ABSTRACT
When countries in Asia, Africa and Latin-America obtained independence in the late 1940s and early 1950s, they were given little chance of improving their economies. Past economic performances were poor, population growth rates high, and terms of trade for primary products, their main source of employment and income, were said to be in secular decline. Many factors are responsible for sustained rapid economic development. An important one is the presence of a labour force with appropriate skills, discipline and commitment. Education can play an important role in producing such a labour force. In order to prevent over-spending on education, it is necessary to break the vicious circle in which over-stated job specifications render over-education necessary for employment. A socially optimal educational program also requires that attention be paid to the types of education provided because the rates of return from investment in different levels of education differ markedly.
