University Rankings Game and its relation to GDP per capita and GDP growth

Tan Kuan Lu, Clifford (2014): University Rankings Game and its relation to GDP per capita and GDP growth.

Abstract

In this paper, ARWU is used as a benchmark of World-Class Universities (WCUs). Universities that are among the Top 500 are considered World-Class Universities.

The paper concludes that WCUs per capita (the number of World-Class Universities relative to the country’s population) is strongly related to the country’s GDP per capita. But WCU per capita has no effect on GDP growth.

There is an obvious increase in the significance level when the ranking lists used to define WCUs are expanded from Top 100 to Top 500. This suggests that to attain a higher GDP per capita, it is therefore more important for a country to have more decent World-Class Universities (in the top 500) than having only a few elite World-Class Universities (in the top 100).

When institutional factors are added into the regression model, clean government appears as the most important factor, followed by respect for property rights, business freedom, and investment freedom.

• Item Type: MPRA Paper
• Language: English
• Keywords: ARWU, University Rankings, University Rankings Game, GDP per capita, GDP growth, institutional factors, freedom from corruption
• Subjects: I - Health, Education, and Welfare > I2 - Education and Research Institutions > I23 - Higher Education ; Research Institutions; I - Health, Education, and Welfare > I2 - Education and Research Institutions > I24 - Education and Inequality; I - Health, Education, and Welfare > I2 - Education and Research Institutions > I25 - Education and Economic Development

References

2012 World Population Data Sheet, Population Reference Bureau.

Academic Ranking of World Universities (ARWU) 2013, http://www.shanghairanking.com/

Index of Economic Freedom 2013, Heritage Foundation, http://www.heritage.org/index/explore?view=by-region-country-year

GDP growth (annual %) 2012, World Bank, http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG

Ammermüller, A. and Kuckulenz, A. and Zwick, T. (2006), ‘Aggregate Unemployment Decreases Individual Returns to Education’, Discussion Paper, Centre for European Economic Research, no. 06-34.

Arrow, K. (1973), ‘Higher education as a filter’, Journal of Public Economics, vol. 2, issue 3, pp. 193-216.

Baldacci, E. and Clements, B. and Gupta, S. and Cui, Q. (2008), ‘Social Spending, Human Capital, and Growth in Developing Countries’, World Development, vol. 36, pp. 1317-1341.

Barro, J. (1991), ‘Economic Growth in a Cross Section of Countries’, Quarterly Journal of Economics, vol. 106, no. 2, pp. 407–43.

Barro, J. (1997), ‘Determinants of economic growth: A cross-country empirical study’, MIT Press.

Barro, J. (1999), ‘Human capital and growth in cross country regressions’, Swedish Economic Policy Review, vol. 6, pp. 237-77.

Becker, G. (1962), ‘Investment in human capital: a theoretical analysis’, Journal of Political Economy, vol. 70, pp. 9-49.

Becker, G. (1964), ‘Human capital’, New York: Columbia University Press.

Becker, G. (1967), ‘Human capital and the personal distribution of income: an analytical approach’, Woytinsky Lecture no.1, Ann Arbor : Institute of Public Administration.

Benhabib, J. and Spiegel, M. (1994), ‘The role of human capital in economic development: evidence from aggregate cross-country data’, Journal of Monetary Economics, vol. 33, pp. 143-174.

Benhabib, J. and Spiegel, M. (2005), ‘Human Capital and Technology Diffusion’, in P. Aghion and S. Durlauf, eds., Handbook of Economic Growth, North Holland: Amsterdam.

Bils, M. and Klenow, P. (1998), ‘Does schooling cause growth or the other way round?’, National Bureau of Economic Research (Cambridge, MA), Working Paper No. 6393.

Bils, M. and Klenow, P. (2000), ‘Does Schooling Cause Growth?’, American Economic Review, vol. 90, no. 5, pp. 1160-1183.

Bloom, David, David Canning and Kevin Chan (2006) ‘Higher Education and Economic Development in Africa’, Mimeo, Harvard University.

Brian G. Dahlin (2002), ‘The Impact of Education on Economic Growth: Theory, Findings, and Policy Implications’, Duke University, pdf from internet.

Bruton, J. (1996), ‘The political economy of poverty, equity and growth: Sri Lanka and Malaysia’, Oxford University Press.

