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Fridays Academy: Education, Poverty Reduction and Economic Growth (V)

Ignacio Hernandez's picture

As usual on Fridays, from Raj Nallari and Breda Griffith's lecture notes on Economic Policies for Poverty Reduction.

 

Achieving the MDG in education will depend on financial and non-financial considerations.  Bruns et al., identified for 55 low-income countries several characteristics of the education system that are widely held to influence outcomes in terms of enrollment and completion rates:

 ·       average annual teacher salary
·        pupil-teacher ratio
·        spending on inputs other than teachers
·        average repetition rate
·        government revenues
·        education recurrent spending
·        primary education recurrent spending
·        private enrollments

 

Benchmarks for Primary Education Efficiency and Quality

ed1

aGovernment current revenues, excluding grants; bStaggered targets proportional to per capita GDP

cFor six-year primary cycle; otherwise prorated for length of cycle

Source:   Bruns, Mingat and Rakotomalala, 2003

 

Enormous variance in these indicators was found across the 55 countries.  The variations translated into huge variance in GER (ranging between 30 and 120 percent) and primary completion rates ranging between 20 and 100 percent.  Based on these data, three stylized groups were identified. Group 1 countries were deemed relatively “successful countries” with GER of 85 percent and above and PCR of 70 percent and above. Group 2 countries that were deemed “high inefficiency countries” with high GER (80 percent or above) but low PCR (60 percent or lower); Group 3 countries, or “low coverage countries” with low GER and PCR (both 60 percent or lower) and Group 4 countries that fell within the ranges of the other three groups.  Exhibit below demonstrates.

                                                                                                                  Primary School Completion Rates and Gross Enrollment Ratios in a Sample of Low-Income Countries,  c.1990-2000

ed2

Source:   Bruns, Mingat and Rakotomalala, 2003.

                                                                                                                                          The relatively good features of the Group 1 countries provide some benchmarks to which Group 2 and Group 3 countries could aspire. Group 1 countries were more likely to:

  • Devote a higher share of their GDP to public primary education;

  • Have unit costs that fell in the middle of the range;

  • Pay teachers an average annual wage of 3.3 times per capita GDP;

  • Have slightly higher spending on complementary, non-teacher salary inputs;

  • Have an average pupil-teacher ratio of 39:1; and

  • Have average repetition rates below 10 percent (Bruns, Mingat and Rakotomalala, 2003).

Group 2 countries had lower average spending and much higher repetition rates (28 percent compared to less than 10 percent for Group 1 countries) and Group 3 countries had hugely higher unit costs—about 70 percent higher—than the other groups, primarily due to higher average teacher salaries. Based on these findings, the challenge for countries with low PCR and low GER is clear and relies on greater domestic effort, both in terms of financing and reform.

However, as noted generally and more specifically based on simulations by Bruns, Mingat and Rakotomalala (2005), many countries are not in a position to mobilize the resources needed to achieve UPE by 2015. Low income countries have a small tax base and have difficulty raising revenues due to limited administrative capacity. Public spending on education in low-income countries ranges from less than 2 percent of GNP in Chad, Guinea, Guatemala, and Lao People’s Democratic Republic to 10 percent in Botswana and Namibia (Mingat and Winter, 2005). Spending on primary education varies widely among the regions, ranging from US$46 per head in South Asia to US$878 per head in Eastern Europe and Central Asia. Usually more money for education results in better education, although this is not a foregone conclusion (Cohen and Bloom, 2005).  Mingat and Winter (2005) note that Senegal and Burkina Faso spend almost the same on each primary school student, yet achievement is much higher in Burkina Faso.  Moreover, more money for education does not always mean more coverage—public spending on education in El Salvador, Ghana and Sri Lanka is a relatively small proportion of their respective GDPs, yet the coverage is wide.