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THE S TUDENT ECONOMIC REVIEW VOL. XXVIII
EDUCATION D EVELOPMENT:
I MPORTANCE, C HALLENGES
AND S OLUTIONS
C OLIN POWER
Junior Sophister
Colin Power investigates the necessity of education for fostering economic development in this thorough and highly informative essay. He examines the multitude of impor- tant effects that education has on health and welfare within a country and raises a number of salient issues which need to be addressed in order to best promote devel- opment worldwide.
Introduction
education can be seen as both an objective and component of development, as well as āfundamental to the broader notion of expanded human capabilities that lie at the heart of the meaning of developmentā (todaro and smith, 2011, p.359). this essay argues that investment in education is essential for development, but also that the form this investment takes is of critical importance in addressing the key challenges to educational outcomes in less developed countries (lDcs) and indeed in the achievement of developmental goals. this essay will discuss the importance of education, and the problems that tend to occur in this sector within many lDcs, with a particular focus upon absenteeism and gender inequality, as well as possible solutions to these problems. this essay will finally discuss some of the possible policies that may be implemented by governments in lDcs, partic- ularly the efficacy of conditional cash transfer programs, as well as simple and cost-effec- tive policy proposals to enhance educational outcomes within lDcs.
Academic Foundation
aside from the intrinsically important goal of the expansion of human capabilities, there is both significant theoretical and empirical basis for the assertion that human capital, and education in particular, is essential for both economic growth and development; numerous models of economic growth include human capital as an important explanatory variable in the achievement of economic growth. most notably endogenous growth theory asserts that investment in human capital will significantly contribute to economic growth, and indeed foster development (romer, 2011). furthermore, mankiw et al. demonstrate that an augmented solow model of economic growth that includes human capital is superior
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in its predictive power of growth (mankiw et al., 1992). and similarly, Jones asserts that extending the original solow model to include the investment of resources in skills accu- mulation, as well as in physical capital, is superior in explaining variation in wealth across countries (Jones, 2002). the effect of human capital upon aggregate income and devel- opment can thus be seen to be of ācentral importanceā to policymakers and economists when considering the essential nature of human capital in development outcomes (ace- moglu and angrist, 2000).
Educational Effects
Educational Effects on Income investment in education is widely considered to be of vital importance to development (Kremer, 2003) for myriad of reasons; indeed human capital and particularly education is arguably the most significant factor in regional differences in development (gennaioli et al., 2011). increased income levels are both a cause of, and indicative of, economic growth and development in a country and investment in education maintains a positive effect on both private (acemoglu and Dell, 2010; Duflo, 2002) and aggregate levels of income (acemoglu and angrist 2000). while individual income levels are also a result of numerous other factors such as labour market structures (Pugatch, 2011), political system and stability, level of education remains the most significant explanatory factor in levels of income within countries (acemoglu and Dell, 2010) and thus investment in education contributes to higher levels of both private and public income; increased income allows for greater autonomy and purchasing power for individuals, and a state which is better able to achieve its developmental goals.
Educational Effects on Human Capacity investment in education can also significantly contribute to the expansion of human ca- pabilities, which is a key aspect of development. this idea is expressed by sen who asserts that a person benefits from education "in reading, communicating, arguing, in being able to choose in a more informed way, in being taken more seriously by others and so on" (sen in todaro and smith, 2011, p.359); this could even include better decision-making, more engagement in the political process and positive spillover effects to those around the educated person, in reading to others, or providing beneficial innovations to a wider community (todaro and smith, 2011, p.365). this increased human capability as a result of education is vital to consider as part of the significant benefits of investment in educa- tion, and its essential place at the heart of development.
