Is financial openness bad for education? a political economy perspective on development

摘要

This paper presents a simple model of the links between education, democratization and economic development. In a context of imperfect capital markets, we investigate the incentives for a capitalist oligarchy to subsidize the education of poor workers and to initiate a political transition. It is shown that international financial liberalization, while stimulating physical capital accumulation, reduces the capitalist elite willingness to subsidize domestic human capital accumulation in the medium run. It thus delays, without necessarily impeding the process of democratization.