Reaching the marginalized: EFA global monitoring report, 2010; 2010

EDUCATION AT RISK: THE IMPACT OF THE FINANCIAL CRISISDouble jeopardy: food prices and financial crisisDouble jeopardy: foodprices and financial crisis‘We were hearing that there was no work and thefactory would be shut down. It all happened quitefast actually. Although there was much talk aboutthe factory shutting down, the authorities did notreally tell us anything until almost the last week.’Anwarul Islam,a Bangladeshi migrant labourer in Jordan‘Since I lost my job sometimes we eat only onceor twice a day. I don’t know what to do. We are justcamping in front of the factory gates, waiting forthe company to pay us.’Kry Chamnan,garment worker in Cambodia, February 2009‘My factory retrenched 150 workers including me.I’m in deep trouble thinking about how to livewith my two children.’Lalitha, a 35-year-old worker in Sri Lanka‘You think about your children when you lose yourjob. That’s the first thing that came into my mind –when school starts, how am I going to buy theuniform, the exercise books and all that. The food,you know how expensive that is now…The childrendepend on me, I’m a single mother.’Kenia Valle, Managua, NicaraguaThese four voices provide a reminder that, inan increasingly interdependent world, economicshocks travel rapidly across borders (Emmett,2009). Faced with a daily barrage of reportingon the state of the global economy and recoveryprospects for rich countries, it is easy to losesight of the human costs of the global downturnfor those who live away from the media spotlight.The recession, sparked by reckless gamblingon Wall Street and the regulatory failures in richcountries, is leaving its mark on people living inslums and remote villages in the world’s poorestcountries. The effects on education systems arecomplex and varied, but overwhelminglydestructive.Economic slowdown threatenseducation financingThe financial crisis is being transmitted toeducation systems through various channels.The degree to which countries are integrated intointernational trade and financial markets, thestructure of employment, patterns of import andexport, and pre-existing poverty levels all play apart in determining who is affected and for howlong (McCord and Vandemoortele, 2009; te Veldeet al., 2009). For low-income countries, trade isthe primary transmission mechanism from worldmarkets to the national economy, with exportersof minerals and primary commodities hit by acombination of lower prices and falling demand(IMF, 2009b, 2009e).Deteriorating prospects for economic growth havefar-reaching implications for education financing.Since the onset of the crisis, growth forecasts havebeen revised downwards on a regular basis. Alldeveloping regions are affected. With a pre-crisisgrowth forecast of over 5%, sub-Saharan Africanow faces the prospect of growing at less than 2%,which is below the rate of population increase.Latin America is projected to face an economiccontraction in 2009 (Figure 1.1).Slower growth and declining export and importactivity have adverse consequences for governmentrevenue and hence for public spending (IMF, 2009b,2009d). Budgetary pressure is evident in data onfiscal balances. Sub-Saharan Africa is movingfrom a fiscal surplus in 2008 to a projected 2009deficit equal to about 6% of gross domestic product(IMF, 2009e). The combined effect of slowereconomic growth and lower levels of revenuecollection will translate into losses equivalent toabout US$80 billion in 2009 and the same in 2010(Table 1.1). This is revenue that could have beenused for investment in areas ranging fromeconomic infrastructure to health and education.The importance of economic growth for educationfinancing is not widely recognized. Rising wealth isnot automatically associated with improvement ineducation – and many countries with low averageincomes have registered extraordinary progress.But increasing national income does createfinancing conditions conducive to higher publicspending on education. Economic growth expandsthe resources available to governments throughtaxation. Moreover, the share of national incomecollected in government revenue tends to rise asIn an increasinglyinterdependentworld, economicshocks travelrapidly acrossborders21