Adopting the Market for Skill Formation: Two Contrasting Approaches

The aim of this paper is to explore some of the major differences in the ways in which governments influence the process of skill formation. In particular, we focus on the ways in which governments use the market as a means of delivering the skills required for economic growth. We argue that the exclusive reliance on the market to co-ordinate the supply and demand for skills works well for societies characterised by the Anglo-Saxon approach to skill formation. However, the market takes time to make adjustments. Therefore this approach may be more suited to societies where the process of industrialisation has been operating over a long period of time. The Tiger economies industrialised in a much shorter period of time. They therefore had to find ways of accelerating the process of skill formation and did this by using the agencies of the state to speed up the operation of the market. In conclusion, we argue that this experience of the Tiger provides a new set of options from which developing societies can draw lessons.