EXECUTIVE SUMMARY
Jandhyala B G Tilak National Institute of Educational Planning and Administration 17- B Sri Aurobindo Marg, New Delhi 110 016 (INDIA)
0 Investment in basic education yields high economic returns to the society. More impor- tantly, there are a multitude of externalities associated with primary education, including posi- tive effects on health, reduction in infant mortality rate, reduction infertility rate, etc. Primary education is also a 'public good'. All this necessitates a positive approach to financing educa- tion, and underscores the need to step up the levels of public expenditure on primary educa- tion substantially. But the present pattern of financing education, and primary education in particular needs much improvement.
1 A Few Stylized Facts (1): Public Expenditure on Basic Education 1.1 Total and per capita expenditure on education in the world increased in real prices rapidly during the last 2-3 decades. But the growth in some of the developing economies has not been commensurate with the rates of economic growth. The requirements of the educa- tion systems are much higher than the levels of availability of resources.
1.2 While in many developed countries, about six percent of GNP is allocated to education, in developing countries the corresponding figure is less than four per cent, and in Asian and African countries it is further less.
1.3 As a proportion of GNP, very little amounts are being invested in primary education in several countries. But the intra-sectoral allocation of resources in education seems to be im- proving over time in some of the developing countries in favour of primary education.
1.4 Most education budgets are 'current' budgets, with insignificant proportions being al- located to items that lead to capital formation like buildings, furniture, etc. Scanty amounts are available for non recurring items. The needed physical capital formation does not take place in education sector in general, and primary education in specific.
1.5 Expenditure on libraries and books forms 'composite' capital: physical and human. Budget allocations seem to be unduly discriminating against such composite capital, which should have been given more attention. Teachers' salaries form the largest chunk of the recur- rent budgets, and virtually little is available for investment in those items such as text books, chalks, globes, maps, and other necessary class room material, that is found to be yielding higher returns. The externalities associated with books are too important to be ignored. The
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parents and other children who do not go to schools may look at these books when carried home, and the effects could be significant.
1.6 Expenditure on primary education per student is trivial in many developing countries (a) relative to the needs of the primary education system, (b) in comparison with other levels of education, and (c)compared to the developed countries. The present levels of spending per student in developing countries are hardly adequate to provide meaningful quality education for all.More importantly, in some of the countries the real expenditure per student has declined over the years.
1.7 Government has been the major financier of basic education in developing countries, the non-governmental sources dwindling rapidly.
1.8 Major systematic attempts to raise non-governmental finances need to be confined to higher education. But in case of basic education, the role of the community is believed to be potentially significant. At the same time there appears to be no case for fees, nor for increased role of the private sector in basic education.
2 A Few Stylized Facts(2): External Assistance for Education 2.1 While there are several international agencies - bilateral and multi-lateral, the role of the World Bank has become very prominent both in terms of quantum of aid, and in in- fluence on planning and policies.
2.2 Only since the mid 1980s, when the attention of the international agencies shifted in favour of poverty alleviation, the importance of primary education was recognized, and ac- cordingly, the share of primary education has become significant in total education lending. A clear shift in favour of primary education can be noted after the Jomtien Conference.
2.3 Generally the external resources that flow in to the education systems are expected to be additive to the domestic resources, and that they would not substitute the national efforts. But it is not necessarily the case always.
2.4 Relative to the countries' domestic education budgets, the external assistance for educa- tion is generally very small.
2.5 The high population countries are at a disadvantage when it comes to external assis- tance. Almost as a rule the more the populous a country is the less is the education assistance per capita it receives, and vice-versa.
2.6 During the periods of implementation of the stabilization and structural adjustment programmes primary education in many countries suffered.
3 The Financial Requirements of EFA 3.1 Simple, crude and quick calculations suggest that the global requirements for Educa- tion for All would be more than $400 billion (in 1985 prices) on the current account alone in 2000 AD, compared to the level of expenditure of about $160 billion in 1985. The real expen- diture should increase by more than 2.5 times during this period.
