Making Educational Investments Grow: Lessons Learned from Korea and Mexico

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Like plants in a garden, investments in education need certain environmental conditions in order to flourish.Investments in education and human capital have long been recognized as precipitators of future economic growth. Rapid development in Korea in the second half of the 20th century, for instance, has been traced by scholars back to high levels of investments in schooling and training, creating the enabling environment for industrialization and further specialization.

There is no doubt that commitment to education for economic development requires both long-term funding and the multiplying effects of time.

But what causes countries with similar levels of sustained spending to achieve vastly different outcomes? It's a question that burns in the minds and wallets of governments and development efforts around the world.

Kye Woo Lee, Professor of Economics at the KDI School of Public Policy in Seoul and a former World Bank executive, returned to the Bank to present his illuminating research on this complex issue. Lee began his study by pinpointing two countries with comparable levels of education spending but very different outcomes: Korea and Mexico. While Korea is often heralded as a model for development, Mexico struggles to achieve equitable educational attainment and the economic growth it can help spur. From these two opposite ends of the spectrum, Lee attempts to draw out lessons on what went right and went wrong.

Starting at the baseline, Lee asks, Why was education’s contribution to growth greater in Korea? He finds that over the past 40 years, Korea spent an average of 3.4% of gross national product (GNP) on public education expenses per capita. In contrast, other countries borrowing from the World Bank spent an average of 3.7% of GNP per capita in the last four decades—that is to say, a similar and even slightly higher level of spending than in Korea.

Since the levels of spending on public education per capita do not account for the gaps in attainment, Lee argues that the following variables play a major role in determining growth:

  • The efficiency of educational investments and implementation
  • The sequence of educational spending over time
  • The linkage between education policies and national economic development policies 


In particular, Lee points out a number of policy areas where Korea shone while Mexico lagged behind. Mexico’s uneven borrowing from various development partners decreased the harmonization of donor funds, while inconsistent national development plans hampered coherency and progress during political turnover. Meanwhile Korea’s sequence of educational spending followed a clear trajectory, with an early focus on achieving basic education for all that allowed for equitable development and subsequent investments in secondary, then higher education and training.

For donors and governments alike, Lee’s insights encourage new rethinking of how educational investments are nurtured over time and how they can be successfully linked to national economic policy.

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