From Britain’s early factories to today’s developing nations, what does the history of literacy and schooling reveal about the path to prosperity?

If you could travel back in time to the moment when nations began to escape poverty, could you predict which ones would become prosperous by examining how educated their populations were? Today, the world’s wealthiest nations tend to have highly educated populations, while poorer nations generally have less education.

This seems to support a simple explanation for economic growth: educate the population, and prosperity will follow. But does the historical evidence actually support this explanation?

In my previous essay, Do Education and Human Capital Drive Economic Growth?, I examined the Human Capital theory, which holds that increasing education and skills is a major cause of long-term economic growth. I questioned whether formal education actually creates the knowledge and skills that make workers more productive, and whether the strong correlation between education and prosperity demonstrates that education causes economic growth.

1. Did widespread literacy and formal education precede transformative economic growth in nations that became prosperous?
2. Did nations that achieved substantial literacy and education subsequently experience transformative economic growth?

These questions test two different claims about education. The first examines whether widespread education was a necessary prerequisite for transformative growth. The second examines whether achieving substantial education was sufficient to produce it.

Measuring Education and Economic Growth

To test whether education preceded economic growth, we first need to identify when each nation began its economic transformation and how educated its population was at that time.

I define transformative economic growth as the beginning of a sustained, long-term increase in real GDP per capita, adjusted for inflation. This distinguishes genuine economic development from temporary periods of growth or increases in total economic output caused simply by population growth.

Choosing nations

To estimate when transformative growth began, I asked ChatGPT to use historical GDP-per-capita estimates, drawing on the Maddison Project Database. To avoid confusing recovery from a temporary economic decline with genuine growth, income also needed to surpass its previous historical peak. I assigned starting decades rather than individual years because the historical data are not sufficiently precise to identify exact takeoff dates. These are approximate estimates rather than dates established through a uniformly verified statistical test.

For the second comparison, I reversed the approach. Instead of starting with nations that achieved transformative growth, I identified nations whose GDP per capita remains below the global median but whose populations had already reached both educational benchmarks established by the first comparison. This allows us to examine whether achieving similar levels of education reliably leads to economic transformation. Remaining relatively poor does not necessarily mean that a nation has experienced no significant economic growth.

Measuring Education and Literacy

1. Literacy rate: The percentage of the population able to read and write. This measures the spread of the most basic educational capabilities.
2. Median years of schooling: The number of completed years of formal education for the person in the middle of the educational distribution. I focus on younger generations because their schooling better reflects recent educational progress.

Historical education statistics are far less precise than modern figures. Many early industrializing nations did not collect reliable national literacy or schooling data. As a result, I asked ChatGPT to reconstruct the data from censuses, school enrollment records, and other historical evidence. The estimates should be treated as approximate rather than exact.

How Educated Were Nations When Transformative Economic Growth Began?

Britain, the birthplace of the Industrial Revolution, is an excellent place to begin. When its transformative economic growth began in the 1820s (or so) Britain had

• 50% literacy rate, and
• younger generations had completed a median of approximately one year of formal schooling.

Britain began its transformation into the world’s leading industrial economy with a population that was poorly educated by modern standards. But was Britain an exception, or did other nations begin their economic transformations with similarly limited education?

Note: these tables only display a limited number of rows at the same time. Click the page selector on the top right to view additional pages.

The results reveal enormous differences in educational attainment at the beginning of transformative economic growth. The median nation in our comparison had:

• approximately 60% literacy, and
• four years of median schooling among younger generations.

These figures provide useful benchmarks for comparing nations, but they do not represent minimum requirements for economic development.

Several of the earliest industrializers began growing with education levels substantially below these benchmarks. Belgium had an estimated literacy rate of 49% and two years of median schooling. France, whose economic transformation was more gradual, had an estimated literacy rate of only 37% and three years of schooling.

The experiences of Russia and Japan are also revealing. Both nations began their economic transformations with relatively low levels of literacy and formal schooling. Nevertheless, both subsequently developed major industrial economies.

However, not all nations followed this pattern.

• Sweden had already achieved widespread reading ability, estimated at around 90%, although its younger generations had completed only about two years of formal schooling.
• Switzerland had approximately six years of median schooling when its economic transformation began, substantially more than most of the early industrializers.

Comparable national literacy estimates are not available for every country, and the Swedish reading measure is not identical to full literacy.

It is also important to recognize that these 26 economies were probably more educated than the world as a whole during their respective takeoff decades. Most of humanity still lived in societies with even lower levels of literacy and formal schooling. The educational levels shown here may seem low by modern standards, but they were likely relatively high by the standards of their time. Our comparison therefore examines a relatively advantaged group of societies, not a representative sample of the world’s population.

