Thursday, October 27, 2005

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Anoint no economic superpower before its time

A common lament among those who like to prognosticate about America's future is that China and India are churning out more and better engineering students than the U.S., which presages their rise to superpowerdom.

For example, Geoffrey Colvin wrote the following in Fortune earlier this year:

China will produce about 3.3 million college graduates this year, India 3.1 million (all of them English-speaking), the U.S. just 1.3 million. In engineering, China’s graduates will number over 600,000, India’s 350,000, America’s only about 70,000.

Sounds ominous -- those figures were cited in a National Academy of Sciences study warning that, "In a world where advanced knowledge is widespread and low-cost labor is readily available, U.S. advantages in the marketplace and in science and technology have begun to erode." (link via Glenn Reynolds)

The thing is, those numbers don't hold up. Back in August, Carl Bialik of the Wall Street Journal's "Numbers Guy" column deconstructed Colvin's claim in Fortune and found some problems:

[T]his is one of those cases where big numbers take on a life of their own through repetition. The lofty estimates have been repeated for years, often without evidence to back them up, and it turns out they vary considerably from figures reported by official sources.

Bialik follows up in a WSJ column today (link again via Glenn Reynolds):

Ron Hira, professor of public policy at the Rochester Institute of Technology and a reviewer of a draft version of the report that didn't contain the figures, brought them to my attention when he spotted them in the press release. "The fact that the Academies has perpetuated the stats is very significant because [they are] viewed as a purveyor of truth," Dr. Hira wrote me in an email. He added, "[The stats] will be perpetuated by every science and technology lobbyist in D.C. from now until who knows when."

The statistics' repetition prompted me to dig deeper into the original source of Fortune's numbers. For my initial column, the author of the Fortune piece, Geoff Colvin, told me he was traveling and couldn't review his notes to find his sources in time for my deadline. Last week, he told me the numbers came from the Chinese government's China Statistical Yearbook 2004, which reported more than 644,000 graduates in engineering from the country's institutions of higher education in 2003.

"This includes graduates of the regular college program as well as graduates of a three-year program focused on engineering, which would appear to be somewhat more advanced than a U.S. engineering technician program while not quite the full bachelor's degree," Mr. Colvin wrote in an email. "Comparability is of course a large issue not just here but in general when comparing degrees across countries." (The India numbers, as I wrote earlier, are also questionable; Mr. Colvin said Monday that he is still looking for his source for those figures and will get back to me.)

But others told me that the 600,000 figure for China in 2003 included engineering graduates who had received less training than their U.S. counterparts. Richard Freeman, a professor of economics at Harvard University who has studied the issue, told me in an email that the Chinese numbers include graduates of two-to-three-year programs who would be comparable to engineering technicians in the U.S. (recipients of an associate's degree). "The number getting full course degrees is around 350,000, which is what we would compare to U.S. graduates in a year," Dr. Freeman said.

Kudos to Hira and Freeman for their intellectual honesty -- both of them are generally concerned about the effects in the U.S. of widening the global supply of educated labor.

[OK, so the number isn't as big as previously thought. It's still pretty big, right?--ed. This gets to the question of quality. Diana Farrell and Andrew J. Grant write in the latest McKinsey Quarterly that the quality problem could lead to a talent shortage in China:

[F]ew of China's vast number of university graduates are capable of working successfully in the services export sector, and the fast-growing domestic economy absorbs most of those who could. Indeed, far from presaging a thriving offshore services sector, our research points to a looming shortage of homegrown talent, with serious implications for the multinationals now in China and for the growing number of Chinese companies with global ambitions....

China's pool of potential talent is enormous. In 2003 China had roughly 8.5 million young professional graduates with up to seven years' work experience and an additional 97 million people that would qualify for support-staff positions.

Despite this apparently vast supply, multinational companies are finding that few graduates have the necessary skills for service occupations. According to interviews with 83 human-resources professionals involved with hiring local graduates in low-wage countries, fewer than 10 percent of Chinese job candidates, on average, would be suitable for work in a foreign company in the nine occupations we studied: engineers, finance workers, accountants, quantitative analysts, generalists, life science researchers, doctors, nurses, and support staff.

