Journal Issue

Education and national development: Lending for education projects serves economic as well as sociocultural objectives in developing countries

International Monetary Fund. External Relations Dept.
Published Date:
June 1982
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Aklilu Habte

Developing countries spend an increasing proportion of their scarce resources on education. Through education they seek, first, to follow the traditional path to “development” by strengthening their national capacity to acquire scientific knowledge and thereby better their economic performance. Second, they use schooling in some instances to create and in others to preserve a sense of national identity and independence that incorporates their cultural values, retaining the freedom to select different elements from foreign systems. So education is not just a means to economic development, measured by discount rates, rates of return, and so on. It has also a broader sociocultural dimension that needs to be taken into account when measuring its role in national development. The success or failure of education systems, therefore, in large part depends on the relevance of development programs to the overall needs of national societies.

The need to preserve a diversity of cultures and values is particularly urgently felt in many developing countries. Most nations, even those whose independence preceded World War II, have been heavily influenced by metropolitan models. In some, school structures, curricula, and credentials, as well as legal and administrative systems, were transferred directly. In others, such as my own country (Ethiopia), the influence was less direct. But the result is a powerful pressure to make cultures the same the world over and to multiply identical beliefs and behavioral patterns just as industrial artifacts or airport facilities are the same the world over. A certain diversity is lost, and it is not surprising that most developing countries regret this loss and want to use their education system to preserve something of their own culture.

They also need to use it to acquire, produce, and impart scientific skills and knowledge. In general, a local scientific capacity is essential to interpret and absorb foreign technology; any nation without some capacity for this function will suffer. It is also needed to avoid counterproductive activities—to know the degree to which mining waste will affect a fishing industry; the degree to which meatpacking industries hold true to their product labels; and the degree to which social programs are as economic—and as social—as their claims. As the World Development Report, 1980 aptly stated, people who are illiterate or who are scientifically ignorant or unaware of a wider world remain essentially “untapped and are unable to contribute fully to national development.”

Yet education is expensive, not only in terms of direct costs but also because of wasted resources. In many countries the environment does not encourage children to complete their educational programs. Speaking of the characteristics of primary education in one West African country, a United Nations Educational, Scientific and Cultural Organization (UNESCO) document stated:

Primary education accounts for 94 per cent of the total school enrollment… occupies about 90 per cent of all teachers, consumes 62.4 per cent of the public educational budget, covers only 13 per cent of the relevant age group, permanently carries 25 per cent of the repeaters, and has an output of 28 graduates for an input of 100 new entries at a cost of 19 pupil years.

Acknowledging the need for education as a central element for growth, this article will review the Bank’s experience with lending for education since 1963. Reflecting the diversity of its members’ needs, the Bank’s funds have been used in many ways—from providing more school places to developing computer facilities and teaching women about nutrition and family planning. Although the Bank lends generally for projects that show economic rates of return, the diversity of its lending reflects its concern for strengthening all aspects of human and social development. Many problems have arisen in the course of this work: expanding school systems often meant great strains were placed on budgets to pay teachers’ salaries; providing technical equipment meant that it had to be maintained; and there has been too much preoccupation with single projects and too little with the long-term needs of individual countries. On the other hand, the Bank’s investments in secondary schools, for instance, have shown remarkable resilience in the face of political and economic disturbances, indicating the strength of the demand for them and proving their effectiveness. For it is widely recognized that a solid educational system goes a long way toward explaining a country’s success in developing productive resources and in preserving its sociocultural uniqueness.

The role of the Bank

There is no single lending priority in the Bank’s education sector. Any area of human capital—whether in formal or non-formal institutions, or in any area of management, administration, information diffusion, processing, or research capacity—is a candidate for financing. The strategy for each country is determined, as much as possible, independently and is based upon five broad principles: (1) expansion of basic education; (2) reduction of educational inequalities; (3) improvements in the cost-effectiveness of the transfer of knowledge; (4) provision of required manpower skills; and (5) development of national analytic capacities in management, administration, and planning.

Although exceptions are made, in general the emphasis in low-income countries is on the development of low-cost basic education to lay the requisite foundation of science, language, mathematics, and other cognitive skills. In middle-income countries, where first-level education is already widely available, educational quality is emphasized, and with it the expansion of facilities to meet the needs of an increasingly sophisticated economy. As the absorptive capacity of an economy grows, the priority tends to shift toward providing higher level technical skills, as well as developing skills in science, technology, information processing, and research.

One of the strengths of the Bank, which could hardly be equaled by other international development institutions, is its wide experience and its concurrent involvement in a number of development sectors within the same country. This is because development has to be conceived at a multisectoral level no less for an education loan than for a power project. Many factors contribute to a person’s growth—among others, income, education, health, nutrition, and fertility.