Nevertheless, these differences suggest that widespread literacy and formal schooling were not universal prerequisites for transformative economic growth. Nations began their economic transformations with widely varying levels of education. There was no single educational threshold that all nations had to cross before sustained economic growth could begin.

Of course, this does not mean that education was unimportant. Even societies with low overall literacy contained educated merchants, engineers, skilled artisans, and others whose knowledge contributed to economic development. It is possible that a relatively small number of educated and technically skilled individuals could support the early stages of industrialization without requiring widespread formal education.

The historical evidence therefore challenges the strongest version of Human Capital theory. Widespread education was not consistently present before transformative economic growth began. However, this comparison alone cannot tell us how much education contributed to subsequent growth or whether particular forms of education accelerated economic development.

Education Expanded as Western Europe Became Wealthier

To see how much education had expanded, I asked ChatGPT to determine literacy and schooling levels in Western European nations in 1900 and today.

This table reveals some key trends:

1. Literacy expanded substantially even after economic take-off.
2. The expansion of formal education occurred long after economic take-off. Indeed, formal schooling in Western Europe was only 5 years in 1900.

These trends suggest that we should distinguish between basic literacy and extended formal education. Learning to read, write, and perform basic calculations did not require many years of schooling. Literacy could spread through religious instruction, local schools, family instruction, and other forms of education without requiring children to spend a decade or more in classrooms. Societies could therefore achieve widespread literacy while most people still received relatively little formal schooling.

More to the point, this data shows that the relationship between education and economic growth is quite different from what Human Capital theory might lead us to expect. Western European nations did not generally create modern systems of mass education and then begin their economic transformations.

Instead, Western European nations began growing with relatively limited schooling, expanded basic education as their economies developed, and greatly extended formal schooling many decades after they had already become much wealthier.

Of course, this does not prove that education made no contribution to economic growth. Basic literacy and specialized technical training could have played important roles even when most people received little formal schooling. Nor does the historical sequence establish precisely how much economic growth contributed to educational expansion.

Nevertheless, the timing is difficult to reconcile with the claim that extensive formal education was a necessary prerequisite for transformative economic growth. In Western Europe, the great expansion of schooling largely followed an economic transformation that had begun much earlier, rather than preceding it.

Why Mass Education Was So Expensive Before Economic Growth

Why did formal education generally expand after transformative economic growth began? One important explanation is that mass education was simply too expensive for most poor societies to support. Educating an entire generation required resources that families, governments, and communities often did not have.

Today, we take universal education for granted. But for most of human history, keeping children in school rather than having them work was a luxury that few families could afford. Providing schools and teachers for an entire population was an enormous financial commitment for governments whose economies produced little taxable wealth.

The Cost to Families

In poor agrarian societies, children were an important source of labor. They helped plant and harvest crops, care for animals, gather firewood, prepare food, and perform numerous other tasks necessary for family survival. Even young children could make valuable contributions to household production.

Sending children to school meant giving up some of that labor. This was an opportunity cost that poor families could rarely ignore. Even when schooling was free, families still had to provide clothing, supplies, and sometimes transportation. In rural areas where most people lived, just getting to the school and back took significant time and resources. Most importantly, families had to sacrifice the goods and services their children could otherwise produce.

The longer children remained in school, the greater these costs became.

• Teaching a child basic reading, writing, and arithmetic might require only a few years of instruction.
• Keeping that child in school for eight, ten, or twelve years imposed a much larger burden, particularly when the additional schooling offered few immediate economic benefits.

For families living near subsistence, the decision was not simply whether education was desirable. It was whether they could afford to give up their children’s labor in exchange for uncertain future benefits.

The Cost to Governments

Poor agrarian economies generated relatively little taxable income. Most people worked in low-productivity agriculture, producing little surplus beyond what they needed to survive. Governments therefore had limited resources to finance schools, especially while also paying for roads, defense, administration, and other public services.

The problem was not simply a lack of political commitment to education. Even governments that wanted to expand schooling faced severe financial constraints. Building schools was relatively straightforward compared with the continuing expense of paying enough teachers to educate every new generation.

These limitations were particularly severe in rural areas, where populations were widely dispersed. Small villages might not have enough students to support a full-time teacher, while traveling long distances to school imposed additional costs on families.

How Economic Growth Changed the Equation

At the same time, growing economies generated more tax revenue. Governments could finance additional schools, employ more teachers, and expand compulsory education without imposing the same financial burden on their populations. What had once been an extraordinary expense gradually became an affordable public service.

Economic growth also increased the economic benefits of education. Expanding industries, commercial enterprises, and government organizations created new occupations that rewarded literacy, numeracy, and specialized knowledge. Families had stronger incentives to educate their children because the opportunities available to educated workers were improving.

Together, these changes created a reinforcing cycle. Higher productivity made education more affordable, while expanding economic opportunities made it more valuable. Greater demand for education and greater ability to finance it encouraged the growth of modern schooling systems.

