Public Spending on Education in the Cis-7 Countries
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PUBLIC SPENDING ON EDUCATION IN THE CIS-7 COUNTRIES: THE HIDDEN CRISIS Nicholas Burnett, Rodica Cnobloch, WB consultants The paper was prepared for the Lucerne Conference of the CIS-7 Initiative, January 20-22, 2003 The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the World Bank, to its affiliated organizations or to members of its Board of Executive Directors and the countries they represent. The boundaries, colors, denominations, and other information shown on any map in this volume do not imply on the part of the World Bank Group any judgment on the legal status of any territory or the endorsement or acceptance of such boundaries. Table of Contents I. Introduction ........................................................................................................................... 3 II. The Context .......................................................................................................................... 4 Demographic Trends............................................................................................................... 4 Educational Structures ............................................................................................................ 4 Total Spending on Education.................................................................................................. 5 Reform Efforts ........................................................................................................................ 5 III. Adapting to the Market Economy .................................................................................... 7 Declining Enrollment and Attendance.................................................................................... 7 Inadequate Quality: Learning Outcomes ................................................................................ 9 Inadequate Articulation with the Labor Market ................................................................... 10 IV. Appropriate and Sustainable Public Spending on Education...................................... 11 Share of GDP and Budget..................................................................................................... 11 Financing .............................................................................................................................. 12 Revenue Generation.............................................................................................................. 12 Sustainability ........................................................................................................................ 12 V. Ensuring Efficient and Equitable Public Spending. ...................................................... 13 External Efficiency: Allocation Across Levels .................................................................... 14 Internal Efficiency: Allocation to Different Inputs............................................................... 15 Input Allocation and Quality ................................................................................................ 16 Input Allocation and Internal Efficiency .............................................................................. 18 Equity of Public Spending .................................................................................................... 21 VI. Ensuring Equity in Private Spending on Education ..................................................... 23 VII. Summary.......................................................................................................................... 25 Bibliography............................................................................................................................ 28 Appendix 1 – Sources and Notes for Tables and Figures.................................................... 29 2 I. INTRODUCTION The seven poorest countries of the Commonwealth of Independent States have an extraordinary achievement that is not well recognized: they have maintained their education systems in the face of precipitous declines in GDP. Several have also initiated reforms to begin to adjust their systems toward the needs of a market economy and to increase the number of years in general education toward the European norm of 12. Deeper reform is needed, however, if the education systems are to continue to function effectively and to adapt fully to new economic and social structures. Indeed, it is not too much of an exaggeration to suggest that the countries may face a hidden crisis, in sharp contrast to the “hidden challenges” faced by transition economies more generally1. To avert this crisis, these countries must adapt their systems more rapidly to the realities of reduced public funding and to the needs of the market economy. The crisis is hidden for three reasons. First, as noted, the education systems continue to function and have not collapsed. Second, the crisis has been somewhat masked by more successful reform efforts in transition countries with higher per capita incomes, such as those seeking European Union accession. Third, the hidden crisis has not provoked any visible human or fiscal crises, as has happened with attempts to shore up deteriorating health and social protection programs. The medium- and long-term effects of the hidden crisis in education among the CIS-7 countries are likely to be very serious indeed, however, if deep reforms are not urgently undertaken. Fortunately it is not too late, and there are some encouraging signs of a growing realization that reform is necessary. This paper identifies four principal areas for reform of public spending if education is to contribute to economic growth and poverty reduction in the seven poorest CIS countries. The paper does not cover all aspects of education but focuses particularly on public spending and how it might be adjusted in the following areas: 1. Adapting education systems to the market economy; 2. Increasing public spending on education and making it sustainable; 3. Improving the efficiency and equity of public spending on education; and 4. Ensuring equity in private spending on education. Each area is discussed in turn in Sections III-VI. First, however, Section II provides the context in terms of demographic trends, changing educational structures, overall education spending (public and private), and system reform efforts in the countries. Finally, Section VII summarizes the major recommendations. 1 See, for instance, the title of World Bank, Hidden Challenges to Education Systems in Transition Economies, 2002 3 II. THE CONTEXT The seven countries have in common that they all have suffered severe declines in GDP and hence in per capita income. Beyond this, they exhibit both common features and differences that are relevant for education. Demographic Trends The school age population is declining in three of the countries (Armenia, Georgia and Moldova), is roughly constant in two (Azerbaijan and the Kyrgyz Republic) and is growing relatively rapidly in two more (Tajikistan and Uzbekistan). Some countries have experienced unusual individual years in terms of the school age population, due mainly to migratory movements, but the overall trends can be seen in Figure 1. These trends imply very different implications for future spending on education. To oversimplify, at least at the compulsory level of general education, Central Asian countries must continue to plan for system expansion while Caucasus countries and Moldova must reduce the size of their education systems. Figure 1 Population growth, 5-17y.o. (beginning of the year) 10.0 5.0 0.0 Armenia Azerbaijan Georgia Kyrgyz Rep. Moldova Tajikistan Uzbekistan -5.0 -10.0 -15.0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Source: Sources for all figures and tables are in Appendix 1 Educational Structures Inherited from the common structure of the Soviet Union, the education system in all CIS-7 countries is based on four levels: preschool, general education, secondary education (specialized secondary and vocational) and higher education. General education has three components: primary education (grades 1-4), lower secondary (grades 5-9), and upper secondary (grades 10- 11). There are minor variations around this – in Armenia, for instance, primary covers grades 1- 4 3 and lower secondary grades 5-9; in Georgia primary covers grades 1-6 and lower secondary grades 7-9; in Moldova and, more recently, Uzbekistan, there is a third year of upper secondary that therefore covers grades 10-12. Compulsory education is generally for the first nine years, except in Azerbaijan (11 years), Kyrgyz Republic and Moldova (in both, recent reforms call for 12 years, although this is not yet in place). Compulsory education is generally meant to be free to the students, but is often not so in practice, as discussed later in this section. The secondary system of vocational and technical (VET/PTUs) and specialized (technikums) education is almost identical in all seven countries. Technikums offer a more professional and academic focus, accepting enrollment from general education either after grade 9 or after grade 11. VET programs in PTUs also accept enrollment at either stage but their courses last for 1-2 years in Armenia, Azerbaijan, Georgia and Uzbekistan and for 2-3 years in the Kyrgyz Republic, Moldova and Tajikistan. Courses in technikums last 2-4 years, depending on the grade of enrollment, except in Moldova where there are three stages, each requiring