Question: Focus looked at the different experiences of Bolivia and Indonesia in their approaches to providing primary education. Let's bring the perspective in that focus up to date. Find data on each country's public expenditures for: all types of education as a percentage of GDP for some recent year; the percentage of total public expenditure on education spent on primary and secondary education; enrolment rates for primary and secondary education for males and females for the same (or a recent) year; and the growth rate of per capita income for a recent period of time. Does the "story" of Focus 12.3 that the importance of concentrating spending on primary (and now secondary) education still apply for Bolivia and Indonesia? How have things changed in both economies, at least according to the data you have collected compared to the late 1980s? (Try looking for the data at www.undp.org, Human Development Data, then click on "Data and factsheets by country.")

FOCUS: PRIMARY EDUCATION IN BOLIVIA AND INDONESIA

In the early 1980s, Bolivia and Indonesia were, superficially, at about the same level of development in terms of income per capita - in the low to middle $600 range. Illiteracy ran at about 20 percent of the population, and girls were especially disadvantaged. Both nations were predominantly agricultural. And both countries were spending an identical percentage of their total GDP on education: 2.3 percent. What each did with this share differentiates the two countries markedly. Indonesia spent 90 percent of its education budget on primary education. By 1987, 91 percent of rural children were enrolled in primary school, compared to the national average of 92 percent. And the gender gap between boys and girls in primary education had virtually disappeared. Free education was extended through the ninth grade. By contrast, Bolivia spent only about 41 percent of its education budget on primary education, so only 60 percent of primary school-age children attended school on average. In the rural areas, only 45 percent of schools even offered education to the fifth grade, with the remainder providing only three years of primary education.

With such low attention to primary education, the gender gap was larger than in Indonesia. Drop-out rates and grade repetition by girls were significantly higher than for boys. Worse, the textbook ratio was only one per ten students, indicating weakness in the quality of education and problems in achieving significant human capital deepening. Indonesia's income per capita grew at a 4.2 percent annual rate, 1980-93, while Bolivia's growth rate of per capita income was -0.7 percent per year. While not all of the variance in growth rates can be attributed to differences in the attention paid to creating essential human capital resources via funding universal primary schooling, what we know about the importance of primary education to future economic growth suggests that Indonesia's policies were paying off. Post-secondary schooling, which is important for creating the indigenous capacity to adopt and adapt world-level best practice technological knowledge and for improving total factor productivity that we will discuss in the next chapter, should not consume too large a level of government resources at early stages of development. In fact, for low-income economies, there are alternative avenues for financing tertiary education besides large subsidies from the state.

These can range from requiring university students, who are likely to be from higher-income families anyway, to pay the major portion of the full costs of their education via tuition and fees,16 "targeting" state subsidies (via, say, scholarships) only toward those with both ability and financial need. Further, it may be more efficient and most likely much cheaper for some period of time to subsidize higher education for domestic students by sending "the best and the brightest" to study abroad at institutions of high quality rather than attempting to invest in the expensive infrastructure and training that university-level teaching and research demands.