Of course, economic growth was not the only factor shaping educational development. Religious institutions had promoted literacy long before industrialization, particularly in parts of Northern Europe where reading religious texts was considered important. Local communities also established schools, while some governments made mass education a priority even when their countries remained relatively poor.

These exceptions matter, but they do not eliminate the underlying economic constraints. Mass education required substantial resources, and sustained economic growth made those resources far easier to obtain. This explains why the expansion of formal schooling so often followed transformative economic growth rather than preceding it.

Establishing Useful Educational Thresholds

At the beginning of transformative economic growth, the 26 economies had a median literacy rate of approximately 60% and a median of four years of schooling among younger generations. By 1900, after decades of economic growth in much of Western Europe, median literacy had reached 90%, while median schooling among younger generations was still only five years.

I am adding in 1900 because some may argue with my choice of “take-off decade”. No one can plausibly argue that Western Europe in 1900 had not industrialized, so I will also use those figure going forward.

For our second historical test, I will apply those two benchmarks to modern nations. If expanding formal education is a primary driver of transformative economic growth, we might reasonably expect nations that reached both benchmarks to have experienced substantial economic development afterward. By examining countries that achieved these levels but remain relatively poor today, we can investigate whether education is sufficient to generate prosperity.

Nations That Expanded Education Without Achieving Transformative Economic Growth

Our first historical comparison showed that many nations began transformative economic growth with relatively low levels of literacy and formal schooling. But what about nations that achieved substantial education without becoming prosperous?

If expanding education is a major cause of transformative economic growth, we should expect nations that achieved substantial literacy and schooling to become increasingly prosperous. Yet a remarkable number of nations have reached or surpassed the educational levels found in successful industrializing economies while remaining relatively poor.

To investigate this question, I asked ChatGPT to identify nations in 2025 with

• National GDP per capita below the global median of $20,200, adjusted for purchasing power.
• at least 60% literacy, and
• four years of median schooling among younger generations.

As you can see below, this is a long list of nations. You can view them all by clicking the page selector on the top right.

The sheer number of nations is striking. There are 49 nations across Africa, Asia, Latin America, and other regions that have achieved both educational thresholds but remain below the global median GDP per capita.

These are not a handful of unusual exceptions. They represent a substantial portion of the world’s poorer nations. And if we include nations with missing data, the number would likely be higher as poorer nations typically have the worst data.

Even more revealing, many below-median nations in 2025 have educational attainment far above our original thresholds. Nations such as Ghana, Honduras, the Philippines, and Bolivia have young populations with ten or more years of median schooling. Yet their GDP per capita remains well below the global median.

Highly Educated Nations Without Western European Prosperity

To examine this possibility, I asked ChatGPT to raise the educational thresholds to:

• 90% adult literacy and
• 12 years of median schooling among younger generations.

These levels approach those found in modern Western European nations. I also excluded:

• European nations,
• major energy exporters, and
• the original 26 economies in our first comparison

We can clearly see from this table that very high rates of adult literacy and formal schooling is not enough to raise GDP per capita to Western levels.

• There are 23 economies that meet these much higher educational thresholds.
• Of the 22 with available GDP figures, 14 remain below the global median GDP per capita of approximately $20,200 PPP.
• Several nations have incomes below $10,000 despite having highly educated populations.

Latin America is particularly revealing. Nations such as Bolivia, Ecuador, Paraguay, Colombia, Brazil, Mexico, Argentina, and Chile have achieved high literacy and extensive formal education. Yet their economic performance varies enormously, and even the more prosperous among them remain considerably less wealthy than the leading Western European economies.

The same pattern appears elsewhere. Sri Lanka, Jordan, South Africa, and several Pacific island nations have achieved educational levels approaching those of Western Europe without achieving comparable prosperity.

Of course, these nations have not all followed the same economic path. Some have experienced substantial economic growth, while others have struggled with prolonged stagnation or repeated economic setbacks. Nor does the comparison establish whether their educational expansion preceded or followed their periods of economic growth.

Nevertheless, the existence of so many highly educated nations with widely differing levels of prosperity presents a serious challenge to the claim that formal education is a primary cause of economic development. Even when literacy is nearly universal and most young people have completed secondary school, extensive education does not guarantee the high productivity and living standards enjoyed in the West.

Conclusion

Our two historical comparisons in this article reveal three important findings:

1. Many nations began transformative economic growth when large portions of their populations were illiterate and most young people received very little formal schooling.
2. Much of the expansion of formal schooling occurred decades after transformative economic growth began, especially during the twentieth century.
3. Dozens of nations have achieved high levels of literacy and formal education without reaching the prosperity enjoyed by successful industrialized economies.

It is far more likely that literacy and particularly formal schooling are one of the many positive results of material progress rather than a cause of material progress.