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Struck by crisis

by Katharina Michaelowa, Jean Bourdon
Achieving the Millennium Development Goal (MDG) of universal primary education will depend on enrolment in schools and the quality of teaching. Funds are needed, and there is reason to fear that the global economic crisis will slow down progress. [ By Jean Bourdon and Katharina Michaelowa ]

MDG2, the achievement of universal primary education (UPE), reflects objectives already adopted by the international community in the Education for All (EFA) process at Jomtien in 1990 and broadened in Dakar 2000. The MDG agenda’s focus is on enrolment: “Ensure that, by 2015, children everywhere, boys and girls alike, will be able to complete a full course of primary schooling.” However, it is well understood that meaningful UPE is also about schools’ quality.

Progress towards EFA is regularly monitored by UNESCO, as the international lead agency. UNESCO’s annual EFA Global Monitoring Report provides the latest statistics on educational outcomes as well as funding through national budgets and donor contributions. The most recent report indicates considerable gains in net enrolment, with an increase between 1999 and 2006 at twice the rate of the 1990s, and even six times the rate of the 1990s in sub-Saharan Africa.

However, about 75 million children of primary school age were not enrolled at all in 2006, corresponding to 12 % of all primary-school-aged children in developing countries. In sub-Saharan Africa, net enrolment has only reached 70 % so far, and achieving 100 % by 2015 is not feasible at the current pace (UNESCO, 2008, p. 9). Moreover, quality has largely been neglected over quantity (p. 21) – as if enrolment in itself could ensure that children eventually master basic literacy and numeracy.

Inequality

With regard to both enrolment and actual achievement, the Global Monitoring Report identifies large and persistent disparities relating to wealth, gender, location and ethnicity. Poverty, followed by rural location, appears to be the worst disadvantage. In several African countries, school-aged children from the highest income quintile are as much as three times more likely to attend school as children from the poorest 20 % (p. 74). Quality disparities arise because poor parents are limited in their ability to support their children’s learning, for instance, or because teachers are unwilling to work in certain areas or schools. One of the strongest conclusions of the report is that the EFA objectives will not be reached unless governments focus on equity issues.

In the Dakar Framework for Action, donor countries pledged that “no credible national plan would be allowed to fail for want of finance” (UNESCO, 2008, p. 203). However, while aid disbursements increased annually by about 11 % from 2000 to 2006, this increase falls short of the initial promises.

Moreover, commitments to future aid disbursements indicate that the positive trend will be reversed in the next few years. The poorest countries do not seem to benefit most from support so far (p. 208ff).

Global economic turmoil

Will the global economic downturn that was triggered by the sub-prime crisis in the United States exacerbate the problems? The World Bank has prepared a number of studies to discuss the impact of the crisis on developing countries’ economies, and, more specifically, on human development and education. It expects developing countries to be hit by the crisis through
– declining demand for their exports,
– reduced investment (including FDI),
– shrinking remittances, and
– reduced development assistance.
This in turn will negatively affect growth, tighten national budgets, increase un- and underemployment, and reduce household incomes (World Bank, 2008).

As there are no empirical data of the current crisis yet, all studies about its impact are largely speculative. Ravallion (2008, p. 8) argues that the poorest countries, and the poorest populations within these countries, may well be least affected as they might be “protected by the same factors that have kept them poor, namely geographic isolation and consequently poor connectivity with national and global markets”. If, however, the crisis does affect the poor, they will have much more difficulties to adjust. In their struggle for survival, these people will take short-term decisions with negative long-term impacts, for instance by reducing spending on health and education.

Evidence from earlier financial crises also shows that it is not clear whether the urban or the rural population will be hurt more. That will depend on various factors, including, for example,
– what type of crops are produced (subsistence agriculture or export crops),
– to what extent urban and rural markets are integrated, and
– the size of the formal versus the informal sector in urban centres.
Such issues will obviously impact on EFA objectives too.

The link between the general impact of the crisis and human development is most obvious at the country level: an entirely isolated country which does not experience any contraction of its economy will not suffer any negative effects on its educational outcomes, either. However, isolated countries tend to be countries with low Human Development Indices, so countries that have made more progress are also more likely to feel the crisis.

Within any given country, matters are more complex. The World Bank (2009a, p. 5) identifies three levels at which educational outcomes may be affected:
– the household level,
– the school level and
– the system level.
Even if the income of a particular household is not directly affected by the crisis because, say, it makes its living purely out of subsistence agriculture, educational outcomes may become worse because of reduced state resources for schools, reduced employment or irregular payment of teachers, or because of overcrowded state-sector schools as fewer well-to-do people can afford to send their offspring to private schools.

