ABSTRACT
The role of education in economic development is widely acknowledged. Hanushek and Woessmann (2008: 627) list three mechanisms through which education affects economic growth:
First, just as in the micro perspective, education increases the human capital inherent in the labor force, which increases labor productivity and thus transitional growth towards a higher equilibrium level of output … Second, education may increase the innovative capacity of the economy, and the new knowledge on new technologies, products and processes promotes growth … Third, education may facilitate the diffusion and transmission of knowledge needed to understand and process new information and to implement successfully new technologies devised by others, which again promotes economic growth.
