Investing in Education Pays Rich Dividends, UNESCO/OECD Study Confirms

February 19, 2003

Paris, 18 Feb 2003

Investing in secondary and tertiary education - and not just in primary education - pays rich dividends for emerging economies, according to a new study by UNESCO and the OECD.

Financing Education - Investments and Returns focuses on 16 emerging economies: Argentina, Brazil, Chile, China, Egypt, India, Indonesia, Jamaica, Malaysia, Paraguay, Peru, the Philippines, Thailand, Tunisia, Uruguay and Zimbabwe. It finds that investments in human capital over the past two decades may have accounted for about a half a percentage point in the annual growth rates of those countries.

However, the study also finds that access to secondary and tertiary education - the key to building a skilled and knowledge-based workforce - is progressing slowly. In 1960, say its authors, adults in the surveyed countries had spent an average of 3.4 years in school. By 2000, this had climbed to 7.6, almost three years short of the 10.2 years in the rich economies of the OECD member states. At this rate of progress, point out the authors, it will take another 30 years for some of these countries to reach current OECD levels.

Financing Education - Investments and Returns analyses the link between the level of education of the labour force and economic growth in 16 of the countries taking part in the UNESCO/OECD World Education Indicators programme (WEI), which tracks and compares their education development.

Apart from increased national wealth, the report also confirms, without surprise, that education also benefits individuals. Better educated people, it states, fare much better on the labour market. They are more likely to be, and remain, employed, and the better qualified they are, the more money they earn. In Indonesia for example, a man with tertiary education earns an average 82 percent more than a man with only secondary qualifications. In Paraguay the difference is as high as 300 percent.

The report finds that the link between education and economic growth over the past 20 years was strongest in Argentina, Chile, Jamaica, Malaysia, Peru, the Philippines and Uruguay, and during the 1990s alone, in Brazil, Indonesia, Thailand and Zimbabwe.

In 1960, for example, Chile's 15 to 64 year-olds had spent an average 6.19 years at school, and per capita GDP stood at slightly less than US$4,000 (1995 constant dollar rate). By 2000, average time at school had climbed to almost ten years and GDP had increased to about US$7,000.

Malaysians in 1960 spent an average 3.22 years in school, with a per capita GDP of US$2000. By 2000, average years of schooling had increased to 9.31 years and per capita GDP had risen to about US$6,000.

Thailand's 15 to 64 year olds had spent an average 2.6 years at school in 1960 and per capita GDP stood at less than US$1500. Forty years later, average schooling had risen to 7.51 years and GDP to about US$4,000 per capita.

According to the report, results were more limited in Egypt, India and Tunisia, which started off with "considerably lower levels of educational attainment" than the other survey countries, with respectively 1.01, 1.17 and 0.83 average years of schooling in 1960.

This suggests, say the authors, that human capital plays a stronger role in the economic growth process once it reaches a critical threshold and that "high levels of upper secondary and tertiary attainment are important for human capital to translate into steady growth." Improving access and completion is the key to building up this critical mass, claims the report.

In their quest to accelerate participation in education, the report shows that the WEI countries are mobilizing funds from a wide range of private sources, including individuals and households which contribute much more to education in these countries than in the OECD member states. In Chile, China and Paraguay, for example, more than 40 percent of the total amount spent on education comes from such private sources. The OECD average is 12 percent.

This has given rise to the rapid development of private education services - from wholly private, independent institutions to schools that have been"sub-contracted" by governments to non-governmental oranizations and municipalities. In Zimbabwe and China, for example, government-subsidized, community-managed schools are the backbone of the education system.

Across the WEI countries an average of one in six primary pupils attend private schools (mostly state-subsidized), compared to only one child in ten in OECD member states. Private enrolment rates increase at secondary and tertiary levels. In Brazil and the Philippines, for example, independent private institutions respectively account for 63 and 73 percent of university students, compared to only ten percent in OECD countries.

The report warns however that private sector development does not solve the problem of access in the survey countries, which often have high levels of inequality and poverty, and where the poor may not be able to pay for education. They point out that at the turn of the new century, school expectancy for five year-old children in the WEI countries was still almost four years below the OECD average.

Without effective and increased investment in human capital, conclude the authors, knowledge, which has become a key economic resource, will be scarce. With effective investment and equitable distribution, knowledge can become not only abundant but renewable and self-generating - a distinction that will separate economic winners from the less successful.

"Financing Education - Investments and Returns" Analysis of the World Education Indicators 2002 Edition UNESCO/OECD, Paris, 2002. See Executive Summary.

Journalists may obtain a copy of the report from the OECD Media Relations Division.

Non-journalists can obtain more information on the publication at www.uis.unesco.org and www.unesco.org/publications or www.oecd.org/els/education/statistics.

Authors

UNESCO, Institute for Statistics, Albert Motivans (tel. 1 (514) 343-6111 ext. 4528) or Doug Lynd (tel.1 (514) 343-6111 ext. 45).
OECD, Karine Tremblay (tel.33 1 45 24 91 82) or Andreas Schleicher (tel. 331 45 24 93 66).

Contacts

Sue Williams, UNESCO Bureau of Public Information, Editorial Section (tel. 33 1 45 68 17 06) or Cristina L'Homme, UNESCO Bureau of Public Information, Editorial Section (tel. 33 1 45 68 17 11) or Nicholas Bray, OECD Media Relations (tel. 33 1 45 24 80 90).

Also available: Les dividendes de l'éducation sont considérables, confirme une étude UNESCO/OCDE (French)

Organisation for Economic Co-operation and Development
http://www.oecd.org

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