In the past 18 years, the education sector has helped to create 2.6 million new student/trainee places in approximately 21,000 educational institutions, including 185 university faculties, 651 teacher training colleges, 2,903 secondary schools, and 16,902 primary schools (see Table 1). Eighty-seven countries have requested capital for educational projects, amounting to approximately US$4 billion, with—including national or other external resources—a total project cost of $8.1 billion. But the Bank’s education sector is not only concerned with places in schools: 26 projects have helped to establish research and product-testing facilities; 10 have partially funded radio or television broadcasting facilities; and 7 have assisted the development of computer facilities. Assistance has been provided in a number of areas: mechanical engineering (48 projects), fisheries (19 projects), forestry (18 projects), child care (12 projects), and hotel and restaurant management (4 projects) (see Table 2).

Table 1Institutions assisted by World Bank education projects, 1963–81
Student placesInstitutions
General university assistance10,29521
Health science1,10320
Home economics02
Social science5004
Nonuniversity institutes91,721386
Administration/management training3,64014
Food processing training9602
Merchant marine5205
Operational engineering3,3206
Recurrent training (multicurricular)1,5003
Teacher training132,142657
Research facilities26
Source: World Bank Education Department.Indicates not applicable.
Source: World Bank Education Department.Indicates not applicable.
Table 2Curriculum components In World Bank education projects, 1963–811
ComponentNumber of projects
Cognitive skills
General science70
Reading, writing55
Child care12
Family planning10
Food processing13
Computer and data processing systems16
Foreman training2
Hotel/restaurant management4
Industrial management3
Rural development
Community development14
Cottage industry29
Farm mechanics38
Small Industry
Forging, welding, pipe fitting180
Industrial production44
Textile technology6
Electrical installation41
Electrical power20
Refrigeration/air conditioning26
Source: World Bank data.

Each education project is preceded by an appraisal report that describes the project’s major emphases. These descriptions frequently include mention of the programs being sponsored within the institutions assisted under the project. When these curricula are mentioned specifically in project appraisal reports, they are coded. This is a list of the frequency with which curricula are mentioned. A total of 224 projects were approved in 1963–81. They are grouped roughly according to area of economic activity for ease of interpretation.

Source: World Bank data.

Each education project is preceded by an appraisal report that describes the project’s major emphases. These descriptions frequently include mention of the programs being sponsored within the institutions assisted under the project. When these curricula are mentioned specifically in project appraisal reports, they are coded. This is a list of the frequency with which curricula are mentioned. A total of 224 projects were approved in 1963–81. They are grouped roughly according to area of economic activity for ease of interpretation.

The Bank channels its education loans/ credits in three principal ways:

  • Through direct loans for the education sector, which range from the most general types of formal schooling to the most specific kinds of nonformal teaching; from the simplest levels of education to the most advanced postgraduate specialties.

  • Through project and sector-related training—that is, through loans either in education or in sectors such as power and transportation, which include the training of managers and persons to operate and maintain project equipment and machinery. The training of over 2,000 persons by the Training Institute of the Bolivia Railway Project, the training of over 5,000 farmers in carefully organized cooperative training sessions of the Lofa County Agricultural Project in Liberia, and the development of the Kenya Water Resources Training Institute in the Fifth Education Project of Kenya are illustrative of the multitude of project components under execution.

  • Through education components within urban and rural development projects. Thus, several rural development projects in Northeast and Central Brazil and elsewhere contain components designed to improve access to and the quality of schools for rural children. Similar efforts to improve the skills of the urban poor are being attempted through projects in Colombia, India, Kenya, and elsewhere.

Problems; successes

A decade ago, a “good” educational system was interpreted to mean one that provided effective teacher training and sound curriculum development, the latter often being reduced to making the content and delivery of what was taught more “practical.” However, the purposes of practical curricula—which taught metal work and carpentry, for example—were not always well accepted, well defined, or well implemented. And quality itself is a broader concept than previously recognized. It includes all elements—chalk, maps, furniture, textbooks, and visual media—required for increased learning; and it requires the measurement of what has been learned. These pose new problems. Specific efforts to strengthen science teaching by placing laboratories in educational institutions often ran into difficulties because of the complexity of upkeep in an environment where chemicals, propane gas, and other ingredients required for demonstrations are at a premium and the supply irregular. Maintenance of equipment has also been a problem, as has, more generally, the strain on governmental finances in meeting the costs of teacher salaries resulting from educational expansion. And there have been problems coordinating training among sectors within both national and international agencies. Duplication of effort is too common.

Protracted problems—such as equipment maintenance—have often been undetected because of the scarcity of on-the-spot information, both about the quality of implementation and project effectiveness. Better information about project results will become increasingly available as current education projects include built-in mechanisms for monitoring and evaluation. Despite these improvements, however, it is fair to say that today neither the Bank nor its borrowers have access to sufficient information to be able to evaluate the effectiveness of these projects properly.

