Voyevodins' Library _ "International Business: Competing in the Global Marketplace" / Charles W.L. Hill ... Chapter 3 ... absolute advantage, ad valorem tariff, administrative trade policies, Andean Pact, antidumping policies, antidumping regulations, arbitrage, ASEAN (Association of South East Asian Nations), balance-of-payments accounts, banking crisis, barriers to entry, barter, basic research centers, bilateral netting, bill of exchange, bill of lading (or draft), Bretton Woods, bureaucratic controls, capital account, capital controls, CARICOM, caste system, centralized depository, channel length, civil law system, class consciousness, class system, collectivism, COMECON, command economy, common law system, common market, communist totalitarianism, communists, comparative advantage, competition policy, constant returns to specialization, controlling interest, copyright, core competence, counterpurchase, countertrade, cross-cultural literacy, cross-licensing agreement, cultural controls, culture, currency board, currency crisis Voevodin's Library: absolute advantage, ad valorem tariff, administrative trade policies, Andean Pact, antidumping policies, antidumping regulations, arbitrage, ASEAN (Association of South East Asian Nations), balance-of-payments accounts, banking crisis, barriers to entry, barter, basic research centers, bilateral netting, bill of exchange, bill of lading (or draft), Bretton Woods, bureaucratic controls, capital account, capital controls, CARICOM, caste system, centralized depository, channel length, civil law system, class consciousness, class system, collectivism, COMECON, command economy, common law system, common market, communist totalitarianism, communists, comparative advantage, competition policy, constant returns to specialization, controlling interest, copyright, core competence, counterpurchase, countertrade, cross-cultural literacy, cross-licensing agreement, cultural controls, culture, currency board, currency crisis


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Chapter 3 Outline

Education

Formal education plays a key role in a society. Formal education is the medium through which individuals learn many of the language, conceptual, and mathematical skills that are indispensable in a modern society. Formal education also supplements the family's role in socializing the young into the values and norms of a society. Values and norms are taught both directly and indirectly. Schools generally teach basic facts about the social and political nature of a society. They also focus on the fundamental obligations of citizenship. Cultural norms are also taught indirectly at school. Respect for others, obedience to authority, honesty, neatness, being on time, and so on, are all part of the "hidden curriculum" of schools. The use of a grading system also teaches children the value of personal achievement and competition.32

From an international business perspective, perhaps one of the most important aspects of education is its role as a determinant of national competitive advantage.33 The availability of a pool of skilled and educated workers seems to be a major determinant of the likely economic success of a country. In analyzing the competitive success of Japan since 1945, for example, Michael Porter notes that after the war Japan had almost nothing except for a pool of skilled and educated human resources.

With a long tradition of respect for education that borders on reverence, Japan possessed a large pool of literate, educated, and increasingly skilled human resources . . . Japan has benefited from a large pool of trained engineers. Japanese universities graduate many more engineers per capita than in the United States . . . A first-rate primary and secondary education system in Japan operates based on high standards and emphasizes math and science. Primary and secondary education is highly competitive . . . Japanese education provides most students all over Japan with a sound education for later education and training. A Japanese high school graduate knows as much about math as most American college graduates.34

Porter's point is that Japan's excellent education system was an important factor explaining the country's postwar economic success. Not only is a good education system a determinant of national competitive advantage, but it is also an important factor guiding the location choices of international businesses. It would make little sense to base production facilities that require highly skilled labor in a country where the education system was so poor that a skilled labor pool wasn't available, no matter how attractive the country might seem on other dimensions. It might make sense to base production operations that require only unskilled labor in such a country.

The general education level of a country is also a good index of the kind of products that might sell in a country and of the type of promotional material that should be used. For example, a country such as Pakistan where 73.8 percent of the population is illiterate is unlikely to be a good market for popular books. Promotional material containing written descriptions of mass-marketed products is unlikely to have an effect in a country where almost three-quarters of the population cannot read. It is far better to use pictorial promotions in such circumstances.

Maps 3.2 and 3.3 provide some important data on education worldwide. Map 3.2 shows the percentage of a country's GNP that is devoted to education. Map 3.3 shows illiteracy rates. Although there is not a perfect one-to-one correspondence between the percentage of GNP devoted to education and the quality of education, the overall level of spending indicates a country's commitment to education. Note that the United States spends more of its GNP on education than many other advanced industrialized nations, including Germany and Japan. Despite this, the quality of US education is often argued to be inferior to that offered in many other industrialized countries.

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