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Submitted by Shanta on

Katie, The issue is not how much of education is a private good and how much is an externality. As long as there is some private benefit to quality education, providing it for free to everybody by providers who are only accountable to the government is neither an efficient nor an equitable solution. This is why governments don't provide food and clothing free and control their supply. Because there is a private benefit to education, you would want the beneficiary to have a say in the delivery of the service. Instead, what we have now is a primary education system that delivers--in principle to everybody--low-quality education (with the rich, and increasingly the poor, opting for private provision); and a higher education system that, because of resource constraints, rations places in university that are overwhelmingly captured by the non-poor. That is the sense in which the model of government-financed and -provided education (with little or no ability of the beneficiary to influence service delivery) has failed. The question is how to improve the system. It's clear that simply increasing resources, without changing the institutional arrangements so that students and parents can have greater voice will not solve the problem. In the 2004 World Development Report, and subsequent work, we explored and assessed ways of strengthening students' ability to hold providers and politicians accountable. The results have been mixed. In the meantime, the private sector has grown, sometimes in response to policies such as vouchers that aim to increase accountability, and sometimes through the sheer desire of parents to give their children a quality education. But these private markets are not perfect; they have many distortions that could lead to inefficient and inequitable outcomes. That is why I was calling for more analytical work and policy action in regulating these markets. Shanta