World Development Report 2018: Learning to Realize Education’s Promise

Decisions over how to allocate public spending ineviDecisions over how to allocate public spending inevitably require difficult trade-offs. When deciding how tably require difficult trade-offs. When deciding how to spend scarce resources, governments have to weigh to spend scarce resources, governments have to weigh the costs and benefits of different spending decisions, the costs and benefits of different spending decisions, both of which are typically estimated with large marboth of which are typically estimated with large margins of error. Governments also have to weigh the gins of error. Governments also have to weigh the short- and long-term benefits of different spending short- and long-term benefits of different spending choices. Should they spend more on urban infrachoices. Should they spend more on urban infrastructure improvements to reduce air pollution in the structure improvements to reduce air pollution in the future, or should they invest today in better primary future, or should they invest today in better primary health care services to treat respiratory infections?

health care services to treat respiratory infections?

Spending on education is subject to this same

Spending on education is subject to this same calculus. Education’s many potential benefits for both calculus. Education’s many potential benefits for both individuals and societies (see chapter 1) make it a individuals and societies (see chapter 1) make it a strong candidate for public support. In fact, the obligastrong candidate for public support. In fact, the obligation to provide equitable education is often enshrined tion to provide equitable education is often enshrined in law. Although the high returns to education mean in law. Although the high returns to education mean that many students are willing to bear the costs themthat many students are willing to bear the costs themselves, there are strong rationales for public financing selves, there are strong rationales for public financing of at least some parts of the education system. First, of at least some parts of the education system. First, a concern for fairness induces countries to subsidize a concern for fairness induces countries to subsidize education for children and youth from the poorest education for children and youth from the poorest households, because their families may be unable or households, because their families may be unable or unwilling to finance their education. Second, because unwilling to finance their education. Second, because education has positive spillovers for others—such as education has positive spillovers for others—such as when it reduces the propensity to commit crime— when it reduces the propensity to commit crime— individuals may underinvest in their own education, individuals may underinvest in their own education, from society’s perspective. Third, governments want from society’s perspective. Third, governments want to use education to create shared values; delivering to use education to create shared values; delivering education directly, or at least financing it, gives them education directly, or at least financing it, gives them leverage to ensure this happens. But in all these cases, leverage to ensure this happens. But in all these cases, governments must weigh benefits against the costs governments must weigh benefits against the costs of investing in education rather than in some other of investing in education rather than in some other area—and they must decide how to spend within the area—and they must decide how to spend within the education sector.

education sector.

As their spending patterns show, countries are

As their spending patterns show, countries are increasingly willing to invest in education. Whether increasingly willing to invest in education. Whether because of the public economics calculations just disbecause of the public economics calculations just discussed or for other political reasons, countries have cussed or for other political reasons, countries have devoted a rising share of their national income to edudevoted a rising share of their national income to education (figure S6.1). In 2012 about two-thirds of councation (figure S6.1). In 2012 about two-thirds of countries that reported information on spending devoted tries that reported information on spending devoted over 4 percent of national income to public spending over 4 percent of national income to public spending on education. Education also typically absorbs the largon education. Education also typically absorbs the largest single share of a government’s budget, averaging est single share of a government’s budget, averaging about 15 percent of the budget across low- and middle-about 15 percent of the budget across low- and middle-income countries. In some countries, the investment income countries. In some countries, the investment in education is still low, indicating scope for further in education is still low, indicating scope for further prioritization, but the aggregate trends suggest that prioritization, but the aggregate trends suggest that governments recognize the importance of education.

governments recognize the importance of education.

While there is a strong rationale for public investWhile there is a strong rationale for public investment in education, the relationship between spendment in education, the relationship between spending and learning outcomes is often weak. In global ing and learning outcomes is often weak. In global learning assessments, for example, although higher learning assessments, for example, although higher per-student spending initially appears to lead to more per-student spending initially appears to lead to more learning at the poorer end of the global income scale, a commonly used mechanism in many countries to the correlation largely disappears once controlling for provide schools with the resources needed to support countries’ per capita income. This finding suggests school improvement. Although grants have often that the correlation is driven more by economic develincreased student enrollment and retention, they opment than by the level of public spending.

have had relatively limited effects on learning. For

Regional learning assessments—which include example, recent evaluations in Indonesia and Tanzamany more low- and lower-middle-income countries— nia found that school grants alone did not increase also show how inconsistent the association between student learning.

spending and learning can be. For example, public spending per primary school student increased over the 2000s in both Kenya and Lesotho; yet student learning outcomes improved in Lesotho but declined in Kenya (figure S6.2, panels a and b). Guate mala

There are five main reasons why spending does not improved student learning significantly between always lead to better and more equal student learning

2006 and 2013, even though per-student spending outcomes:

declined over the same period (figure S6.2, panels c and d). Comparing across regions within a country

• Spending is not allocated equitably.

often reveals similar patterns. In Indonesia during

• Funds do not reach schools or are not used for their the 2000s, the link between changes in district eduintended purposes.

cation spending and secondary school examination

• Public spending can substitute for private spending.

results was very weak. These findings indicate that

• Decisions on the use of public funding are not education systems, and even schools within the same coherently aligned with learning.

system, vary in their ability to translate increased

• Government agencies lack the capacity to use fundspending into better learning outcomes.

ing effectively.

