Fiscal policy can foster growth and human development through a number of different channels. These channels include the macro-economic (for example, through the influence of the budget deficit on growth) as well as the microeconomic (through its influence on the efficiency of resource use). But how precisely do these channels work in developing countries? Do the insights gleaned from the vast body of research on these topics in industrial countries carry over to developing countries?1
Basic education combined with social mobility is a prerequisite for successful economic development. Basic education improves productivity through investment in human capital, and also through beneficial externalities when more educated people complement one another in productive activities. Basic education also improves the quality of life by allowing people to read, write, and do arithmetic calculations. It is a responsibility of government to ensure that children have quality basic education independently of their parents’ social and economic circumstances. Ideally, therefore, all children should have access to free-access, publicly financed, quality schools.1 Yet, in many poor countries, education of children is not free; rather, parents pay fees or user payments for the education of their children. The user payments in some cases supplement public spending on schools. In other cases, where no public financing is available, user payments self-finance community schools that are organized and funded by communities and parents independently of government.