The former director of the World Bank’s Global Indicators Group, Augusto Lopez-Claros, has written and lectured extensively on those factors and policies which are central in the fight against global poverty. Two areas whose importance he has highlighted concern the role of education and technology. In his lectures he has argued that education is critical for development and for nurturing a capacity for innovation and noted the progress made in the past 50 years. By the turn of the century well over half of the world’s countries had primary enrolment rates of 100 per cent as opposed to only 28 percent in 1960. Yet illiteracy is still a fact of life in many developing nations, with close to 800 million people in the world still unable to read or write. Lack of such basic skills severely limits the possibilities of citizens to participate in the development process, to be gainfully employed, to be well-informed judges of government policies and politicians, and not to fall captives to the manipulations of demagogues. From a business perspective, without access to workers with a basic education, companies are limited to resource- or basic labor-intensive industries and constrained in their ability to grow and to move up the value chain.

However, enrollment rates in themselves do not tell the whole story, as they disguise important differences in the quality of education. An artificial focus on enrolment rates, has often obscured the importance of the quality of learning, and the role of incentives and motivation of teachers and students. As the global economy has become more complex, to compete and maintain a presence in global markets it is essential to boost the human capital endowments of the labor force, whose members must have access to new knowledge, be constantly trained in new processes and in the operation of the latest technologies. Numerous experts have emphasized the need for high educational standards as well as education and training that has a strong practical orientation. As coverage of primary education has expanded rapidly in the developing world, higher education has gained importance. Thus, countries which have invested heavily in a well-developed infrastructure for tertiary education have reaped enormous benefits in terms of growth. Education has been a particularly important driver in the development of the capacity for technological innovation, as the experience of Finland, Korea, Taiwan, and Israel clearly shows.

An increasingly important factor in explaining successful economic development concerns the agility with which an economy adopts existing technologies to enhance the productivity of its industries. In fact, the relative importance of technology for competitiveness has been increasing in recent years, as progress in the dissemination of knowledge and the increasing use of information and communications technologies have become increasingly widespread. This requires an environment that is conducive to innovative activity, supported by both the public and the private sectors. In particular, this means sufficient business investment in research and development, high-quality scientific research institutions, collaboration in research between universities and industry, and protection of intellectual property.