EDUCATIONAL OUTCOMES IN OECD COUNTRIES
26
Importantly, after all people in the labor force have obtained the new and improved
education (in 2070), annual growth will be 0.47 percentage points higher. This implies
that each country that achieves the average improvement of ¼ standard deviation of
achievement will have a cumulative impact on the economy through 2090 that is equal to
288 percent of current year GDP. The first column of Table 7 provides these discounted
values of all of the future increases through 2090 for each OECD country. The dollar
value for each country varies by the level of GDP in 2010 - but the total impact across
the OECD is $123 trillion in present value.
Because these are put into present value terms, they can be compared to current
economic values. For example, these calculations indicate that the value of
improvements through long-run growth far outstrips the cost of the current worldwide
recession (and are much larger than the worldwide fiscal stimulus efforts).
5.2.2. Scenario II: Bring each country to Finland average level (of 546 PISA points)
The success of Finland on the PISA tests is well-known. In the second scenario, the
performance of Finnish students is taken as a benchmark for the performance levels that
are possible. The economic impact calculated is found from projecting the impact on
growth for each OECD country under the assumption that it could bring itself to the top
of the rankings as identified by Finland - an average PISA score of 546.
Obviously, the amount of reform necessary varies by where each OECD country ranks
on PISA today. Commensurately, the impact on different economies varies by the size
of reform (in addition to the size of the economy itself). Finland, for example, under this
scenario would neither change its schools nor see any long-term economic changes. On
the other side, Mexico and Turkey would require enormous changes in their educational
achievement, and, if the changes were feasible, would see their economies completely
transformed.
Columns (2)-(5) of Table 7 present the country-by-country impacts of these changes.
On average, the OECD countries would see a nearly 50 point increase in performance
(one-half standard deviation). While the change in Japan or Korea amounts to about 5
points, the change in Mexico is 144 points - an almost inconceivable change given
current knowledge of how to transform schools or cognitive skills in general. (Again,
the calculations assume that adjustment is complete within 20 years. An alternative view
would be that a number of countries would actually require more than 20 years for a
reform program to yield such large changes. We model the implications in the
robustness analyses below).
The present value for OECD improvements under this scenario is $275 trillion, or
more than six times the current GDP of the OECD countries. The United States itself,
which currently falls over 50 points behind Finland, would by historical growth patterns
see a present value of improved GDP of over $112 trillion, or some 40 percent of the
OECD total - reflecting both the size of the country and its distance behind Finland.
Germany would see a $17 trillion improvement, or more than five times current GDP.