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Challenges to Education
Absenteeism one of the most damaging problems that affects development in the human capital sectors in lDcs is that of absenteeism; particularly the absenteeism of service providers in edu- cation which is āwidespread and unpredictableā (J-Pal, 2009, p.1) and contributes to low levels of educational outcomes. this prevalence of absenteeism is negatively correlated with economic development and income and thus poorer countries suffer more than wealthier states (J-Pal, 2009, pp.1-3). however, there is significant evidence that some relatively low cost and targeted investments can be highly effective in combating service provider absenteeism in lDcs, particularly through the implementation of external mon- itoring, accompanied with impersonal and direct incentives for attendance as well as pun- ishment for absenteeism (J-Pal, 2009, pp.1-3). this is further supported by Duflo, et al. who tested the effects of monitoring, where attendance is monitored using a tamper- proof camera, as well as financial incentives, on teachersā absenteeism; they found that absenteeism decreased significantly with the introduction of this relatively simple moni- toring system, and observed an increase in studentsā test scores (Duflo et al., 2010). the problem of absenteeism also extends to students in many lDcs, where absence is often caused by health problems such as malnutrition and disease that are a far higher cause of student absenteeism in lDcs than in developed countries and this exacerbates the already existing gap in years of schooling between these regions and states (todaro and smith, 2011, pp.360). miguel and Kremerās analysis of a relatively simple and cheap school āde- wormingā scheme in Kenya found evidence that this ādewormingā had a positive effect on both school and health participation, as well as decreasing student absenteeism by up to 25per cent (miguel and Kremer, 2004). investments in education are of vital importance to development, and investments in solutions to the problem of absenteeism, such as those outlined above, that are cost-effective and dynamic in their application can play an enor- mous role in ameliorating human capital and fostering development within lDcs.
Educational Gender Gap there exists an extensive gender gap in educational sectors in many lDcs (todaro and smith, 2011, pp.373) which is a significant problem as, besides the intrinsic injustice of its existence, it is a considerable hindering factor in the effectiveness of human capital as an essential component and driver of development.there exists a particularly large gender gap in education, which hinders economic development mostly in 3 ways: firstly, the rate of return on expansion of basic education of females is extremely high, considerably higher than mensā in most lDcs (Psacharopolous, 1994); higher even than the return on invest- ment in many large public infrastructural projects (todaro and smith, 2011, pp.374-5). investment in womenās education also results in numerous other benefits including greater labour force participation, later marriage and childbirth, lower fertility rates and hugely
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improved child nutrition and overall health (todaro and smith, 2011, pp.374-5; glewwe, 1999). thirdly, according to todaro and smith ābecause women carry a disproportionate burden of poverty, any significant improvements in their role and status via education can have an important impact on breaking the cycle of poverty and inadequate schoolingā (to- daro and smith, 2011, pp.374-5). the existence of this gender gap is somewhat indicative of, and symptomatic of a larger issue of inequitable distribution of resources throughout lDcs, particularly in education, and it is a topic that should be of definite concern in the discussion of human capital investment being essential for development.
Policy Implications
Role for Government this essay argues in favour of educational investments in lDcs as a means of encouraging development. however, it is also the argument of this essay that the method, structure and focus of these investments is hugely important in determining how effective devel- opmental outcomes of any such investment will be, and therefore a focus on the role and responsibility of policymakers and government in education provision is of vital impor- tance in determining the efficacy of investment in this sector. the necessity of focusing upon the role of government intervention in education provision is largely a result of four factors: the fact that higher private incomes do not necessarily lead to improvements in education (todaro and smith, 2011, p.360, 403), the existence of market failures leads to outcomes in educational provision that are socially sub-optimal, the fact some govern- ment policies can lead to distortions in education provision and even act to perpetuate and exacerbate inequities in education systems (todaro and smith, 2011, p.403) and finally the concept that resources alone are not enough to ensure beneficial outcomes in educa- tion, that the structure and implementation of investments are enormously salient in the encouragement of development through educational investments (banerjee et al., 2007).
Conditional Cash Transfers there are numerous policies that this essay would support in order to encourage more socially optimal outcomes in education, and that could be undertaken to best ensure that investments in education promote development most effectively. the first of these is the implementation of conditional cash transfer (cct) schemes; whereby welfare payments are directly made to people in poverty with conditions attached, such as payments in ex- change for childrenās school attendance or completion of vaccination schemes. the dis- tributions of income, educational opportunities and services across lDcs are highly unequal, and ccts are a highly effective method of combating this inequity through tar- geted redistribution. the effectiveness of ccts in yielding improved development out- comes, largely through improvements in human capital outcomes, is widely supported by empirical evidence across lDcs, and indeed across multiple policy areas; as rawlings
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senteeism and gender inequalities in education. this essay has argued that government in- tervention in the educational sector is necessary, but with the caveat that the form of their intervention and investment must be cognizant of recent empirical findings such as those included in this paper. finally, this essay has suggested possible policies such as the imple- mentation of ccts that, if adopted by policymakers, may catalyse improvement educa- tional outcomes, and therefore foster development within lDcs.
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