Problems of Measuring Knowledge Capital Stock and Its Contribution to Economic Growth. Review of the Book by E. Hanushek and L. Wössmann «The Knowledge Capital of Nations: Education and the Economics of Growth»

In their book, E. Hanushek and L. Wössmann analyze the relationship between the economic growth of countries and the stock of knowledge capital that they have. The main argument that is put forward and discussed in the book is that the level of knowledge capital is one of the key predictors of economic development. However, in order to test this hypothesis empirically, it is important to correctly measure the stock of knowledge capital. The authors propose their own methodology for measuring knowledge capital, which is based on the results of international studies of student performance. This methodology differs significantly from previous approaches, in which the stock of knowledge capital was approximated by the average years of schooling in the country. Measuring knowledge capital through aggregating the results of international studies of educational achievements, the authors suggest that the economic growth of countries is affected not by the duration of education, but by its effectiveness, that is, the average level of cognitive skills of people. The use of the knowledge capital indicator proposed by the authors in modeling economic development makes it possible to explain the differences in economic growth rates in different groups of countries, as well as to identify public policy instruments in the field of education, the use of which can accelerate economic growth.