Investments in Education and Socioeconomic Development

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Investments in Education and Socioeconomic
Development

• José Pablo Arellano
• Mexico City, August 2003

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Contribution of education to development

• Return on investment in education
• In Latin America, rates of return are among the
  highest
• Return on early investment in education is
  greater
• Primary education has greatest return

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Return on investment in education
(Source Psacharopoulos and Patrinos, 2002)
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Return on an additional year of schooling
(Source Psacharopoulos and Patrinos, 2002)
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Contribution of education to growth

• Review of growth theories, more emphasis on human
  capital (worker productivity and innovation)
• Between one tenth and one third of growth due to
  human capital
• One additional year of schooling among the work
  force increases per capita GDP by 6 over the
  long term
• Contribution has been greater for developing
  countries in past few decades

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Competitiveness and education

• Surveys on international competitiveness
• In 19 Latin American countries, math and science
  achievement averaged 3.6 vs.5.6 in Eastern
  Europe and 4.9 in East Asia. Public school
  quality averaged 2.7, 4.9, and 4.2, respectively.
• Education level of work force growing slower than
  in other regions

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Availability and Retention of Engineers


High-income OECD

East Asia and Pacific


Eastern Europe
Latin America

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Secondary Completion
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Equity

• Growing role of education due to increased demand
  for qualifications
• Questioning of other instruments for
  redistribution of income and wealth

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Financing amount of resources

• In 1990s, public investment in education showed
  highest growth in LAC, jumping from 2.9 of GDP
  to 3.9.
• Future resources will depend on economic growth
  (salaries), lower demographic pressure, greater
  demand for coverage at costlier levels, family
  contribution (economic growth and policies)

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Expanding coverage

• Universal coverage of primary education increases
  demand for secondary and tertiary. Higher costs
  per student.
• Achieving full secondary education coverage.
  Types of problems children never enrolled, late
  enrolment, poor performance (low achievement,
  repeaters), dropouts.

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Poor attending school by age
6 to 14 years old
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Population attending school, by age and income
6 to 14 years old
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Percentage of children in poorest two quintiles
attending school at
6 and 8-9 years of age
100
97
95
95
95
94
90
83
82
82
80
76
74
73
73
70
70
60
50
50
40
35
34
30
20
10
0
Colombia 2000
Bolivia 1997
Brasil 1996
Rep Dominicana
Guatemala 1999
Haití 1994-95
Nicaragua 1998
Perú 2000
1996
Minimum attendance
Maximum attendance
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Latin America (18 countries) Dropout rates for
adolescents aged 15-19, by area Overall dropout
rate Urban areas

Rural areas
Simple average
Simple average
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Clear progress in reducing dropout rates in the
1990s. For 18 countries in LAC, rate dropped from
45 to 37 (from 32 to 27 in urban areas, and
from 64 to 51 in rural areas)

• More emphasis needed on starting school on time
• Policies on incentives and benefits according to
  age of children
• Reducing age children enter school vs. increasing
  coverage at an older age
• Dropout rates associated with teenage pregnancy
  very high and have increased in most of the
  countries in past 15 years
• Policies to finance expansion of higher education

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Breakdown of spending (S)

• S HS x H x T
• S/GDP (HSxH/pcGDP)x(T/ST)x(ST/N)x(N/P)
• HS Hourly teacher salary
• H Hours of teaching per teacher contract
• T Teachers
• ST Students
• N School-age population
• P Total population
• GS Grade-age students
• RS Late-starter and/or repeater students

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Quality student achievement

• International test results
• Is it a resource problem?
• How to improve the use of resources?

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PISA 2000 performance by 15-year-old students
(reading comprehension test)
3
5




100

5.7
9.5
6
9
18.5
18.7
90
19
22
80
31
41
47
70
49
26
26
46
32
60
50
50
33
40
57
42
28
21
28
30
43
54
20
23
12
23
20
10
9
16
5
5
6
5


0
New Zealand
OECD average
Argentina
Brazil
Chile
Mexico
Peru
Finland
Korea
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PISA 2000 performance by 15-year-old population
(reading comprehension test)
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Differences in math test performance
(Korea vs. LAC 90th percentile)
700
676
650
600
550
536
502
500
496
464
450
431
400
350
5
10
25
50
75
90
95
Percentile
Korea
Argentina
Brazil
Chile
Mexico
Perú
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Spending per student (primary) vs. reading test
performance
(PISA 2000)
600
Fin
550
Aus
Kor
U.K.
Swe.
Jap
Nor
Fra
U.S.A.
Czech Rep.
500
Spa.
Austria
Ger.
Swi.
Den.
Ita
Gre
Hun
Pol
Por
Performance
450
Mex
Chi
Arg
400
Bra
350
Peru
300
5
10
15
20
25
30
Spending per student / per capita GDP
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System governance

• Decision-making and decision-makers Who is
  responsible and what are the consequences?
• Examples of problems teacher absenteeism, lack
  of evaluation politization and/or strong
  influence of teacher unions on appointments and
  promotions
• Overregulated system that maintains
  decision-making and administration system
  designed prior to mass education
• High turnover among senior education ministry
  officials and discontinuity of policies
• Parents and other stakeholders have little say