W Post on engineering success in India

Much as I have respect for economic reasoning, I would still take a peek into the business world before I confirm my observations. I don't recall where I have heard this but it has stuck in my mind. Most economics authorship doesn't take note of two factors: evolving preferences and changing technology. And indeed it does seem to be confirmed when one looks at the market for schooling (and education) in India. This article In India, Engineering Success is a pointer to it. Relevant parts are quoted below.

What's made this engineering takeoff possible is not an increase in the supply of universities financed by taxpayers or foreign donors; it's an increase in demand for education from fee-paying students -- a demand to which entrepreneurs naturally respond. More than four out of five Indian engineering students attend private colleges, whose potential growth seems limitless. ...

Something similar is happening to the Indian school system, which has experienced a huge growth in private provision. Since the early 1990s the percentage of 6-to-14-year-olds attending private school has jumped from less than a tenth to roughly a quarter of the total in that cohort, according to India's National Council of Applied Economic Research. And this number may be on the low side. James Tooley of the University of Newcastle in Britain has found that in some Indian slums about two-thirds of the children attend private schools, many of which are not officially recognized and so may escape the attention of nationwide surveys.

The causes of this private-school explosion shed interesting light on debates about development, not just in India but throughout the poor world. The standard assumption among anti-poverty campaigners is that education leads to development; if you supply classrooms and teachers, progress will follow. Up to a point, India's success in brain-intensive industries such as software and pharmaceuticals lends substance to this theory: India's government has long invested in a few elite engineering schools, whose graduates are at the heart of the country's high-tech success. But it's also true that this elite pool of engineering excellence counted for little so long as statism stifled India's economy. It was only after market reform began in the 1990s that high-tech India took off.

Meanwhile, the recent private-education boom in India shows how causality can also flow the other way. Education may or may not spark development, depending on whether economic conditions favor it, but development certainly can spark an educational takeoff. Since India embraced the market in the early 1990s, parents have acquired a reason to invest in education; they have seen the salaries in the go-go private sector, and they want their children to have a shot at earning them. Private elementary schools improve kids' prospects because they teach in English, the passport to India's modern sector. Colleges such as the Vellore Institute of Technology promise the qualifications needed to work in the auto industry or in software. Once parents understand that education buys their kids into the new India, they demand it so avidly that public money for schoolrooms becomes almost superfluous.

Of course, India's progress isn't simple. The best engineers get snapped up by industry, so it's hard to find decent teachers to staff Vellore and other engineering schools. As a result, many of the new colleges teach kids little of value, and some science graduates end up unemployed. But the story of Vellore points to an important lesson. Apparently unconnected development policies -- cuts in tariffs and oppressive business regulation, or projects to build roads and power grids -- can sometimes stimulate new educational enrollment at least as much as direct investments in colleges or schools.

The last paragraph is important. It points to the necessity of the government focusing on roads, regulations and electricity (among other things) for they act as a springboard for markets to develop. The next question for the developing schooling market is how to address the question of quality and its signals.

Imagine you are a parent and trying to choose a school. Asking other parents may be one method but it may not be enough. Looking at board results may not tell all about a good school, and in fact you do not have board examination results in the elementary and middle school. Again, (and even from my experience in research on schooling in India), in today's schooling market, the fact that a school is teaching in english is enough for a parent to send a child to the school. And this happens even in the slums of Sangam Vihar in Delhi, where you have an unrecognized school in every gulley, and the trigger for the demand is largely English. What about grade inflations by schools to please students and parents? A schooling education is not like a car whose quality can be confirmed easily. There are limitations, but then that very fact may beget more business opportunities.

Can poor standards be removed by the advent of a Standard and Poor's?