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Driven by the enormous economic change in most advanced industrial countries in the last decade, training reform has emerged as a major issue. With the increasing integration of world markets, rapid introduction of new technologies and the emergence of efficient, low wage competitors, the industrialised countries have been forced to move into high-skill, high value-added market segments to remain competitive. This chapter explores the relationship between education and training (ET) and economic organisation and performance in comparative perspective. The first part of the chapter reviews the traditional approaches to the relationship between ET and economic performance. The second part outlines the author's model, which attempts to synthesise two major theoretical approaches to ET and examines the nature of the ET investment decision. The third part of the chapter applies this model to Britain to explain why its market-based system fails to provide the same level of ET and economic performance as its main economic competitors.