Consider engineers. China has 1.6 million young ones, more than any other country we examined. Indeed, 33 percent of the university students in China study engineering, compared with 20 percent in Germany and just 4 percent in India. But the main drawback of Chinese applicants for engineering jobs, our interviewees said, is the educational system's bias toward theory. Compared with engineering graduates in Europe and North America, who work in teams to achieve practical solutions, Chinese students get little practical experience in projects or teamwork. The result of these differences is that China's pool of young engineers considered suitable for work in multinationals is just 160,000—no larger than the United Kingdom's. Hence the paradox of shortages amid plenty.]

UPDATE: Howard French has a nicely balanced account in the New York Times of China's effort to upgrade its top universities in order to attract top-drawer talent. The highlights:

China is focusing on science and technology, areas that reflect the country's development needs but also reflect the preferences of an authoritarian system that restricts speech. The liberal arts often involve critical thinking about politics, economics and history, and China's government, which strictly limits public debate, has placed relatively little emphasis on achieving international status in those subjects.

In fact, Chinese say - most often euphemistically and indirectly - that those very restrictions on academic debate could hamper efforts to create world-class universities.

"Right now, I don't think any university in China has an atmosphere comparable to the older Western universities - Harvard or Oxford - in terms of freedom of expression," said Lin Jianhua, Beijing University's executive vice president. "We are trying to give the students a better environment, but in order to do these things we need time. Not 10 years, but maybe one or two generations."

French also provides his own engineering numbers: "In engineering alone, China is producing 442,000 new undergraduates a year, along with 48,000 graduates with masters' degrees and 8,000 Ph.D's."

LAST UPDATE: More on the overhyping of India and China from Pranab Bardhan and Brad DeLong.

posted by Dan on 10.27.05 at 06:22 PM


Well, the numbers may not be too far off the mark. When I was graduating high school (1993), the state I lived in in India had an entrance test for engineering admissions. It announced about 20,000 ranks, to fill a corresponding number of seats. If one projects these figures throughout the country would be about 150,000 in 1993. I think the capacity has grown since.

However, the question of quality is legitimate. Indian colleges are not very well funded in comparison to American universities, and there is quite tremendous variation in their quality. However, I get the impression that there have been improvements in this regard.

Finally, while quality may be an issue, I think a comparison of the American workforce with the pool in India is not entirely valid. The economies of the two countries are in different stages of development, and consequently technological needs also vary. In addition, the US has built up tremendous capacity in terms of manpower and trained talent over the last 100 years. I don't think either India or China have this level of technological depth. Consequently talk of competition in cutting edge technology is somewhat premature. I also think that the higher education market in India is predominantly market driven, so marked changes in quality of the bulk workforce will need to be driven by a demand for the same.

posted by: vin on 10.27.05 at 06:22 PM [permalink]

Whatever the numbers actually are there’s a conceptual problem here. Manufacturing (where you employ engineers) is shrinking as a percentage not just of US or European GDP but as a percentage of world GDP. It’s simply becoming less important all round.
Focusing on how many engineers China and India produce as a predictor of how rich or large their economies will be in future years is rather like someone, 70-80 years ago, focusing on how many farmers are being trained as agriculture shrank from 20% of the economy to 2% since then. Just not a relevant indicator.

posted by: Tim Worstall on 10.27.05 at 06:22 PM [permalink]

"Compared with engineering graduates in Europe and North America, who work in teams to achieve practical solutions,"
Not only is that wrong, at least in computer science, where at least in Australia the amount of teamwork varies from university to university, but I would be extremely wary of claiming that teamwork is a better way of get good graduates. Teamwork has the small flaw in that good members of a group can carry bad members, which is great if your goal is to get a finished product out of the team, but terrible if you want to grade individual members.

posted by: Factory on 10.27.05 at 06:22 PM [permalink]

Suppose the scary numbers are right, not wrong - how's that bad for the US?

If a Chinese engineer invents a room temperature superconductor, or an Indian one finds a cure for cancer, then I win big time, even thought I'm an American.

This is just intellectual mercantilism, and it's as wrong today as it was back in the gold dubloon era 200 years ago.

posted by: Jos Bleau on 10.27.05 at 06:22 PM [permalink]

Hi -

Been there, done that. If you go back to the 1970s into the 1980s, the Soviets were going to overwhelm the west not because their political system was better, but rather because they were training so many more engineers, mathematicians and scientists.