Card, D. (1999), ‘The Causal Effect of Education on Earnings’, in Ashenfelter, O. and Card, D. (eds.), Handbook of Labor Economics, North-Holland: Amsterdam.

Cohen, D. and Soto, M. (2007), ‘Growth and human capital: good data, good results’, Journal of Economic Growth, vol. 12, no. 1, pp. 51–76.

Cohn, E. and Addison, J. (1998), ‘The economic returns to lifelong learning in OECD countries’, Education Economics, vol. 6, no. 3, pp. 253-307.

Conrad, C. and Pratt, A. (1985), ‘Designing for quality’, Journal of Higher Education, vol. 56, no. 6, pp. 601-622.

Cooray, A. V. (2009), ‘The role of education in economic growth’, Proceedings of the 2009 Australian Conference of Economists (pp. 1-27). Adelaide, Australia: South Australian Branch of the Economic Society of Australia.

Depken, C. and Mazonaite, (2009) ‘The world university rankings: do country characteristics matter?’, Department of Economics, The Belk College of Business, UNC Charlotte, http://belkcollegeofbusiness.uncc.edu/cdepken/P/rankedcolleges2.pdf

Dowrick, S. (2002), ‘The contribution of innovation and education to economic growth’, Melbourne Institute Economic and Social Outlook Conference, “Towards Opportunity and Prosperity”.

Durlauf, S. and Johnson, P. (1995), ‘Multiple Regimes and Cross-Country Growth Behavior’, Journal of Applied Econometrics, vol. 10, no.4, pp. 365-384.

Gemmell, N. (1996), ‘Evaluating the impacts of human capital stocks and accumulation on economic growth: some new evidence’, Oxford Bulletin of Economics and Statistics, vol. 58, no. 1, pp. 9-28.

Gittleman, M. and Wolff, E. (1993), ‘International Comparisons of Inter-industry Wage Differentials’, Review of Income and Wealth, vol. 39, issue 3, pp. 295–312.

Hanushek , E. (1995), ‘Interpreting Recent Research on Schooling in Developing Countries’, World Bank Research Observer, vol. 10, no.2, pp. 227-246.

Hanushek, E. and Kim, D. (1995), ‘Schooling, Labor Force Quality, and Economic Growth’, NBER Working Paper, no. 5399. Hanushek, E. (1996), ‘A more complete picture of school resource policies’, Review of Educational Research, vol. 66, no. 3, pp. 397-409.

Hanushek, E. and Kimko, D. (2000), ‘Schooling, Labor Force Quality, and the Growth of Nations’, The American Economic Review, vol. 90, pp. 1184-1208.

Hanushek, E. and Woessmann, L. (2007), ‘The role of education quality in economic growth’, Policy Research Woring Paper, World Bank, no. 4122.

Harmon, C., and Oosterbeek, H. and Walker, I. (2000), ‘The Returns to Education. A Review of Evidence, Issues and Deficiencies in the Literature”, Centre for the Economics of Education, LSE.

Harmon, C. and Oosterbeek, H. and Walker, I. (2003), ‘The returns to education: Microeconomics’, Journal of Economic Surveys , vol. 17, no.2.

Howitt, P. (2013), ‘From curiosity to wealth creation: how university research can boost economic growth’, commentary, Institut C.D. Howe Institute, no. 383.

Jamison, E. and Jamison, D. and Hanushek, E. (2006), ‘The effects of education quality on mortality decline and income growth’, paper prepared for the International Conference on the Economics of Education, “How do recent advances in economic thinking contribute to the major challenges faced by education?”, Dijon, France.

Krueger, A. and Lindahl, M. (1998), ‘Education for growth: why and for whom?’, Princeton University.

Krueger, A. and Lindahl, M. (2001), ‘Education for growth: Why and for whom?’, Journal of Economic Literature, vol. 39, no. 4, pp. 1101-1136.

Levine, R. and Renelt, D. (1992), ‘A sensitivity analysis of cross-country growth regressions’, American Economic Review, vol. 82, no. 4, pp. 942-963.

Lin, T.C. (2004), ‘The Role of higher education in economic development: an empirical study of Taiwan case’, Journal of Asian Economics 15 (2).

Mankiw, G. and Romer, D. and Weil, D. (1992), ‘A contribution to the empirics of economic growth’, Quarterly Journal of Economics, vol. 107, no. 2, pp. 407-437.

