Education is crucial for enhancing human capital in an economy, which, in turn, increases workers' productivity and thus contributes to economic growth. The importance of investing in human capital has been discussed in the economic literature for long. Probably, the strongest argument for investment in human capital came from the endogenous growth theory which highlights that investment in human capital together with innovation, and knowledge are important contributors to economic growth.
As the global market moves towards accelerated automation, increasing the investment in human capital is now more important than ever. What often causes the difference between the ability of workers in the developed and developing countries is the poor performance of the education system in the developing countries.
Ensuring access to education is one of the main targets of development agenda in the world. The new global education goal - Goal 4 of Sustainable Development Goals (SDGs), focuses on promoting quality education and providing inclusive and equitable learning opportunities for all. The 10 targets under Goal 4 of SDGs highlight the importance of early childhood development, technical and vocational skills, qualified teachers at all levels of education and reducing all sorts of disparities in education by ensuring equal access for women and vulnerable groups. However, while the targets and indicators under SDG 4 are comprehensive and include all major aspects of quality education, the lack of available data for the newly proposed indicators poses a problem for monitoring the progress in these targets, especially in the developing countries.
In this article, keeping in mind the data limitation, we have looked into cross-country differences in two major indicators of education - 'average years of schooling' and 'pupil-teacher ratio in primary education'. The first indicator relates to the outcome of education, while the second one indicates the status of educational infrastructure. In the following analysis, we have listed the top and bottom 10 countries in terms of these two indicators, using the data from the United Nations Development Programme (UNDP) and World Development Indicators of World Bank. 'Average years of schooling' is the average years of schooling for adults aged 25 and above, expressed in the number of years. The 'pupil-teacher ratio in primary school' is the average number of pupils per teacher in primary school. The rankings are based on the average values of these indicators during the period 2010-2015 for the countries with available data.
Table 1 shows that Switzerland has the highest average years of schooling of 13.4 years, closely followed by United Kingdom (13.2), Germany (13.1), Australia (13.1) and United States (13.1). On the other hand, Burkina Faso has the lowest average years of schooling of 1.4 years. All top 10 countries are among the high-income countries while 9 out of the bottom 10 countries are from Sub-Saharan Africa, with the exception of Bhutan.
Figure 1 shows the distribution of countries in average years of schooling among 187 countries. While looking at the data we found that the countries with average years of schooling of 10 and above are mostly from the developed economies; the countries with average years of schooling between 7 and 9 are mostly from the advanced developing countries, and the countries with poor average years of schooling (i.e. below 6) are from the low-income countries. Figure 1 suggests that still there is a sizeable number of countries in the world with poor educational outcomes.
In the case of pupil-teacher ratio, San Marino has the lowest pupil-teacher ratio of 6.4, while Central African Republic has the highest ratio (81.9) among 175 countries (Table 2). Among the top 10 countries, 8 are in the high-income group, with the exception of Georgia and Cuba. Whereas, all the bottom 10 countries are from Sub-Saharan Africa. Nine of the bottom 10 countries are in the low-income group, with Zambia being the only middle-income country in the bottom 10.
Figure 2 shows the distribution of countries in pupil-teacher ratio. Out of 175 countries with data, 75 have pupil-teacher ratios between 10 and 19.9, more than half of which are high-income countries. On the other hand, most of the countries with pupil-teacher ratios of 30 or above are from Sub-Saharan Africa and South Asia, and they are the low-income or lower-middle income countries.
It appears from the aforementioned analysis that a large number of countries are considerably lagging behind in terms of both outcome and infrastructure of education. In particular, the low-income countries might struggle to achieve the Goal 4 of SDGs.
In this case, what policy instrument can be an effective tool to change the aforementioned situation? Empirical literature and evidence show that public expenditure on education has a positive impact on the long run economic growth of a country through improvement in educational indicators leading to accumulation of human capital.
Table 3 presents lists of top and bottom 10 countries in terms of public expenditure on education as a percentage of gross domestic product (GDP), based on the average values for the period 2010-2015. The analysis of the data depicts that, among 157 countries (for which data is available), Cuba has the highest percentage of GDP (12.8 per cent) devoted to public expenditure on education, closely followed by Micronesia (12.5 per cent). Four of the top 10 countries are in the high- income group, while the remaining six are in the middle-income group. Among the bottom 10 countries, Central African Republic has the lowest ratio (1.2 per cent). All the bottom 10 countries have public expenditure on education between 1-2 per cent of GDP. Of these, 8 are from Sub-Saharan Africa.
Figure 3 illustrates the distribution of countries in public expenditure on education as the percentage of GDP. Out of the 157 countries, 58 have ratios less than 4.0 per cent of GDP, and most of these countries are the low-income countries from Asia and Sub-Saharan Africa. The only exception in the bottom list is Sri Lanka, which currently has a low ratio, though this country had high ratios during the early years of educational development. While 37 countries have ratios between 4.0 and 4.9 per cent of GDP, only 10 have ratios more than 7.0 per cent of GDP.
Therefore, countries which are badly lagging behind in educational infrastructure and outcome must consider using the public expenditure on education as a critical tool to achieve the targets. These countries should reevaluate their prioritization of public spending, and reorient such spending more towards social sectors like education and health. It should also be kept in mind that the increase in the ratio of public expenditure on education to GDP should coincide with the improvement in the quality of institutional arrangements in the education systems in these countries.
Dr. Selim Raihan, Professor of Economics at University of Dhaka, is Executive Director of South Asian Network on Economic Modelling (SANEM): selim.raihan@gmail.com
Iffat Anjum, Research Associate, SANEM: iffat.anjum46@gmail.com