An overriding and long-term problem is that both borrowers and lenders have been preoccupied with individual projects at the expense of the long-range development of national capacities for analysis, planning, and general management. It is not only desirable but essential for the Bank to assist developing countries to build and maintain their capacities in these areas.

It used to be thought—in fact, so widely that it was a truism—that educational systems were politically more “sensitive” than other sectors. If what was meant by this was that educational institutions were more subject to political change, resulting in irreparable disruption, then this impression was exaggerated. The Bank’s educational investments have demonstrated an extraordinary staying power in spite of political and economic shifts in the status quo. This is particularly true for secondary education. Secondary schools assisted by the Bank have been found fully operational and fully enrolled after a decade of crisis in Uganda, during a period when the industrial sector and much of the agricultural sector economically broke down. They have been found fully operational after an earthquake, an unprecedented civil war, and a shift in political philosophy in Nicaragua; and found to be functioning normally after a decade of massive starvation and civil war in Eastern Nigeria. Thirty-two secondary education projects have been completed since 1963; and there has yet to be a case of underenrollment.

When there is progress in getting agriculture moving, in managing power plants, and in implementing health and social reforms, the degree of this progress often rests upon the education and technical knowledge of its designers and participants. It is increasingly common now to find that today’s managers have emerged from educational institutions or fellowship programs, many of which have been wholly or partially assisted by World Bank funds. The Economic Development Institute (the teaching affiliate of the World Bank), for instance, financed and enrolled some 8,000 middle-level and senior-level development managers in its training activities between 1956 and 1981. The Bank’s lending for training, too, has increased its share in total Bank/International Development Association loans from 1.1 per cent to 1.4 per cent between 1976 and 1980. The success of economic development across sectors is significantly helped by a firmly founded education system. Strengthening that foundation is our principal purpose. What Alfred Marshall wrote is more true today than it ever was, “Knowledge is the most powerful engine of production.”

Education and culture

That certain educational investments (although not all) are able to withstand the vicissitudes of economic and social change is simply an indication of the consistency of what economists call “social demand” and what I would call the aspirations of people the world over for knowledge. The purpose of the Bank—in any of its sectors—is to change people’s lives for the better. As a bank we must weigh the economic alternatives of how to do this, and for the most part our analyses, by virtue of the nature of the institution, are confined by the concept of what is most economic. But economics itself is an instrument; it is no more and no less than a scientific measure of the options nations have to select from. What they actually want is a wider scope for choice.

There are two reasons why nations want to borrow for education; these have already been mentioned, but it is relevant to discuss them in more detail. First, most want their own capability, at the very least, to interpret for themselves the pluses and minuses of various ideas—technological, religious, or political—and to partake not only in the application but also in the generation of knowledge among the community of nations. Second, they want education to discover and sustain the fundamental values of their own culture and subcultures. Peoples’ values are unique. They may, for instance, be deeply religious. They may believe in the importance of the family, in the virtue of true courage, in civility, in the dignity of the individual, and in the wisdom of age and experience. Their historic music, poetry, and painting are similarly unique. But the arts of the nation and many other traditions, many of them oral, will soon be lost if they are not recaptured in more enduring forms.

That is why nations continue to be preoccupied with setting up institutions and encouraging researchers, local or otherwise, to record their histories in books; collecting and preserving their oral traditions, which for many of them are the only authentic sources of their past; promoting local and national languages as a medium of communication among themselves; and taking steps to safeguard the important sites and centers of their cultural and natural heritage. Nations want to preserve and develop their identity. Historically and at present, the school is the chosen medium—not the only one, of course—for the transmission of such a cultural heritage, its temporary deficiencies notwithstanding.

These two purposes of educational investment may not always be congruent; the need to preserve culture sometimes conflicts with the requirement to enhance scientific and analytic capacity. This problem is universal; every country has to set priorities and every country has to make hard choices in a time of limited resources. But a country’s success in meeting either goal uniformly rests upon the degree to which it is able to educate its citizens. The Bank does not invest directly in painting or poetry; it does equip laboratories for chemistry; it also helps countries to generate a capacity to design, produce, and distribute their own textbooks. The Bank, has, for instance, supported 50 education projects that include the production of textbooks and the training of teachers to use them in Africa, Asia, and Latin America. In Thailand, a Bank loan is being used to train teachers to rewrite their curricula. Yet every child who is taught to read and write enhances a nation’s capacity to meet both its economic and its noneconomic goals. A nation without a capability of storing, retrieving, and disseminating information or of generating skills will not have a chance for success in meeting either goal. It is no wonder that the demand for this capability is consistently high among countries at different levels of economic development. As long as this demand remains, the Bank will attempt to respond with the capital required to fulfill it.

The challenge of institutions with economic development as their overriding institutional objective is to devise a development assistance strategy with man as the end purpose and the center of their development activities. The next two to three development decades will perhaps reap the fruits, and benefit from the lessons learned and the experience acquired over the past several development decades.

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