Marginson, S. (2007), ‘Global University Rankings: Implications in General and for Australia’, Journal of Higher Education Policy and Management, vol. 29, no. 2, pp. 131-42.

Mason Geoff, Dawn Holland, Iana Liadze, Mary O'Mahony, Rebecca Riley, Ana Rincon-Aznar. (2012), ‘Macroeconomic Benefits of Vocational Education and Training’, Report to European Centre for the Development of Vocational Training (CEDEFOP), London: National Institute of Economic and Social Research.

Meyer, J. and Ramírez, F. and Soysal, Y. (1992), ‘World expansion of mass education, 1870-1980’, Sociology of Education, vol. 65, no.2, pp. 128-149.Mincer, J. (1958), ‘Investment in human capital and personal income distribution’, Journal of Political Economy, vol. 66, no. 4, pp. 281-302.

Mincer, J. (1974), ‘Schooling Experience and Earnings’, New York: National Bureau of Economic Research.

Murphy, M. and Shleifer, A. and Vishny, R. (1991), ‘The Allocation of Talent: Implications for Growth’, Quarterly Journal of Economics, vol. 106, no.2, pp.503-530.

Patrinos, H. and Psacharopoulos, G. (2001), ‘Education: past, present and future global challenges’, World Bank, Policy Research Working Paper, no. 5616.

Petrakos, G. and Arvanitidis, P. and Pavleas, S. (2007), ‘Determinants of Economic Growth: The Experts’ View’, DYNREG, Working Paper, no. 20.

Psacharopoulos, G. (1973), ‘Returns to Education: An International Comparison’, Amsterdam: Elsevier. Psacharopoulos, G. (1981), ‘Returns to education: an updated international comparison’, Comparative Education, vol. 17, pp. 321-341.

Psacharopoulos, G. (1985), ‘Returns to Education: A further international update and implications’, Journal of Human Resources, vol. 20, pp. 583-604.

Psacharopoulos, G. (1994), “Returns to Investment in Education: A Global Update” World Development, vol. 22, no. 9, pp. 1325–43.

Psacharopoulos, G. and Patrinos, H. (2004), ‘Returns to investment in education: a further update’, Education Economics, vol. 12, no. 2, pp. 111-134.

Prichett, L. (2001), ‘Where has all the education gone?’, World bank Economic Review, vol. 15, no. 3, pp. 367-91. Prichett, L. (2006), ‘Does learning to add up add up? The return to schoolings in aggregate data’, in Hanushek, E. and Welch, F., eds., Handbook of the Economics of Education, vol. 1, Amsterdam: North-Holland.

Rauhvargers, A. (2011), ‘EUA report on rankings 2011: global university rankings and their impact’, European University Association.

Romer, P. (1990), ‘Human Capital and Growth: Theory and Evidence’, Carnegie-Rochester Conference Series on Public Policy, vol. 32, no.1, pp. 251-286.

Schultz, T. (1960), ‘Capital Formation by Education," Journal of Political Economy, University of Chicago Press, vol. 68, pp. 571.

Schultz, T. (1961), ‘Investment in human capital’, American Economic Review, vol. 51, no.1.

Sianesi, B. and Reenen, J. (2000), ‘The returns to education: a review of the macro-economic literature’, Centre for the Economics of Education, London School of Economics and Political Science.

Stevens, P. and Weale, M. (2003), ‘Education and economic growth’, NIESR Discussion Paper, National Institute of Economic and Social Research, no. 221.

Spence, M. (1973), ‘Job market signaling’, Quarter Journal of Economics, vol. 87, pp. 355-374.

Spence, M. (1974), ‘Competitive and optimal responses to signals: An analysis of efficiency and distribution’, Journal of Economic Theory, Elsevier, vol. 7, no. 3, pp. 296-332.

Temple J (2001), ‘Growth Effects of Education and Social Capital in OECD Countries,’ Economic Studies, vol. 33, pp. 57-101.

Thurow. L. (1975), ‘Generating inequality’, New York: Basic Books, Inc.

Weiss, A. (1995) ‘Human Capital Vs Signalling Explanations of Wages’, Journal of Economic Perspectives, vol. 9, no. 4, pp. 133-154.

Wils, A. (2002), ‘On Accelerating the Global Literacy Transition’, Research and Assessment Systems for Sustainability Program Discussion Paper 2002-18. Cambridge, MA: Environment and Natural Resources Program, Belfer Center for Science and International Affairs, Kennedy School of Government, Harvard University.

