Globalization and Endogenous Educational Responses : the Main Economic Transmission Channels.

This paper analyses the links between openness, education and inequality from a political economy point of view. We start by presenting various channels through which external liberalization may affect the pattern of educational responses and we derive the implications for inequality and redistributive conflicts in a small open developing economy. We focus specifically on the role played by imperfect capital markets. We investigate then the incentives for an oligarchic Elite to subsidize the education of the poor and how external liberalization affects these incentives. We discuss finally the implications for the dynamics of democratization and economic development.