Public education in developing countries: Cost-effectiveness of education policies and endowments growth

Abstract

The article analyses the general equilibrium effects of education as a user and producer of resources considering some features of the sector typical in developing countries, such as the presence of inefficiencies, in a model that nevertheless remains close to the Heckscher–Ohlin paradigm. Short- and long-term effects of education are considered and it is shown that the overall effects are linked to the efficiency with which endowments are produced. The analysis has implications for policymakers in developing countries with failing educational systems, as it suggests a relation between cost-effectiveness of policies and growth and not between enrolments and growth or between public expenditure in education and growth as it is usually tested in growth regressions.

Keywords:

• public education
• skills formation
• developing countries

JEL Classifications:

• F1

Acknowledgements

Helpful comments and suggestions from two anonymous journal referees are gratefully acknowledged.