focuses on the neoclassical theory of economics in great britain calculation for the standard commodity assumptions of piedro sraffa on the cycle of production functions of the rate of return ebsco

the differential effects of oil demand and supply shocks on the global economy abstract we employ a set of sign restrictions on the impulse responses of a global var model estimated for 38 countries regions over the period 1979q2 2011q2 as well as bounds on impact price elasticities of oil supply and oil demand to discriminate between supply driven and demand driven oil price shocks and to study the time profile of their macroeconomic effects across a wide range of countries and real financial variables we show that the above identification scheme can greatly benefit from the cross sectional dimension of the gvar by providing a large number of additional cross country sign restrictions and hence reducing the set of admissible models the results indicate that the economic consequences of a supply driven oil price shock are very different from those of an oil demand shock driven by global economic activity and vary for oil importing countries compared to energy exporters while oil importers typically face a long lived fall in economic activity in response to a supply driven surge in oil prices the impact is positive for energy exporting countries that possess large proven oil gas reserves however in response to an oil demand disturbance almost all countries in our sample experience long run inflationary pressures an increase in real output a rise in interest rates and a fall in equity prices

cross country evidence on the link between volatility and growth this paper presents empirical evidence against the standard dichotomy in macroeconomics that separates growth from the volatility of economic fluctuations in a sample of ninety two countries as well as a sample of oecd countries the authors find that countries with higher volatility have lower growth the addition of standard control variables strengthens the negative relationship the authors also find that government spending induced volatility is negatively associated with growth even after controlling for both time and country fixed effects copyright 1995 by american economic association

oil abundance and income inequality the paper empirically investigates the impact of natural resource abundance in particular oil on income disparities it employs common correlated effects pooled mean group methodology for estimation to account for the cross country heterogeneity and cross section dependence in the oil inequality nexus in a sample of developed and developing countries we find that oil abundance as well as oil dependence reduce income inequality this inequality reducing effect is highly likely to operate from better education attainments and improved health status due to oil booms

social accountability to contain corruption in this paper we investigate the welfare properties of simple reappointment rules aimed at holding public officials accountable and monitoring their activity public officials allocate budget resources to various activities delivering public services to citizens officials have discretion over the use of resource and can divert some of them for private ends due to a liability constraint zero diversion can never be obtained in all states the optimal reappointment mechanism under complete information is shown to exhibit some leniency in the absence of information a rule with random verification in a pre announced subset is shown to be optimal surprisingly most common rules make little use of hard information about service delivery when available by way of contrast requesting that the public official defend his record publicly can be very useful if service users can refute false claims with cheap talk complaints the first best complete information outcome can be approached

sraffian indeterminacy a critical discussion this paper is aimed at discussing mandler s interpretation of sraffa s price theory in particular we will analyse mandler s idea that an institutional determination of distribution suggested by sraffa could be solidly advanced only in the case of equilibrium price indeterminacy in intertemporal sequential models first it will be shown that this kind of indeterminacy arises from an arbitrary use of the tendency to a uniform rate of return on the supply prices of capital goods second it will be remarked that when sraffa s contribution is placed as it should within the classical theory of value and distribution no price or sraffian indeterminacy will result finally we will argue that mandler s emphasis on the non arbitrariness of the capital goods endowments which is at the root of his indeterminacy result naturally leads to refer to those normal positions of the economy whose only possible consistent determination is sraffa s price theory copyright the author 2011 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

finance and the sources of growth the authors evaluate whether the level of development in the banking sector exerts a causal impact on economic growth and its sources total factor productivity growth physical capital accumulation and private saving they use 1 a pure cross country instrumental variable estimator to extract the exogenous component of banking development and 2 a new panel technique that controls for country specific effects and endogeneity they find that banks do exert a large causal impact on total factor productivity growth which feeds through to overall gdp gross domestic product growth the long run links between banking development and both capital growth and private savings are more tenuous

natural resources and economic growth the role of investment is it possible that excessive reliance on natural resources affects saving and investment in a way that retards economic growth and thus in the long run the level of output per capita this paper reviews the literature explores the data and compares and contrasts the explanatory power and interplay of natural resources and civil liberties our proxy for institutional variables currently under scrutiny in the literature we propose that natural resource dependence may be viewed as an exogenous factor that impedes economic growth and investment as well as institutions even if we stress that natural resource abundance may be good for growth

on the keynesian notion of equilibrium and dynamics harrod had always maintained that keynes s treatise was much more amenable for dynamic analysis than the general theory however in much of the later work on keynesian dynamics the general theory became the foundation in this paper i argue that recent developments in neoclassical general equilibrium theory have the effect of undermining the conventional keynesian conception of dynamics based on the general theory and recasting keynes as a coarse precursor of modern general equilibrium analysis opposing this renewed orthodox reinterpretation of keynes might require a reconsideration of the treatise as the foundation for an alternative keynesian dynamics 1996 academic press limited

returns to investment in education a global update the author updates compilations of rate of return estimates to investment in education published since 1985 and discusses methodological issues surrounding those estimates some key patterns among the three main levels of education primary education continues to exhibit the highest social profitability in all world regions private returns are considerably higher than social returns because of the public subsidization of education the degree of public subsidy increases with the level of education which is regressive social and private returns at all levels generally decline by the level of a country s per capita income overall the returns to female education are higher than those to male education but at individual levels of education the pattern is more mixed the returns to the academic secondary school track are higher than the vocational track since unit cost of vocational education is much higher and the returns for those who work in the private competitive sector of the economy are higher than in the public noncompetitive sector and the returns in the self employment unregulated sector of the economy are higher than in the dependent employment sector controversies in the literature are discussed in the light of the new evidence the undisputable and universal positive correlation between education and earnings can be interpreted in many ways the causation issue on whether education really affects earnings can be answered only with experimental data generated by randomly exposing different people to various amounts of education given the fact that moral and pragmatic considerations prevent the generation of such pure data researchers have to make do with indirect inferences or natural experiments some have been attempted the author looks at the research on overeducation or surplus schooling the conclusions reinforce earlier patterns they confirm that primary education continues to be the number one investment priority in developing countries they also show that educating females is marginally more profitable than educating males that the academic secondary school curriculum is a better investment than the technical vocational tract and that the returns to education obey the same rules as investment in conventional capital that is they decline as investment is expanded