Anoint no economic superpower before its time

A common lament among those who like to prognosticate about America’s future is that China and India are churning out more and better engineering students than the U.S., which presages their rise to superpowerdom. For example, Geoffrey Colvin wrote the following in Fortune earlier this year:

China will produce about 3.3 million college graduates this year, India 3.1 million (all of them English-speaking), the U.S. just 1.3 million. In engineering, China?s graduates will number over 600,000, India?s 350,000, America?s only about 70,000.

Sounds ominous — those figures were cited in a National Academy of Sciences study warning that, “In a world where advanced knowledge is widespread and low-cost labor is readily available, U.S. advantages in the marketplace and in science and technology have begun to erode.” (link via Glenn Reynolds) The thing is, those numbers don’t hold up. Back in August, Carl Bialik of the Wall Street Journal‘s “Numbers Guy” column deconstructed Colvin’s claim in Fortune and found some problems:

[T]his is one of those cases where big numbers take on a life of their own through repetition. The lofty estimates have been repeated for years, often without evidence to back them up, and it turns out they vary considerably from figures reported by official sources.

Bialik follows up in a WSJ column today (link again via Glenn Reynolds):

Ron Hira, professor of public policy at the Rochester Institute of Technology and a reviewer of a draft version of the report that didn’t contain the figures, brought them to my attention when he spotted them in the press release. “The fact that the Academies has perpetuated the stats is very significant because [they are] viewed as a purveyor of truth,” Dr. Hira wrote me in an email. He added, “[The stats] will be perpetuated by every science and technology lobbyist in D.C. from now until who knows when.” The statistics’ repetition prompted me to dig deeper into the original source of Fortune’s numbers. For my initial column, the author of the Fortune piece, Geoff Colvin, told me he was traveling and couldn’t review his notes to find his sources in time for my deadline. Last week, he told me the numbers came from the Chinese government’s China Statistical Yearbook 2004, which reported more than 644,000 graduates in engineering from the country’s institutions of higher education in 2003. “This includes graduates of the regular college program as well as graduates of a three-year program focused on engineering, which would appear to be somewhat more advanced than a U.S. engineering technician program while not quite the full bachelor’s degree,” Mr. Colvin wrote in an email. “Comparability is of course a large issue not just here but in general when comparing degrees across countries.” (The India numbers, as I wrote earlier, are also questionable; Mr. Colvin said Monday that he is still looking for his source for those figures and will get back to me.) But others told me that the 600,000 figure for China in 2003 included engineering graduates who had received less training than their U.S. counterparts. Richard Freeman, a professor of economics at Harvard University who has studied the issue, told me in an email that the Chinese numbers include graduates of two-to-three-year programs who would be comparable to engineering technicians in the U.S. (recipients of an associate’s degree). “The number getting full course degrees is around 350,000, which is what we would compare to U.S. graduates in a year,” Dr. Freeman said.

Kudos to Hira and Freeman for their intellectual honesty — both of them are generally concerned about the effects in the U.S. of widening the global supply of educated labor. [OK, so the number isn’t as big as previously thought. It’s still pretty big, right?–ed. This gets to the question of quality. Diana Farrell and Andrew J. Grant write in the latest McKinsey Quarterly that the quality problem could lead to a talent shortage in China:

[F]ew of China’s vast number of university graduates are capable of working successfully in the services export sector, and the fast-growing domestic economy absorbs most of those who could. Indeed, far from presaging a thriving offshore services sector, our research points to a looming shortage of homegrown talent, with serious implications for the multinationals now in China and for the growing number of Chinese companies with global ambitions…. China’s pool of potential talent is enormous. In 2003 China had roughly 8.5 million young professional graduates with up to seven years’ work experience and an additional 97 million people that would qualify for support-staff positions. Despite this apparently vast supply, multinational companies are finding that few graduates have the necessary skills for service occupations. According to interviews with 83 human-resources professionals involved with hiring local graduates in low-wage countries, fewer than 10 percent of Chinese job candidates, on average, would be suitable for work in a foreign company in the nine occupations we studied: engineers, finance workers, accountants, quantitative analysts, generalists, life science researchers, doctors, nurses, and support staff. Consider engineers. China has 1.6 million young ones, more than any other country we examined. Indeed, 33 percent of the university students in China study engineering, compared with 20 percent in Germany and just 4 percent in India. But the main drawback of Chinese applicants for engineering jobs, our interviewees said, is the educational system’s bias toward theory. Compared with engineering graduates in Europe and North America, who work in teams to achieve practical solutions, Chinese students get little practical experience in projects or teamwork. The result of these differences is that China’s pool of young engineers considered suitable for work in multinationals is just 160,000?no larger than the United Kingdom’s. Hence the paradox of shortages amid plenty.]

UPDATE: Howard French has a nicely balanced account in the New York Times of China’s effort to upgrade its top universities in order to attract top-drawer talent. The highlights:

China is focusing on science and technology, areas that reflect the country’s development needs but also reflect the preferences of an authoritarian system that restricts speech. The liberal arts often involve critical thinking about politics, economics and history, and China’s government, which strictly limits public debate, has placed relatively little emphasis on achieving international status in those subjects. In fact, Chinese say – most often euphemistically and indirectly – that those very restrictions on academic debate could hamper efforts to create world-class universities. “Right now, I don’t think any university in China has an atmosphere comparable to the older Western universities – Harvard or Oxford – in terms of freedom of expression,” said Lin Jianhua, Beijing University’s executive vice president. “We are trying to give the students a better environment, but in order to do these things we need time. Not 10 years, but maybe one or two generations.”

French also provides his own engineering numbers: “In engineering alone, China is producing 442,000 new undergraduates a year, along with 48,000 graduates with masters’ degrees and 8,000 Ph.D’s.” LAST UPDATE: More on the overhyping of India and China from Pranab Bardhan and Brad DeLong.