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In India, Engineering Success
...In 2005 India enrolled fully 450,000 students in four-year engineering courses, meaning that its output of engineers will more than double by 2009.

As striking as these numbers is the way India is getting there. What's made this engineering takeoff possible is not an increase in the supply of universities financed by taxpayers or foreign donors; it's an increase in demand for education from fee-paying students -- a demand to which entrepreneurs naturally respond. More than four out of five Indian engineering students attend private colleges, whose potential growth seems limitless. In 2003 the Vellore Institute of Technology received 7,000 applications. In 2005 it received 44,000.

Something similar is happening to the Indian school system, which has experienced a huge growth in private provision. Since the early 1990s the percentage of 6-to-14-year-olds attending private school has jumped from less than a tenth to roughly a quarter of the total in that cohort, according to India's National Council of Applied Economic Research. And this number may be on the low side. James Tooley of the University of Newcastle in Britain has found that in some Indian slums about two-thirds of the children attend private schools, many of which are not officially recognized and so may escape the attention of nationwide surveys.

The causes of this private-school explosion shed interesting light on debates about development, not just in India but throughout the poor world. The standard assumption among anti-poverty campaigners is that education leads to development; if you supply classrooms and teachers, progress will follow. Up to a point, India's success in brain-intensive industries such as software and pharmaceuticals lends substance to this theory: India's government has long invested in a few elite engineering schools, whose graduates are at the heart of the country's high-tech success. But it's also true that this elite pool of engineering excellence counted for little so long as statism stifled India's economy. It was only after market reform began in the 1990s that high-tech India took off.

Meanwhile, the recent private-education boom in India shows how causality can also flow the other way. Education may or may not spark development, depending on whether economic conditions favor it, but development certainly can spark an educational takeoff....