Basic schooling

 

Rationale | next

 

8.2  What steps has the government taken to increase participation in basic schooling and to improve the quality of instruction so as to leverage human resource assets to attract and to seize investment opportunities?


Rationale for the question


Access to basic education for girls and boys is a human right and educational attainment at the primary and lower secondary levels is a minimum necessary condition for development.  Broad access to basic education also underpins a healthy investment environment. Formal educational attainment also provides the foundations for further learning and safeguards the capacity to seize future investment opportunities. Despite positive trends in school enrolment, many countries under invest in human capital, due in part to a range of market failures and poverty. In these circumstances, without policy intervention, investment in early childhood, primary and lower secondary education will be suboptimal, feeding under-skilled workers into the labour market, disconnected with the requirements of business.

Investment in human capital over two decades in 17 emerging economies has accounted for about ½ of a percentage point in their annual growth, and among OECD countries, one more year of schooling can increase GDP per capita by 4%-7%

OECD/UNESCO (2003), Financing Education: Investment and Returns, Paris


Human capital is one of the most important determinants of the investment location decision of foreign firms and its importance has grown over time, according to a study of 36 developing countries.

Noorbakhsh, Farhad et al. (2001), Human Capital and FDI Inflows to Developing Countries: New Empirical Evidence, World Development 29(9)


In Latin America and the Caribbean, a 1% decline in the illiteracy rate can increase FDI by 2.6%.

Daude, C. et al. (2003), “Core labour standards and foreign direct investment in Latin America and the Caribbean: does lax enforcement of labour standards attract investors?” IADB mimeo, Washington

 

Roughly one in five firms in many developing countries rate inadequate skills and education of workers as a major or severe obstacle to their operations.

World Bank(2005), World Development Report 2005: A Better Investment Climate for Everyone, Washington

 

Formal educational attainment also provides the foundations for further learning and safeguards the capacity to seize future investment opportunities. Indeed, mastering core competencies of literacy and numeracy are pre-requisites for effective training programmes later on. Countries with very low basic education thus risk, down the road, missing out on opportunities to move up the value chain by upgrading worker skills. Positive developments in schooling enrolment rates over recent decades have lowered this risk, though in many countries progress has been slow.


Too often families living in poverty and unable to access credit markets have no option but to withdraw their children prematurely from schooling, even though it is in their long term interest to continue. In these circumstances, without policy intervention, investment in early childhood, primary and lower secondary education will be sub-optimal, perpetually feeding under-skilled workers into the labour market, disconnected with the requirements of business. Sub-Saharan Africa and South Asia offer a stark example. According to the World Bank, in year 2000 more than 40 per cent of those aged 25 and over in these regions had not completed any formal education.


Basic education is especially prone to country-specific constraints. Moreover, successful basic education systems vary widely, making general policy guidelines hard to formulate, but certain general principles nevertheless apply. First, governments need to aim to extend access to all, not just the elite. Second, they should consider further development of basic education by, for instance, extending the length of compulsory education to at least the lower-secondary level. Better quality of basic education is also important. This can be facilitated through streamlining of learning objectives designed to impart core competencies and promote creativity, and by strengthening the relationships of accountability.


A strategy that tries rapidly to boost the level of access and quality of primary and lower-secondary level education runs the risk of encountering supply constraints, delaying the improvements to the investment climate that flow from better human resources. This risk can be reduced by better service delivery procedures, such as voucher schemes, and by giving schools and communities more autonomy for budget management, provided they meet pre-defined performance criteria.

 

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