Wils, A. (2003), ‘National Transitions to Full Literacy: Patterns of Timing, Gender Inequality and Regional Diffusion’, Working Paper, Academy of Educational Development, Washington, DC.

Wils, A. and Connor, R. (2003a), ‘The Transition to Education for All: General Patterns and Timing’, Working Paper, Academy of Educational Development, Washington, DC.

Wils, A. and Connor, R. (2003b), ‘The causes and dynamics of the global education transition’, Working Paper, Academy of Educational Development, Washington, DC.

Wils, A. and Goujon, A. (1998), ‘Diffusion of education in six world regions, 1960-90’, Population and Development Review, vol. 24, no. 2, pp.357-368.

Xiao, J. (2002), ‘Determinants of salary growth in Shenzhen, China: An analysis of formal education, on-the-job training, and adult education with a three-level model’, Economics of Education Review, vol. 21, no. 6, pp. 557.

Altbach, P. G. (2004), ‘The Costs and Benefits of World-Class Universities’, Academe, vol. 90 no. 1, pp. 20-23.

Casal, G. B. and Martinez, O. G. and Sanchez, M. P. and Munoz, O. V. (2007), ‘Comparative study of international academic rankings of universities’, Scientometrics.

Dill, D.D. and Soo, M. (2004), ‘Is there a Global Definition of Academic Quality? : A Cross-National Analysis of University Ranking Systems’, Public Policy for Academic Quality.

Hazelkorn, E. (2007), ‘The Impact of League Tables and Ranking Systems on Higher Education Decision Making’, Higher Education Management and Policy, vol. 19, no. 2.

Hazelkorn, E. (2008), ‘Learning to Live with League Tables and Ranking: The Experience of Institutional Leaders’, Higher Education Policy, vol. 21, no.2, pp. 193-215.

Huang, M.H. (2011), ‘A Comparison of Three Major Academic Rankings for World Universities: From a Research Evaluation Perspective’, Journal of Library and Information Sciences, pp.1-25.

Li, M. and Shankar, S. and Tang, K. K. (2009), ‘Why does the US dominate university league tables?’, School of Economics Discusssion Paper No.391, School of Economics, The University of Queensland, Australia.

Machung, A. (1998), ‘Playing the Rankings Game’, Change, vol. 30, no. 4, pp. 12-16.

Marginson, S. (2005), ‘Different Roads to a Shared Goal’, Higher Education in Europe, vol.25, no.2.

Marginson, S. (2007), ‘Global University Rankings: Implications in General and for Australia’, Journal of Higher Education Policy and Management, vol. 29, no. 2, pp. 131-42.

Merisotis, J. P. (2002), ‘On the Ranking of Higher Education Institutions’, Higher Education in Europe, vol.27, iss.4, pp.361-363.

Monks, J. and Ehrenberg, R. G., (1999), ‘The Impact of U.S. News and World Report College Rankings on Admissions Outcomes and Pricing Policies at Selective Private Institutions’, National Bureau of Economic Research, Working Paper 7227.

Liu, N.C and Cheng, Y. (2005), ‘Academic Ranking of World Universities – Methodologies and Problems’, Higher Education in Europe, Vol. 30, No. 2.

Okorie, P. (2013), ‘Preliminary Assessment of National Universities Rankings as economic indicators in Africa’, European International Journal of Science and Technology, vol. 2, no. 8.

Wang, Q. and Cheng, Y. and Liu, N.C. (2012), ‘Building World-Class Universities: Different Approaches to a Shared Goal’, Global Perspectives on Higher Education, vol. 25, no. 1.

Rauhvargers, A. (2011), ‘EUA Report on Rankings 2011: Global University Rankings and Their Impact’, European University Association.

Rauhvargers, A. (2013), ‘EUA Report on Rankings 2013: Global University Rankings and Their Impact II’, European University Association.

Salmi, Jalmi. (2009), ‘The Challenge of Establishing World-Class Universities’, Washington, DC: World Bank

Taylor, P. and Braddock, R. (2007), ‘International University Ranking Systems and the Idea of University Excellence’, Journal of Higher Education Policy and Management, vol. 29, no. 3, pp. 245-60.

Usher, A. and Savino, M. (2007), ‘A Global Survey of University Ranking and League Tables’, Higher Education in Europe, vol. 32, no.1, pp. 5-15.