Economic Development

In theorizing the evolvement of distinct education-training regimes, factors related to industrial growth and capitalist development represent one set of potential determinants. Economic theory has long recognized that educational improvement and economic ad- vancement go hand and hand (see e.g., Becker 1964; Goldin and Katz 2009), and this association has frequently been used to explain historical and cross-national variations in the institutions providing education and training (e.g., Gellner 1964, 1983). In these ex- planations, the level of affluence is regularly identified as a core factor, but the levels of industrialization, openness, and diversity found in an economy also play significant roles. It is not unreasonable to think then that these four elements have been similarly important in shaping the provision of general education and vocational training in modern societies.

National Affluence. Given that wealthier countries tend to have more generous social programs, one might expect higher national affluence to produce a greater emphasis on school-based forms of education. Schools require significant resources to establish and operate on a permanent basis, so they are only likely to appear and grow in societies with significant wealth. Demand for schools might also be higher in these societies because they generally exhibit a strong preference for collective, often public, institutions in the

provision of welfare goods and services, like education (Wagner’s Law). Societies develop these preferences because economic development often engenders dramatic social change that undermines existing systems of social protection and support (Kerr et al. 1960; Wilen- sky 1975; Wilensky and Lebeaux 1958). By increasing the provision of education, states can both facilitate this economic transition and address its social consequences (Kerr et al. 1960). While firm-based training can meet some of these new demands, it should be a more attractive to poorer societies than wealthier ones. This is due to the fact that firm- based training generally requires little public investment, as most of the costs associated with this form of training can be passed on to trainees and their employers.

Industrial Activity. Despite the close historical association between increasing indus- trialization and rising affluence, a greater emphasis on industrial activity in a capitalist economy should favor the rise of vocational training over the expansion of general educa- tion. Building and maintaining a robust industrial sector requires a substantial number of workers trained in increasingly advanced and specialized forms of production. In an in- dustrializing economy, these labor demands can most directly be satisfied on a mass scale through the extension of vocational training – both firm-based and school-based – as this form of education encourages early integration into the labor force and focuses on the ac- quisition of more technical and specific skills (Finegold and Soskice 1988; Iversen and Stephens 2008; Streeck 1992). Assuming that its internal interests and actions are suffi- ciently aligned, a large industrial sector is likely to be a strong and influential proponent for this approach given its labor needs and economic clout (Hall and Soskice 2001). Of course, the emergence of a robust service sector could reverse some of these incentives and make general education more desirable for workers and firms (Goldin and Katz 2009).

Trade Openness. A higher level of trade openness might further strengthen the de- mand and preference for technical-oriented education because it exposes many economic

sectors to more direct competition and technological change. To withstand these ampli- fied competitive pressures and exploit new growth opportunities, affected firms and their workers must continually improve their productivity through new investments in innova- tive processes and specific skills, thus making specialized education a central priority for these actors (Katzenstein 1986). When it comes to selecting the delivery method for this education, however, there are competing logics for firm- and school-based systems. On the one hand, the firm-based approach, with its emphasis on in-plant training and capital-labor oversight, can be quite efficient in transmitting relevant skills and giving those most im- pacted by increased trade a dominant say in its design and operation. On the other hand, the school-based approach, with its greater access to state financing, can serve as a mecha- nism for compensating certain segments of the economy for the heightened risks they face with greater trade liberalization (Cameron 1978; Garrett 1998; Katzenstein 1986; Rodrik 1997).

Economic Diversity. Variations in economic diversity at the subnational level should also impact the direction of educational reform and expansion, with greater diversity across geographical regions decreasing the likelihood of a viable firm-based training system emerg- ing. Creating and sustaining a scheme for firm-based training on a mass scale requires a high degree of coordination among employers and employees, and such a level of coor- dination can only emerge when internal divisions within these economic groups are mini- mal (Tolliday and Zeitlin 1991). Sharp divergences in the makeup of regional economies should work against broad non-market coordination, as there is a strong potential for dis- cord among key stakeholders (Mares 2003). One point of disagreement may well be the direction of education because some firms and workers are likely to find the transferable skills provided by general education very attractive in an economic environment that is highly fragmented.