Financing Education / pdf - Unesco

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PROGRESS IN FINANCING EDUCATION FOR ALL Contribution of external aid to EFA since Dakar The response to the call at Dakar for donors to coordinate their efforts around sector-wide reforms and policies has been positive, as the increased share of education aid demonstrates. However, the experiences and evaluations of a small number of donor agencies at the forefront of this movement, and the country case studies indicate that adoption of a programmatic approach is not without difficulties and that several conditions need to be met for it to be effective. Among these are: (a) a well-prepared sector or subsector plan to which the government is committed; (b) the ability of the education sector to obtain the required backing of key ministries such as those dealing with finance and personnel; (c) a solid system of public financial management that is accountable and transparent; (d) broad support from multiple stakeholders who through their own actions can support or hinder the progress of the plan; (e) an interest and ability on the part of government enabling it to carefully monitor change in the sector and to react appropriately, and, generally; (f) capacity at all levels of policy-making and service delivery to ensure that decisions are made and carried through effectively. To the extent that these and other necessary conditions are lacking, direct sectoral or general budget support will not be effective. 15 The donors, in turn, whether within or outside a group providing general financial support to the sector programme, need to ensure that, in all their dealings with the government and other donors, the principles of harmonization and alignment are adhered to and that their own actions do not distort government priorities. Finally, even where many of the issues of harmonization and alignment are being dealt with formally, the nature of the obstacles surrounding dialogue between government and donors is not always sufficiently assessed on both sides. The impact of aid on basic education Responding to the Dakar Framework and other calls to increase aid for the expansion and development of basic education in developing countries, donors provided a total of US$21 billion in ODA for this level between 2000 and 2005. There is a general expectation that if donors provide the aid, the coverage and quality of basic education in receiving countries will improve. This is not necessarily the case. The receiving government may reduce its own allocation for education and direct more funds to sectors not receiving aid, or it may allocate less of its education budget to basic education and more to levels that do not receive aid; aid-assisted expansion of public education may lead to reduction in private sector enrolments or in families’ purchases of school materials, so that neither total enrolment nor overall expenditure increases; and aid may not be used in the areas for which it was provided or it may be ineffective. Assessing the impact of aid on basic education is part of a wider discussion of the overall impact of aid on economic and social development. To this question there is a broad range of answers, from very little impact to substantial impact. As R. C. Riddell (2007) notes, ‘most disputes about the impact of aid can be traced back to two sources: evidence and methods of assessment’ (p. 165). Both of these are minefields. Nevertheless, the need for additional aid is a central element of the Dakar Framework for Action, global advocacy groups are calling for additional aid for basic education, and both donors and recipient governments act as if they accept as a given that aid is indeed effective. The question of what impact aid has on basic education and the movement towards the EFA goals must, therefore, be addressed. Quantitative assessments show small but positive effects Over the past two decades, many attempts have been made to assess empirically the impact of aid on economic development. The methods range from case studies of a single project to crosscountry regression analysis of the impact of total aid flows. Despite their large number and their variety, these studies are inconclusive. Some find an unambiguously positive relationship between aid and economic development (Clemens et al., 2004; Dalgaard et al., 2004; Hansen and Tarp, 2001; Roodman, 2004), others find no relationship (Boone, 1996; Easterly, 2001, 2002, 2003, 2006), while a third set of studies concludes that the effect depends on the quality of institutions and policies (Burnside and Dollar, 2000). The emerging picture is that aid can have a positive impact on development but the link is very fragile and whether assessments are positive or negative depends critically on the choice of data and estimation methods. Some recent work has focused on sectors, including education, rather than on economic development as a whole. Studies by Michaelowa (2004) and by Michaelowa and Weber (2007b) found Assessing the impact of aid on basic education is part of a wider discussion of the overall impact of aid on economic and social development 15. It is ironic that the conditions necessary for successful sectoral or general budget support exist more commonly in middle income countries while these forms of aid are more common in low income countries. 169
