Chapter 8 Increasing factor productivity in the rural area

Education is probably the most important instrument for the improvement of human capital. It leads to greater productivity and therefore to higher levels of income and the diminution of poverty, an increase in employment flexibility, a greater accessibility to wider employment opportunities, the stimulation of various services and consumer products, and more. The influence of education is proven worldwide. A World Bank study (unpublished) finds that the return from education in Northeast is high, especially in the rural area. It also shows that higher levels of education increase the probability of non-farm employment. The study of the Banco do Nordeste do Brazil (1978) on rural industrialization of the Northeast found, on the basis of an econometric model, that education is a major stimulant of urban-oriented industrialization in the interior. A specific study of small agro-industrial firms in Ceara by Pinto (1994) also concludes that education and professional training is one of the most important necessities of such rural activities.