This paper addresses the potential effects on human capital accumulation and economic growth of the alternative compositions of public expenditures in the context of a computable dynamic general equilibrium model of overlapping generations and heterogeneous agents in which altruistic parents make schooling decisions for their children. In the presence of fixed and variable costs for different levels of schooling, we show that reducing household costs of primary education has the largest positive impact on growth and poverty reduction in the short run. Moreover, an increase in higher education spending increases long-run growth. These effects can be substantial even when increasing education spending comes at the expense of public infrastructure investment.
This paper argues that the development of human capital in the public sector should be an important ingredient in any proposed set of “second-generation” reforms for Africa. In the post-colonial era the quality of governance has seriously declined, and the stock of human capital in the public sector has been eroded by a flight of human capital from many countries in response to compression of wages. The paper develops a simple theoretical framework to discuss these issues and the continent’s experience with foreign technical assistance in supplementing the low level of domestic human capital.
Like most Sub-Saharan African countries, Kenya’s economic growth appears to have been primarily driven by factor accumulation. The Selected Issues paper and Statistical Appendix for Kenya examines economic developments and policies. During the last two decades, Kenya has been plagued by pervasive problems of internal conflicts, constitutional crises, and corruption scandals. The governance agenda focuses on several reforms, including upgrading the public budget and financial management systems, strengthening the anticorruption institutions, and improving the judicial framework.
The evaluation focus was on three main objectives: Assessing whether the AFRITACs have provided value added to beneficiary countries; Assessing the extent to which the AFRITACs’ objectives have been achieved; and Assessing whether the AFRITACs have enhanced cooperation between stakeholders in their respective regions.
As part of its conditionality review, the IMF has organized a series of discussions on its proposals, holding seminars in Berlin in June (see IMF Survey, July 2, page 218) and in Tokyo in July (see IMF Survey, July 30, page 249). A third forum—cosponsored by the Commonwealth Secretariat, the World Bank, and the IMF and held in London on July 23-24—covered issues related to conditionality and ownership particularly relevant to low-income countries. The seminar was co-chaired by Winston Cox, Commonwealth Deputy Secretary-General; Masood Ahmed, Deputy Director of the IMF’s Policy Development and Review Department; and Joanne Salop, Vice-President for the World Bank’s Operations Policy and Country Services. It brought together representatives of borrowing and creditor countries, international organizations, nongovernmental organizations (NGOs), and a number of other individuals with relevant expertise and experience.
The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.