And they were. But they weren't. The level of qualification was significantly lower (not on paper, but in reality: engineers that rote-learned their trade, rather than learning how to solve problems) and as a result the productivity was also significantly lower. Couple that with the fact that the system more or less conspired to prevent productive work, and you know why the "threat" dissapated.

That's not to say that the US produces "enough" engineers, mathematicians and scientists: it doesn't. But holding up a foreign threat to try to motivate increasing spending levels is fairly weak: it'd be a lot better of you argue for domestic reasons.


posted by: John F. Opie on 10.27.05 at 06:22 PM [permalink]

Don't the comments above miss the point? One would expect emerging powers with rapidly growing economies to start producing more engineers (among other things). I suppose one might expect as well that the quality of their education and training would vary somewhat. But this will change, and we couldn't do anything about it even if we wanted to.

The thing we could do something about is the number of new Americans engineers. Is that figure of 70,000 accurate? Is that enough? Are new American engineers educated and trained better than their foreign counterparts? If the latter two questions are answered in the negative, what needs to be done in response?

posted by: Zathras on 10.27.05 at 06:22 PM [permalink]

There's also the question of demand. China is arguably at an engineering-intensive stage of development right now (especially civil engineering and electrical power engineering) because so much infrastructure needs to be build. Each new bridge, each new railroad spur, each new powerplant, are all going to require engineering talent.

Yes, we have infrastructure issues here, too, but nothing, I suspect, like China does.

posted by: David Foster on 10.27.05 at 06:22 PM [permalink]

Graduate students from China and India out number Americans in American universities. I'm not saying thats a bad thing, but if you're going to look at differences in education you might want to look at those numbers too.

posted by: publius on 10.27.05 at 06:22 PM [permalink]

Another issue: Chinese universities outside of a few general universities (BeiDa, Fudan in Shanghai) are often very tightly focused: they have shipbuilding universities, "transportation" (Jiao Tong) universities, political science universities, aerospace universities, foreign language universities, etc. The result of this is a very narrow and specialized degree that is inevitably several years out of date.

Courses of study are completely scripted, with few or no electives, and due to funding problems, students rarely get to do much work in labs. There are frequently no general education requirements outside the major, so - for example - it is very rare for engineers to have any background in economics beyond the Marxist silliness they learned in high school.

posted by: Foobarista on 10.27.05 at 06:22 PM [permalink]

I don't know why everyone asserts the US doesn't graduate "enough" engineers. If so, wouldn't salaries rise to compensate?

I'm an engineer, and I don't understand how we got infantilized like farmers. The US dominates most sciences with fewer and fewer resources. How is that a bad thing?

posted by: Michael Karam on 10.27.05 at 06:22 PM [permalink]

While I do see China as a major strategic competitor to the status-quo powers (mainly US & EU), some things (like the graduate student situation) seem slightly overblown, at least for now.

Check out Econobrowser, which points out some doubts to China's latest GDP Growth numbers.

posted by: StrategyUnit on 10.27.05 at 06:22 PM [permalink]

The biggest threat from the Chinese is that they have no need or much desire to follow any rules.

Intellectual property - steal it.

Worker protectiontions - ignore them.

Currency manipulation - absolutely.

Rule of law - for someone else.

posted by: save_the_rustbelt on 10.27.05 at 06:22 PM [permalink]

The real measure is not the diplomas, but were those "graduates" are at the 5-yr and 10-yr-mark in their careers. A "graduate engineer" manning a fast-food counter, or a manufacturing-plant machine-tool is not an "engineer" to the National Economy. In my own profession, less than 10% of the declared college majors are still in the profession even 5-ys out of school. Many never even complete their major, but transfer to other disciplines. And less than 15% of the actual graduates are still in the profession after 10-years.

posted by: Ted B. on 10.27.05 at 06:22 PM [permalink]

For once I agree with save_the_rustbelt

posted by: John Kneeland on 10.27.05 at 06:22 PM [permalink]

There is one thing that I do find significantly worrying:

Much like in the international security field, the "solution" of the economist field seems content to say something along the lines of "Okay, look, it's not a problem RIGHT NOW" and leave the argument at that...the implicit logic seems to be "wait til it IS a problem and THEN worry about it..." Can't we be a bit proactive on this?

posted by: John Kneeland on 10.27.05 at 06:22 PM [permalink]

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