On the other hand, sinking household incomes do not necessarily mean that educational outcomes have to suffer. If youngsters are no longer able to earn attractive wages outside school and start going to classes again (“substitution effect”), that may outweigh reduced expenditure for school (“income effect”). For that to be the case, however, a family must not be so poor as to compensate reduced wages by working even harder (“perverse labour supply function”).

In this light, one finding of Ravaillon’s is particularly striking. He states (2008, p. 12) that schooling remained unaffected by crisis in countries like Brazil and Mexico during earlier crises, whereas it suffered from the income effect in poorer countries like Tanzania or Zimbabwe.

Targeted interventions

As highlighted above, the dynamics of crisis are so complex that it is impossible to say exactly what groups will be affected most. Nonetheless, Ravaillon lists several reasons for governments and/or donors to specifically support the poor:
– If the poor are hit, the impact on their wellbeing will tend to be high and long-term. For well-to-do families, saving on education may imply sending their kids to public-sector rather than private schools. In the case of poor families, drop-out and illiteracy are more likely.
– As discussed above, poor children are disadvantaged in terms of access to and quality of education anyway. Therefore, they are the most important target group for EFA interventions.
– Support to the poor is likely to have the greatest impact on aggregate demand and thus on economic recovery in general.
– If higher or median income quintiles of the population happen to be affected more directly by the economic crisis while support is targeted to the poor, this presents a chance to overcome existing educational inequalities.

However, the dynamics of political economy normally do not work that way. As Ravaillon gathers from past crises (p. 20), public spending tends to target the non-poor who have more voice in the polity. This is notably so under authoritarian rule.

In any case, considerations of the political economy must shape meaningful interventions. It makes sense to not only consider the broad divide of wealthy and poor target groups, but to also consider the interests of different relevant actors in the education sector (such as teachers, local communities, parents). On this basis, the World Bank (2009a) makes some recommendations, including:
– conditional cash transfer programmes to poor families,
– school feeding programmes,
– student fellowships,
– block grants to schools, and
– the reliable payment of teachers who work in poor communities.

A forthcoming World Bank publication with background studies for the annual meeting of the EFA High-Level Group complements these recommendations with further details. In a brief summary of econometric evaluations and experiments, Mertaugh, Jimenez and Patrinos (2009) provide evidence of measures of this kind being effective. They also show that it makes sense to suspend school fees. Moreover, they call for increased autonomy and monitoring at school and community level.

Fredriksen (2009) stresses matters beyond primary education. Unless there are labour market prospects and meaningful opportunities in secondary and higher education, he argues, demand for primary education is likely to drop again at some point. Unfortunately, there are no studies on how to best weight support in different segments of the education sector so far. Starting to support secondary education only once full primary enrolment is achieved is obviously too late. On the other hand, focusing on secondary education too soon may also be inefficient. Issues of inequality in the education system must be taken into account. Generally speaking, investment in primary education will tend to be pro-poor, but that is usually not the case for secondary education in poor countries (Mertaugh, Jimenez and Patrinos, 2009).

Rogers (2009) focuses on the need for funding. He discusses the danger of pro-cyclical development assistance. Aid budgets are likely to be cut exactly when they are needed most urgently. If aid decreases when economic recovery depends on some kind of Keynesian expansionary fiscal policy, donor behaviour will exacerbate the crisis in recipient countries.

It is noteworthy, moreover, that, even before budget constraints induced by the global crisis, donors had fallen short of their agreed support of EFA. The suggested solution in several of the papers reviewed here (for instance, Frederiksen, 2009) is to renew the commitments or create additional funds, such as a new “Education Transition Fund” for the support of the education sector in fragile states.

It remains unclear, however, why donors should live up to new commitments if they do not fulfil existing ones. As documented in detail by UNESCO (2009), the problem of unmet donor pledges is omnipresent in international agreements, whether they relate to education or other issues. If funds will not be provided eventually, it might be better to adjust the pledges. At least, that would allow developing countries to plan their budgets.

Several developing and middle income countries have cumulated sizeable sur­pluses in recent years and may now be prepared to enter into expansionary fiscal policy themselves. In this context, selecting the right area of intervention is of crucial relevance (Ravaillon, 2008). Investment in education has proven successful in such cases, by giving the economy a good starting position after the recession (World Bank, 2009a, p. 1).