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Determinants of Literacy in Africa - a Panel Data Study

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Determinants of Literacy in Africa - a Panel Data Study Determinants of Literacy in Africa - A panel data study Master Thesis Author: Martin Pehrsson Spring, 2012 Supervisor: Therese Nilsson Abstract Adult literacy is often taken for granted in industrialized countries. Developing countries still struggles with a large portion of their population not being able to read or taking active part in the productive sector. The African continent have the highest numbers of illiteracy. The aim of this thesis is to look at the factors contributing to this fact and investigate which factors determinates adult literacy in Africa. Three economical theories provide a framework for the assignment: Human-capital theory, The New Institutional Economics and the Education production function, with a special emphasis on the colonial impact in Africa. Through the use of panel regressions is literacy explained by economic development, health status, quality of education and institutional variables. The estimated result shows that adult literacy is strongly affected by primary enrollment rates, government’s expenditure on education and fertility rates. Keywords: Adult literacy, Africa, panel data study, Colonial background, Human- capital theory Table of contents List of Abbreviations ...................................................................................................... 5 1 Introduction ............................................................................................................. 6 1.1 Research question ............................................................................................. 8 1.2 Limitations ........................................................................................................ 8 1.3 Disposition ........................................................................................................ 8 2 Literacy in an African context ............................................................................... 9 2.1 General overview of education in Africa ......................................................... 9 2.2 Special cases of educational history ............................................................... 11 2.2.1 Ethiopia ....................................................................................................... 11 2.2.2 Liberia ......................................................................................................... 12 2.2.3 South Africa ................................................................................................ 12 2.3 Educational policy’s during the colonial rule ................................................. 13 2.3.1 Portuguese colonies .................................................................................... 14 2.3.2 German colonies ......................................................................................... 15 2.3.3 British colonies ........................................................................................... 15 2.3.4 French colonies ........................................................................................... 17 2.4 Post-colonial and contemporary educational challenges and problem ........... 18 2.4.1 From promise to progress to crisis towards a new hope ............................. 18 3 Theoretical framework ......................................................................................... 21 3.1.1 Human-capital theory .................................................................................. 21 3.1.2 Institutional approach .................................................................................. 22 3.1.3 The education production function ............................................................. 22 3.1.4 Economic development and educational outcome ...................................... 23 3.1.5 Health factors and educational outcome ..................................................... 24 3.1.6 Institutional factors and educational outcome ............................................ 26 3.1.7 Education supplied and its effect on literacy .............................................. 26 3.1.8 Education demanded and its effect on literacy ........................................... 27 4 Method ................................................................................................................... 28 4.1 The econometric specification ........................................................................ 29 4.1.1 Panel data models ....................................................................................... 29 4.1.2 Fixed and random effects estimators .......................................................... 30 4.1.3 The Hausman test ........................................................................................ 31 5 Empirical results ................................................................................................... 32 5.1.1 Cross-section random effects models ......................................................... 32 5.1.2 Period-section fixed effects model .............................................................. 33 5.1.3 Missing observations, omitted variables and biases ................................... 34 6 Conclusion ............................................................................................................. 36 3 7 References .............................................................................................................. 39 Appendix A .................................................................................................................... 42 Appendix B .................................................................................................................... 43 Appendix C .................................................................................................................... 44 4 List of Abbreviations ADEA Association for the Development of Education in Africa AU African Union CASAS The Centre for Advanced Studies of African Society EFA Education For All EFA FTI Education For All Fast Track Initiative GDP Gross Domestic Product HL-effect Heyneman-Loxley effect MDG Millennium Development Goals NIE New Institutional Economic NGO Non-governmental Organization PPP Purchasing Power Parity SACMEQ The Southern and Eastern Africa Consortium for Monitoring Educational Quality SAP Structural Adjustment Programme SES Socioeconomic Status SSA Sub-Saharan Africa UN United Nations UNDP United Nations Development Programme UNESCO United Nations Educational Scientific and Cultural Organization UNIDO United Nations Industrial Development Organization 5 1 Introduction Literacy and education is among the most necessary elements for human development in today’s knowledge world or as Nelson Mandela (2003) put it “Education is the most powerful weapon, which we can use to change the world”. Adult literacy is often taken for granted in developed countries, but in developing countries year 2008 as many as 750 million adult men and women had no knowledge of how to read. About 75 million children of school age remained out of their countries educational system. Meanwhile millions of young students left school without the adequate level of literacy to be able to participate in the productive parts of their country’s economy (Richmond et al 2008:10). Every year the African workforce increase with 7-10 million young people searching for an occupation (UNIDO 2011:104). The cost of learning a job, have been of growing importance within economic research by economist’s, such as Theodore Schultz, Gary S. Becker, Jacob Mincer and Eric Hanushek. The major alignment coming from the human-capital theory, which investigates whether income correlates to the amount of investment in education. A further assumption is that widespread investment in human capital creates a labour-force that is crucial for economic growth. The educational development is moving in a positive direction when looking at the total number of illiterates but fast population growth in developing countries contributes to the disequilibrium between demand and supply on the education market. The year 2000 almost one billion people where illiterate, where of 2/3 were women. Their illiteracy will strongly affect the possibilities to get a wage job and affect other social and economic variables, such as health and possibility to run a company. Of the world’s illiterate people 95% live in developing countries and 70% are women. The African continent have since measuring of illiteracy rates started, had higher values than the rest of the world. The worst number for illiteracy is found in desert countries like Niger, Mali and Burkina Faso, where more than 90 % of the adult female population were illiterate in 2005, as a result of high population growth, the low quality of schooling, low school enrolment rates and poverty (Verner, 2005:3). Jointly with a lot of other indicators, the adult literacy rate can be used to measure a country’s development level and as an output variable for the quality and the effectiveness of a country’s school system. The African school system is affected by many indicators, the aim of this paper is to look at these indicators from a macro and institutional perspective. The institutional approach involves the legal system, religion, languages, culture and colonial rule. To understand how literacy and education has evolved and its contemporary state on the African continent, it is important to understand the countries colonial and post-colonial history since it contribute to the countries institutional
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