OECD (2000)

FINANCIAL AND HUMAN RESOURCES
INVESTED IN EDUCATION
B
Education is an investment in human skills. It can thus help to foster economic growth and enhance
productivity, contribute to personal and social development, and reduce social inequality. Like any
investment, it has both costs and returns. This chapter provides a comparative examination of cost
patterns in OECD countries, focusing on three aspects of educational spending:
• the resources that each country invest in education, relative to national wealth, the number of
students, and the size of the public purse;
• the ways in which education systems are funded, and the sources from which the funds originate;
and
• the apportionment of resources between different resource categories.
How much is spent on education
Indicator B1 examines the proportion of national resources devoted to educational institutions, the
sources of these funds, and the levels of education to which they are directed. This indicator provides a
broad picture of the resources devoted to education, although it has to be interpreted in the light of a
number of inter-related supply and demand factors, including the demographic structure of the population
(Indicator A2), enrolment rates at the different levels of education (Indicator C1), income per capita,
and national price levels for educational resources. The relative size of the youth population, for
example, shapes the potential demand for initial education and training in a country. The bigger the proportion
of young people (other things being equal), the more resources have to be devoted to education.
Similarly, participation rates affect educational expenditure: the higher the enrolment rates (again, other
things being equal), the more financial resources will be required.
While Indicator B1 shows the proportion of national wealth that is invested in education, Indicator B4
shows how these funds translate into the amount ultimately spent per student. Policy-makers must balance
the pressure to improve the quality of educational services against the desirability of expanding access to
educational opportunities. They must also decide how to apportion expenditure per student between different
levels of education – including continuing education and training – and between different types of
educational programme. For example, some countries emphasise broad access to higher education while
others invest in near-universal education for children as young as two or three years of age. As there are no
absolute standards for the resources per student necessary to ensure optimal returns for either the participant
or society as a whole, international comparisons of national investment in education provide an
important insight into how countries vary in the extent of their investment.
Who pays for education
Cost-sharing, between the participants in education and society as a whole, is an issue that is under
discussion in many countries. This question is especially relevant at the beginning and ending stages of
education − early childhood and tertiary education − where full or nearly full public funding is less
common in some countries.
© OECD 2000
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