Skip to Main Navigation
FEATURE STORYApril 24, 2023

The False Dichotomy between More & More Effective Public Spending on Education: Lessons from Country Experiences

Education and Finance

At the April 13, 2023 Spring Meetings event “Effective Public Spending on Education: Lessons from Country Experiences,” Jaime Saavedra, Head of the World Bank Education Global Practice, explains financing challenges and actions to mobilize resources for education more effectively and equitably.

Global school closures following the COVID-19 pandemic have led to massive learning losses, which have pushed the level of learning poverty to an estimated 70 percent. As a result, many countries in the world now face substantial additional costs associated with remediating learning losses and building back better and more resilient education systems that can deliver more learning for all children.

Education financing is not meeting today’s nor tomorrow’s needs

Funding for education as a share of national income has not changed significantly over the last decade for any country income group. However, the COVID-19 shock compromised spending in many low- and lower-middle income countries. In 2022, higher-income countries increased the prioritization of education in their budgets. But in many lower-income countries, education lost space.

Governments now need to recover and increase this lost fiscal space to meet the needs and learning goals, according to the new World Bank technical brief, The Adequacy of Public Expenditure on Education and the Needs Post-COVID-19.

The report points out that many low-income countries and lower-middle income countries that meet common international benchmarks on education spending (such as 4-6% of GDP or 15-20% of public budgets) still spend very little per school-age child due to their small government budgets and large young populations. A third of lower-middle-income countries and half of upper-middle-income countries spent less per capita on education in 2019-2020 than in 2014-2015.

As a result, spending per school-age child—the most accurate indicator of financing adequacy—averages $53 in low-income countries, $318 in lower-middle income countries, $980 in upper-middle income and $7,800 in high-income countries. These stark differences greatly surpass the differences in countries’ living standards and the costs of delivering education services.

Overcoming the false dichotomy between more—and more effective—education spending

Although more education spending does not automatically lead to better results, key outcomes like learning poverty and learning-adjusted years of schooling are, on average, worse off in countries that spend the least per child of primary and secondary school age. Unfortunately, increases in public education spending during the last decade have been associated with relatively small improvements in education outcomes. It is essential to ensure the efficiency and the equity of education spending.

For the poorest-performing countries—those with high levels of learning poverty—education financing needs to increase significantly in order to escape current low-learning and low spending traps. Resources must fund the most impactful investments, allocated to overcome the critical gaps and constraints to the delivery of quality education services, and have a strong focus on the more disadvantaged. Meanwhile, in most low-income and middle-income countries, increases in both the level and efficiency of education spending are needed to meet national learning goals, with a strong equity focus and fiscally sustainable financing strategies.

In all countries, increases in public spending, combined with the right strategies, can unlock improvements in the value for money of their current spending. Improving teaching quality, through more practical and focused teacher training and support, is one of the most important fronts in unlocking efficiency: spending on teachers accounts, on average, for nearly two-thirds of total education spending in low-income and middle-income countries. 

Efficiency can be improved by strengthening management capacity and public financial management. Overcoming spending inequities across education levels—while ensuring financing for basic education and foundational learning—can enhance equity. Mechanisms that differentiate funding based on regional needs and equity principles, and that reward outcome improvements, can also improve efficiency.

Countries need to develop longer term financing strategies on how to mobilize more domestic and external resources and rally national actors around a social contract that ensures equitable, effective, and sustainable education financing.

Domestic resource mobilization is paramount, coupled with external funding that is catalytic

Governments are the largest education funders in all country income groups. So achieving significantly higher spending levels will depend on expanding domestic resource mobilization. Following the pandemic, global macroeconomic challenges, growing external debt pressures, eroding national tax bases, rising interest rates, and ensuing national budgetary constraints are making it hard for most governments to raise sufficient revenue and to increase education spending to needed levels, given the many competing financing demands. In many countries, domestic revenue is too low to even meet expenditure needs to provide the infrastructure and services required for equitable and sustainable growth and development.

