One of the baffling things in explaining the Industrial Revolution is that education, that pillar most economists believe to be critical for economic growth, seems to have played a relatively minor role. Universal public education was a consequence rather than a cause of the Industrial Revolution. Eighteenth-century England did not first have a skilled population before it had an economic transformation; the uncomfortable truth is that it was the other way round.
This uncomfortable truth does not suggest that formal education was completely unimportant. It suggests, instead, that much of what caused the Industrial Revolution was the scientific knowledge obtained by an elite group of highly skilled artisans, inventors and entrepreneurs.
It was not the average level of education of every Brit that mattered. Most of the breakthrough technologies of the era – the Spinning Jenny, the steam engine – came instead from upper-tail tinkerers who had hoped to make a profit from their innovations.
A wonderful new research paper by economists Mara Squicciarini and Nico Voigtländer in the Quarterly Journal of Economics confirm this. They use the subscriber list to the mid-eighteenth century French magazine Encyclopédie to show that knowledge elites mattered in explaining the first Industrial Revolution: in those French towns and cities where subscriber density to the magazine was high, cities grew much faster in the following century, even when controlling for a variety of other things, like wealth and general levels of literacy.
Their explanation? Knowledge elites (engineers, scientists, inventors) raise the productivity at the local level through their piecemeal innovations, with large positive spill-overs for everyone around them.
Fast-forward to the 21st century. High-skilled workers are the stars of today’s knowledge economy. Their innovations and scientific discoveries spur productivity gains and economic growth. Think, for example, of the immense contributions of Sergey Brin’s Google, or Elon Musk’s Tesla, or even Jan Koum’s WhatsApp. It is for this reason that the mobility of such highly talented individuals has become such an important topic – consider that all three individuals mentioned above are immigrants to the US. There is little doubt that the most prosperous economies of the future will be the ones to attract the most skilled talent.
Which is why understanding the push-and-pull factors of current global talent flows is so important, and the subject of an important new article in the forthcoming Journal of Economic Literature. The four authors begin with the facts. High-skilled elites are more mobile: between 1990 and 2010, the number of migrants with a tertiary degree increased by 130%; those with only primary education increased by only 40%. More of these high-skilled migrants depart from a broader range of countries and head to a narrower range.
While Organisation for Economic Co-operation and Development (OECD) countries constitute less than a fifth of the world’s population, they host two-thirds of high-skilled migrants. Seventy percent of these are located in only four countries: the US, the UK, Canada and Australia.
The United States, unsurprisingly, dominates all rankings. Since the 1980s, of all the Nobel Prizes awarded for physics, chemistry, medicine and economics, academics associated with American institutions have won over 65%, yet only 46% of this group was born in the US.
One fascinating and under-appreciated fact of global migrant flows is the role of highly educated women. Between 1990 and 2010, high-skilled women immigrants to OECD countries increased from 5.7m to 14.4m; in fact, by 2010, the stock of highly skilled women migrants exceeded male migrants! As the authors note, “Africa and Asia experienced the largest growth of high-skilled female emigration, indicating the potential role of gender inequalities and labour market challenges in origin countries as push factors.”
Cue South Africa. The authors calculate the emigration rates of high-skilled individuals by country for 2010, and plot these on a graph. SA is a clear outlier: our emigration of high-skilled individuals is the sixth highest of the countries included, and by far the highest for countries with more than 10m people. This is worrisome. True, some of this emigration is made up by high-skilled immigrants from our African neighbours, like Zambia and Zimbabwe, who also have high emigration rates. But the fact remains: our economic outlook will remain precarious if we continue to shed high-skilled individuals at these exorbitant rates.
Is there something to do? The authors mention various push and pull factors that affect the decision to migrate, from gatekeepers that pull the best talent by giving citizenship based on a points system to repressive political systems that suppress freedom of speech and scientific discovery and push the best and brightest to emigrate. If SA is to prosper, high-skilled individuals should be recruited and retained – not pushed to find opportunities elsewhere. Protests at universities do not help; providing residency to graduates, as government has proposed, will.
In the knowledge economy, knowledge elites are the bedrock of success. If we are to learn from history, cultivating them should be our number one priority.
This article originally appeared in the 3 November edition of finweek. Buy and download the magazine here.