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James Heckman,
Nobel Laureate in Economics and Professor
of Economics at the University of Chicago, delivered a lecture
organized by the HKUST Jockey Club Institute for Advanced
Study and cosponsored by HKUST IEMS drawing from recent
advances in economics, sociology, and child development to
emphasize the critical importance of early-childhood social,
emotional, and cognitive skills in explaining outcomes in
adulthood. Enhancing these skills during youth is key, Prof
Heckman argues, to tackling the problem of growing income
and opportunity inequality in developed and developing
countries alike.
Inequality is on the rise around the world, and is closely linked
to social mobility. Prof Heckman also pointed to empirical
evidence from economics linking income inequality and
intergenerational mobility, where less income-advantaged
families face difficulties in financing their children's education,
and in providing them opportunities. This is a serious concern
in many places around the world. Some economists believe
that inequality is a cause of immobility. On the other hand, the
causality might run the other way: low mobility might explain
inequality.
Given rising inequality, income redistribution has become an
increasingly popular topic. While taxation and transfers may
have varied effects on alleviating inequality, Prof Heckman
proposed a broader, complementary approach to addressing
inequality, namely the development of skills and capabilities
that allow people to function better in the economy and fit into
society. Prof Heckman’s premise is that people with larger skill
and capability sets have more freedom to shape their own lives,
and those with fewer have more limited choices.
Prof Heckman noted several key lessons from recent findings
in economics, sociology, and developmental psychology for
skill development. The first lesson is that skills vitally affect
performance in life along many dimensions, such as the
likelihood of marriage and divorce, health, the ability to stay
on task, etc. A second lesson is that gaps in both cognitive and
non-cognitive skills across socioeconomic groups emerge at
early ages, even before children begin attending school.
CREATING SKILLS TO PROMOTE SOCIAL OPPORTUNITY AND REDUCE POVERTY
HKUST IAS Nobel Lecture, cosponsored by HKUST IEMS (2015.11.17)
CHALLENGES IN EMERGING MARKETS IN THE 21ST CENTURY
HKUST IEMS – EY Workshop (2015.12.16-17)
Songnian Chen (HKUST), James Heckman, Albert Park (HKUST IEMS)
The third lesson is about the role of genetics in fostering skills.
While genetic heritability plays a part in the development of
skills in children, the evidence suggest that parenting and
learning environments play more important roles. Fourthly,
there are critical and sensitive periods in child development,
with Prof Heckman citing the fact that one’s intelligence
quotient (IQ) becomes rank stable around the age of 10.
As previously touched upon, the fifth lesson concerns the
substantial differences in children’s environments, with children
of professional parents hearing as many as four times as many
words at age three than those from disadvantaged families.
The sixth lesson, Prof Heckman continued, is that initial
disadvantages have a lingering effect that society can partially
compensate for. For example, for neglected children, programs
targeting socio-emotional and character skills through mentoring
are particularly effective. The seventh lesson relates to the
importance of “scaffolding”, meaning that staying with a child,
working with her, and challenging her to take the next step in
the “proximal zone” of development through interaction (rather
than lecturing) is critical. The final lesson Prof Heckman stressed
is the value of early investment, where the skills and abilities
created at early ages can propagate throughout one’s life.
Concluding the discussion, Prof Heckman emphasized that
social and emotional skills support cognitive skills, that cognitive
skills lead to better health, and that it is easier to change the
skill base of children at early in life rather than later. The early
years are especially important because of the malleability and
flexibility of young children. Later in life, while certain skills are
still malleable, the full base of skills is not. Into adulthood, the
skill base plays a powerful role in producing adult outcomes.
Prof Heckman underscored the effectiveness and fiscal prudency
of early childhood intervention to address social and economic
inequality. While economic redistribution can alleviate some
problems of poverty and inequality, disadvantaged families can also
greatly benefit from measures to improve parenting skills and to
provide a better environment to nurture their children’s capabilities.
Video recording available at
Supported by EY, HKUST IEMS hosted a two-day workshop with
senior leaders from EY as well as high-level researchers and
faculty from the international network of universities connected
through EY’s network of emerging market research institutions
in Hong Kong, India, and Russia. The current network members
include HKUST IEMS, the Moscow School of Management
SKOLKOVO IEMS, the Indian School of Business (IBS) IEMS, and
the China Europe International Business School (CEIBS) IEMS.
The workshop included research presentations on several key
emerging market themes: growth and innovation, financial
systems, firm strategies, and better jobs.
In addition to providing a platform for researchers at partner
IEMS institutes to share their research, the workshop allowed
EY to connect with senior faculty and researchers in the IEMS
network and communicate its vision and priorities for emerging
markets. Participants presented research and agendas
prioritized by institutions, exchanged views and perspectives on
business challenges in emerging markets in the 21st century,
and discussed the intellectual framework best suited to address
these challenges through research and education promoted by
the IEMS network, and to identify opportunities for collaborative
activities among IEMS partners that stand to broaden the
current scope of work by individual IEMS partner institutions.
Delivering the opening presentations were
Jay Nibbe,
Global
Vice Chair for Tax at EY, and
Ilse Blank,
Global Economic
Programs Leader at EY, who described the many programs and
surveys the multinational company has implemented to increase
their knowledge and understanding of emerging market issues.
On the regional growth front, EY has launched business and
foreign direct investment attractiveness surveys for India, ASEAN
countries, China, Russia, and Africa. On the digital banking
front, EY has published an ongoing series of digital banking and
digital tax developments related to Brazil, South Korea, Saudi
Arabia, Kuwait, the UAE, and other countries in the Middle East.
EY plans to continue its research and thought leadership efforts
by deepening its efforts and expanding to new countries in
coming years.
In a presentation on China as the world’s next technology leader,
Naubahar Sharif,
HKUST Associate Professor of Social Science
and HKUST IEMS Faculty Associate, emphasized the propitious
indicators signaling China’s rise. For example, China’s spending
on research and development (R&D) now outpaces overall
economic growth, placing it second in the world behind the
United States. China now has over 3.2 million R&D personnel,
and is currently the world’s largest producer of tertiary and post-
tertiary students in science and engineering. Moreover, China
now ranks second in the world in research output as measured
by papers published in research journals, and third in terms of
patent filings with the World Intellectual Property Office. Prof
Sharif commented that too few policymakers and financial elites
outside China anticipate the rise of Chinese multinationals to
positions of global technological leadership, underestimating
the massive growth of China’s domestic market, the strong
government support aimed at turning China into an “innovation
nation”, and intensified forces of globalization helping China
extend its reach abroad.
Addressing the issue of sustainable growth across countries,
Vladimir Korovkin,
Head of Digital Research at the Moscow
School of Management SKOLKOVO IEMS, used World Bank GDP
per capita data from the 1970s to present day to demonstrate
whether a given country’s growth model led to a long-term
decline, stagnation, or growth. While all countries inevitably
experienced at least one bout of significant economic decline
in the timeframe observed, the countries most able to sustain
long-term economic growth were those with national strategic
vision and broad industrial policies driven by collaborations
between the state, society, and business. Dr. Korovkin also
noted that the key factor in sustainable economic growth was
not about how quickly a nation can grow, but how effectively a
nation can handle its inevitable economic downturns.
Other presenters at the workshop included
Albert Park
(HKUST),
Alexey Kalinin
(SKOLKOVO),
Sanjay Kallapur
(ISB),
Anand Nandkumar
(ISB),
Kellee Tsai
(HKUST), and
Peter MacKay
(HKUST).
Video recordings available at
