Optimal Education Policies And Comparative Advantage
AbstractWe consider the optimal education policies of a small economy whose government has a limited budget. Initially, the economy is closed and the government chooses its education policy to maximize welfare under autarky. Then the economy trades with the rest of the world. Lastly, the government chooses a new education policy that maximizes welfare under trade. Is it ever optimal for the government to choose its new policy so that it reverses the economy's comparative advantage? We find that if the budget stays fixed when it is optimal to `move up the skills chain' it is not feasible. In such a case a foreign loan is welfare imroving. A move in the opposite direction can be optimal and when it is optimal it is also feasible.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Pacific Economic Review.
Volume (Year): 16 (2011)
Issue (Month): 5 (December)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=1361-374X
Other versions of this item:
- Spiros Bougheas & Richard Kneller & Raymond Riezman, 2009. "Optimal Education Policies and Comparative Advantage," CESifo Working Paper Series 2631, CESifo Group Munich.
- Spiros Bougheas & Richard Kneller & Raymond Riezman, . "Optimal Educational Policies and Comparative Advantage," Discussion Papers 09/02, University of Nottingham, GEP.
- F11 - International Economics - - Trade - - - Neoclassical Models of Trade
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
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