Spending

Why is our public spending on education still so shockingly low?

Weak and inefficient allocation of public resources negatively affects the education sector. Photo: Mostafa Sabuj

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Weak and inefficient allocation of public resources negatively affects the education sector. Photo: Mostafa Sabuj

Because it boosts individual productivity and produces a skilled workforce, education is seen as an essential pathway to economic progress. However, in most countries, there are clear examples of market failure in education since, in a free market, education is under-consumed. High market prices for education can prevent individuals from investing in human capital. In this situation, the role of government in allocating resources to education is essential to compensate for the inability of markets to support education.

The Sustainable Development Goals (SDG 4) highlight the importance of ensuring inclusive and equitable quality education and promoting lifelong learning opportunities for all. Bangladesh’s 8th Five-Year Plan aims to achieve an 8.5% GDP growth rate by 2025. In addition, the country envisions the possibility of achieving the rigid SDG targets by 2030, aspiring to become a an upper-middle-income country by 2031, and a developed country by 2041. Success in achieving these goals in Bangladesh critically depends on the allocation of a substantial amount of public resources to education and its effective use. However, there are genuine concerns that the current education system in Bangladesh is unable to help achieve most of these goals.

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Where is Bangladesh? Although there has been considerable progress in gross enrollment in primary education, the country lags seriously behind in ensuring quality education for all. If we take the average number of years of schooling as an indication of the state of education in any country, in 2019 the average number of years of schooling in Bangladesh was only 6 ,2. It was higher than Pakistan (5.2) but lower than India (6.5), and Bangladesh was far behind Sri Lanka (10.6) and Southeast Asian countries like Malaysia (10.4), Vietnam (8.3), Indonesia (8.2) and Thailand (7.9). ).

Bangladesh had long enjoyed macroeconomic stability in terms of sustained and increasing economic growth and maintaining the fiscal deficit at around 5% of GDP. However, this success has come at the cost of very low educational expenditure. Unfortunately, Bangladesh has one of the lowest ratios of public expenditure on education to GDP – less than 2%. This figure is well below the averages for LDCs (more than 3%), lower middle-income countries (more than 4%), upper middle-income countries (more than 4%) and high income (more than 5%). Bangladesh’s ratio of public expenditure on education to GDP is still below the South Asian average.

Two specific reasons explain the shockingly low ratio of public expenditure on education to GDP. First, the country has weak state capacity to mobilize tax revenue and therefore does not have sufficient public resources for education. Inefficient tax infrastructure, complex tax laws, poor coverage and corruption are the main causes of low tax collection. Second, even with a low tax-to-GDP ratio, the country suffers from the problem of not having the right priorities when it comes to allocating public resources to education. Moreover, due to corrupt practices, much of what is spent by the government on education does not reach the intended beneficiaries. There are also regional disparities in the allocation of public resources to education. In a system of crony capitalism and a high degree of rent-seeking activities, human development and human capital formation do not get the priorities they deserve.

Another huge setback is that the education sector in Bangladesh has a stable anti-reform coalition among the dominant players, which leads to political paralysis. It can be described as a situation where essential and necessary laws and reforms are not undertaken or, even if undertaken, are not implemented due to a lack of commitment on the part of the government or the inability of the dominant actors to reach a consensus on the nature of the reform. Policy paralysis can be seen in the continued impossibly low public spending on education, the absence of education reforms, the high prevalence of mismanagement, corruption, and lack of accountability and transparency.

Bangladesh has a pluralistic education system which is not properly regulated and consists of different actors with different interests and varying degrees of power or influence. There is a strong incentive to maintain the status quo where the generation of rents/privileges from the existing system and the distribution of these rents/privileges among influential actors, who have the least interest in reform, perpetuates the self -called stable anti-reform. coalition. Thus, political will is essential to break this stable anti-reform coalition and get rid of political paralysis.

Vietnam, which has shown strong political commitment to education for all, is an interesting example. Vietnam’s economic transition since the Doi Moi reforms has been extraordinarily efficient, leading to one of the fastest rates of economic growth in the world. From the beginning, education has been a key element of the reform. They understood that for an economy to thrive, its people must have the education, training and skills necessary to sustain business and prosperity. As a result, since the late 1990s, the government has allocated between 15 and 20% of its total budget to education. The ratio of public expenditure on education to GDP in Vietnam has been over four percent over the past two decades.

However, it is not just high public spending on education. Critical reforms in the education system have also helped Vietnam achieve rapid human capital development. The country has made significant progress in universal primary education, gender equality and adult literacy under the first Education for All (EFA) action plan. The second EFA plan built on this progress by placing more emphasis on quality than quantity, universal lower secondary education, lifelong learning and improved management of education. education and resource allocation. Bangladesh can learn from these experiences and make the decision to prioritize education in the same way.

Dr. Selim Raihan is a Professor in the Department of Economics at the University of Dhaka, Bangladesh, and Executive Director of the South Asian Network on Economic Modeling (SANEM). Email: [email protected]