Providing more resources directly to schools has also had mixed effects on learning in different

Public spending is often allocated in ways that exclude environments. A review of two decades of research poor and marginalized children, reducing its overreveals that the association between many school-all impact on learning. Overall, public education level resources (such as textbooks) and student expenditure tends to favor wealthier, more powerful outcomes is variable. School grants have become groups (table S6.1). Poorer households do tend to receive a greater share of public spending on primary differences across socioeconomic groups, since they education because they tend to have more children typically do not account for the fact that students than wealthier households. But public spending on from poorer families tend to receive lower-quality secondary and tertiary education overwhelmingly schooling than those from wealthier families. Allofavors wealthier groups, because by the time students cating resources more equitably could therefore raise reach those levels, many of the poor have already left average learning levels.

school. In Zambia, 39 percent of secondary education

Public funds sometimes fail to reach schools or are not spending was allocated to the richest fifth of houseused as intended. In 2013–14, almost a third of school holds, compared with only 8 percent for the poorest.

capitation grants failed to reach Zambian primary

The gap is even wider at the tertiary level, where 86 schools. In the Philippines, in 2013 about a quarter percent of all public spending is captured by the richof similar funds did not reach primary and lower est households. These estimates likely understate the secondary schools. In Zambia, funds were diverted for other uses, including to fund district-level operatbecause parents reduced their own financial support ing costs. In the Philippines, while district education in anticipation of increased government funding.

offices reported using some of the funds to pay school

Decisions on how to use public resources often lack expenses, this use was not recorded and schools coherent alignment with learning. The evidence on ways had no way of monitoring the spending. Schools to improve learning is growing, suggesting ways to in the Philippines that served poorer students also use funding more effectively. Also important is ensurreceived a smaller share of their intended allocation ing that the mix of inputs and interventions that are than schools serving wealthier students. Even when funded work together well. Many education systems resources are delivered to schools, they are sometimes find this difficult. For example, more classrooms may not used. In Sierra Leone, a 2008 program successbe built, but there are insufficient funds to hire the fully increased the delivery of textbooks to schools, teachers needed to use them. Teachers are present but the textbooks had no impact on learning because in classrooms, but they lack the learning materials they were stored as a hedge against future shortfalls needed to teach effectively. Improving coherence rather than distributed to students.

is not just about the mix of inputs, but also about

Household spending can also aff ect the link between the systems that manage these inputs. In Tanzania, public spending and outcomes. Taking account of housegrants given to schools were ineffective on their hold spending on education can alter the picture own, but combining grants with teacher incentives of overall spending across countries. Government ensured the grants were used effectively to improve expenditure as a proportion of gross domestic prodstudent learning. In Indonesia, school grants uct (GDP) in Nepal is much lower than in Vietnam.

improved learning only when they were combined

However, when all public and private spending on with measures to link school committees with village education is taken into account, spending in Nepal is authorities.

much higher. Households can also react to increases

The government agencies responsible for managing eduin public education spending by lowering their own cation often lack the capacity to use resources eff ectively. The contributions. For example, the introduction of school

Philippines recently embarked on an ambitious edugrants in India and Zambia had no effect on learning cation reform backed up with significant increases in public investment. A central element of the program is the introduction of two additional years of secondary education, which in turn requires the rehabilitation and expansion of school infrastructure to provide the places needed for senior high school. Despite a 19-fold increase in the infrastructure budget between 2005 and 2015, lack of government capacity to manage such a massive school building program has meant that a large share of the resources remained unspent. In 2014 only 64 percent of the infrastructure budget was committed. And even where classrooms were built, school principals have been largely unsatisfied with their quality.

Achieving education goals, whether national or global, will certainly require more spending in the coming decades. The Education Commission estimates that low- and middle-income countries will have to increase spending by 117 percent between 2015 and 2030 to enable most children to complete primary and secondary education with minimum levels of learning, as the Sustainable Development Goals call for. Reliably estimating such global costs is difficult because doing so requires accurate information on many aspects of country systems that is often unavailable. It also requires making assumptions—for example, about optimal class size—that, while valid for some countries, may not apply to others. Notwithstanding these difficulties, exercises of this kind offer useful information on what school expansion of reasonable quality might cost. That information indicates that, even with greater effi - ciencies, it will be impossible to extend schooling for hundreds of millions of students without investing more in education.

The key will be to use those additional resources in ways that improve learning, especially for disadvantaged children. Costing exercises are sometimes misinterpreted as implying that more spending is all that is needed. But because there is no certainty that spending will lead to better outcomes, spending better will also be essential—as the Education Commission emphasizes. When education is funded using resources diverted from other pressing public needs such as health or infrastructure, or funded through debt to be repaid by the next generation, it is crucial that spending be oriented toward what will improve learning for all. How to achieve this is the focus of this World Development Report.

Spending more can be an important first step to spending better, but, again, increasing spending alone is not sufficient to improve learning. The politics of education reform sometimes requires compensating stakeholders who might lose out, or spending more to lay the foundations for future reform. For example, addressing the low pay of teachers in Peru was an important prerequisite for introducing the reforms (such as linking teacher career paths to performance) that underpinned improvements in learning outcomes. However, in other cases strategies of this kind have worked less well. A 2006 education finance law in Argentina aimed at reversing declines in quality led to a near-doubling of education spending as a share of GDP (from 3.5 to 6 percent) between 2005 and 2013. The new resources were used to increase teacher hiring, raise teacher pay, and improve school infrastructure. Yet despite these improvements in inputs, learning outcomes have improved only marginally in recent years and are still below 2003 levels. These experiences highlight the need to strengthen the links in the spendinglearning chain, if more spending is to lead to better learning outcomes.