2 0 8 0 CHAPTER 4 <strong>Education</strong> for All Global Monitoring Report One explanation of the disappointing results of most aid effectiveness studies is that aid is misallocated 16. A recent cross-country analysis of changes in aid disbursements and changes in total public expenditure in health across fifty-six low income countries shows a statistically significant relationship, though the effect is small. ‘Although donors earmark 17% of aid to health the increase in health spending generated by an increase in aid is far less than this’ (High Level Forum on Health MDGs, 2005, pp. 16–17). a positive impact of aid on the education sector, including on primary completion rates. Their results suggest that, on average, an increase in aid to education by 1% of a recipient country’s GDP is associated with an increase in primary completion rates of 1.6 percentage points per year. However, this effect is very small given that total aid to education as a share of GDP is rarely above 0.5%. In addition, the coefficients are sensitive to alternative specifications of the model. Dreher et al. (2006) examined the overall effect of aid to education over several decades. Their main explanatory variables were, again, aid to the education sector and overall domestic spending on education. The results suggest that, on average, increasing aid to education by 1% of a recipient country’s GDP increases the primary net enrolment ratio by 2.5 to 5 percentage points. A major drawback of these studies is that they do not disaggregate aid to education by level. Yet, it is likely that aid to tertiary education has little impact on primary completion rates. Michaelowa and Weber (2007a) differentiate between aid flows to primary, secondary and tertiary education. Their results provide some evidence of a small positive effect of aid at each level. According to the most optimistic result, increasing aid to any level of education by 1% of a recipient country’s GDP improves completion rates by a maximum of 2.5 percentage points. As in previous studies, the estimated effects are small. In addition, for primary and secondary education, the authors find some evidence of diminishing returns to aid. Consistent with the literature on the impact of aggregate amounts of aid, some studies of aid to education also suggest considerable differences in effectiveness depending on the quality of political governance. Weber’s (2006) results imply that with poor governance, the impact of aid to education may even be negative. Overall, the results of quantitative studies suggest that the impact of aid on primary education is positive, but small, and often with low statistical significance. One explanation of the disappointing results of most aid effectiveness studies is that aid is misallocated. Thiele et al. (2006) assess the extent to which donors have prioritized aid in line with the MDGs. They find that while some MDGs, such as that for HIV/AIDS, have shaped aid allocation, a considerable gap exists between donor rhetoric and actual aid allocation with respect to other MDGs, most notably that for primary education. The simple analyses of the relationship between aid to education and ‘need’ presented earlier support this argument. Another possible factor reducing the impact of aid on basic education is how aid affects recipient governments’ own spending on education. Governments may reduce the amount they allocate to education to below what they would otherwise have spent and allocate more to sectors without aid, or reduce efforts to increase domestic revenue. This issue of fungibility has often been studied in the literature on aid and development but rarely as regards the education sector. 16 Qualitative assessments and case studies reveal institutional weaknesses Another approach to assessing the impact of aid, more widespread than quantitative cross-country studies, is broad assessment of a donor agency’s aid programme or of a large donor-supported programme. The World Bank Independent Evaluation Group (2006b) evaluated the Bank’s support to primary education between 1990 and 2005 . The evaluation was not a quantitative one in the sense of those discussed above, but relied on a review of documents from over 700 IDA and IBRD projects. The objectives almost universally cited in these projects were to improve sector management and to increase the quality of education through increases in inputs. In addition, expanding enrolments, increasing equity and increasing internal efficiency were cited as objectives in around two-thirds of projects, with explicit reference to improved learning outcomes in just one-fifth. World Bank-supported projects are self-evaluated. Ratings are assigned for outcomes in relation to objectives, sustainability and impact on institutional development. In terms of meeting objectives, primary education projects rated higher than all education projects and projects across all sectors combined. However, only around 60% of them were rated as likely to be sustainable. More worrying is that only 25% were judged to have had a substantial impact on institutional development across the sector, compared with 46% of all education projects and 36% of all Bank-supported projects. For projects completed since 2000 the rating improved to 38%, but it is clear that even the largest donor to the education sector has not succeeded in encouraging the implementation of effective capacity-development programmes. Other conclusions were that: management objectives 170
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Financing Education / pdf - Unesco

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