Education For All Summit 3
3.2 The developing countries have to increase the public recurrent expenditure by 3.6 times from $23.4 billion in 1985 to $83.4 billion by the turn of the century. The share of the develop- ing countries in the world expenditure on EFA will have to increase from 14.6 per cent in 1985 to 20.5 per cent in 2000 AD.
4 Policy Issues(1): On Mobilizing Domestic Resources 4.1 Family investments in education are estimated to be as important and significant as public investments in quantum. The scope for raising families' contributions, voluntary, or compulsory like fees, to education seems to be limited.
4.2 Contributions from the communities should be treated as peripheral sources to supple- ment the levels of the funding by the government. The core educational activities should not critically depend upon such contributions, and the state must ensure the smooth functioning of the core education activities though its own funding. Excessive reliance on parental and community contributions for basic education will produce serious adverse effects on equity, contributing to inequalities between several groups of population, and between regions, thus finally contributing to under-optimum levels of social investment in education.
4.3 Private schools in general do not necessarily reduce the financial burden of the govern- ment. They might even work against financial, educational and other social considerations of the welfare state. Policies encouraging privatization in education need to be made with cau- tion.
4.4 The evidence on decentralization and local financing of primary schools is not conclusive with regard to school effectiveness, and funding. One has to be cautious in laying exclusive stress on decentralization as a panacea for all the problems in educational development in developing countries.
4.5 It may be desirable to have a national norm, applicable to all regions in a country, with regard to, say, the minimum share of the budget that should be allocated to education, and to basic education in particular. This will help in promoting balanced development of education in the country.
5 Policy Issues (2): On Mobilizing External Resources 5.1 External assistance will play an important catalytic role in the development of educa- tion, but it is too much to expect that it will solve the financial problems of education in develop- ing countries substantially.
5.2 Externally aided projects should become sustainable over time.
5.3 The shift in aid programmes in favour of education, and more specifically in favour of basic education needs to be strengthened and sustained.
5.4 The undesirable trends in primary education during the process of stabilization and ad- justment strongly suggest the need for necessary accompanying of compensatory program- mes such as the Social Safety Net programme along with the adjustment loans. It may be better in fact, if the stabilization and adjustment programmes exclude human development sectors
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like education from general conditions of budget cuts, and rather include conditions of strengthening education budgets.
5.5 There exists a threshold level of buildings and other hardware facilities for meaningful education activities to be carried on, and external assistance should make appropriate invest- ments in physical capital, apart from software.
5.6 The needs of the developing countries relating to the nature and type of external assis- tance vary, and there cannot be a single pattern of external assistance to all developing countries.
- Countries with low levels of income and low levels of educational development need to be provided assistance in terms of technical assistance as well as physical (material and direct monetary) inputs.
- Countries with low levels of income and reasonably high levels of educational develop- ment do not require technical assistance; external aid may be concentrated on direct money inputs, and material support.
- Countries with high levels of income and low levels of educational development need to be provided external aid in terms of technical assistance.
- Countries with high levels of income and high levels of educational development ob- viously do not require any kind of external assistance for education.
5.7 The efforts of donor agencies in all categories of countries should concentrate on build- ing national capacities, and long term development of education in the country concerned.
5.8 It may be advisable to look at the possibility of providing debt relief, or more clearly swapping the education debts of the poor countries as a means of funding education, like the debt-swaps relating to environment initiated in 1987.
5.9 The international donor community, including the bilateral and multilateral agencies should substantially raise their support for education in developing countries, and may also fix a norm regarding the minimum level of the share of education in their development aid programmes, and the share of basic education in their education aid programmes.
6 In Conclusion 6.1 The basic approach to financing education both by the national governments and inter- national donor community needs to be changed. Expenditure on education should be viewed as 'investment' that yields benefits for a long time, some times even across generations, and that this investment is "crucial for national development and survival".
External and Internal Resource Mobilization for Education For All