Domestic resource mobilization is a core priority of the sustainable development agenda and for the World Bank. The 2015 Addis Ababa Action Agenda on Financing for Development emphasized that the mobilization and effective use of domestic resources are central to our common pursuit of sustainable development.

However, external financing can be catalytic and enhance the impact of domestic investments. Moreover, some low-income countries, particularly those affected by fragility, are locked in traps characterized by low spending and very low learning, coupled with inefficiencies in the use of scarce resources. In these countries, a substantial increase in external financing is necessary.

To help facilitate these discussions on education financing, the World Bank hosted a high-level roundtable discussion among a group of Ministers of Finance and Ministers of Education during the 2023 World Bank-IMF Spring Meetings.

“Even with the multiple crises countries are facing today—from rising inflation and instability to increasing climate impacts—education must remain a priority,” stressed Anna Bjerde, World Bank Managing Director of Operations. “Maintaining investments in human capital is essential, as those investments are critical for the growth, productivity, and welfare of a society. With learning poverty—the share of ten-year-old children who cannot read or understand a simple text—estimated at 70 percent in low-and middle-income countries after the pandemic, ensuring sufficient, efficient, and equitable financing is of utmost importance.”

Participants reinforced the message of going beyond the false dichotomy that permeates debates about education financing – between increases in the level and efficiency of spending.

Mamta Murthi, World Bank Vice President for Human Development said, “In the current global discourse on education finance, spending more money on education and spending it more efficiently is often portrayed as an either/or scenario.  We need to go beyond the false dichotomy: additional education spending does not automatically improve learning outcomes. In most low and middle-income countries, increases in both the level and efficiency of education spending are needed to accelerate learning.”

“Education is in crisis.  We need strong political commitment and leadership to ensure swift recovery of children’s learning, before the crisis widens inequality and leaves a permanent scar on this generation,” emphasized Jaime Saavedra, World Bank Global Director for Education

During the event, countries shared their experiences on how to ensure adequate and efficient public education spending to recover learning losses and to meet national learning goals.

  • Jaime Perczyk, Minister of Education, Argentina:

“We need to invest more, but also better. What are the priorities, where do we invest? When everything is a priority, then nothing is. We need to continuously invest and sufficiently. We need ongoing investments in education to guarantee learning. This is a responsibility of each country and the international community.”

  • Dipu Moni, Minister of Education, Bangladesh:

“We need massive amounts of funding to meet the compound challenges of underfunding of education and COVID-19-related learning losses, while acknowledging competing budgetary demands. We need direct budgetary support to the education sector. We must make work every penny available for the future generation of our country. Let’s invest in education. Let’s invest in our future.”

  • Chakib Benmoussa, Minister of National Education, Preschool and Sports, Morocco:

“There is no dichotomy between increasing education funding and improving the efficiency of its financing. They are two operations that complement each other. Morocco education roadmap 2022-2026 prioritizes the quality of public schools by strengthening the efficiency of public spending and allocating resources to measures with the highest impact on student learning.  Essential to our success is the commitment of all stakeholders, including development partners, to the successful implementation of the roadmap.”

  • Gov. Godwin Obaseki, Executive Governor of Edo State, Nigeria:

“There is plenty of evidence showing the economic returns that investing in education brings. However, simply investing in education is not enough. We must also prioritize efficiency. Our focus today is on ensuring that we invest in learning rather than mere access to education. That's the only way we will promote economic growth and social development while reducing poverty and inequality.”

  • Amenah Pangandaman, Secretary, Department of Budget and Management, the Philippines:

“While we acknowledge that we all have a long way to go in terms of enhancing the level and efficiency of spending on education, we join the community of nations in working hard to achieve the Sustainable Development Goal of accessible quality Education for All.”

  • João Costa, Minister of Education, Portugal:

“The pandemic was an eye opener for the issue of equity. Equity has always been at the core of education, but it appears that some were distracted. If we don’t solve the inequity issues in education, we are not addressing the core issues of education, but just reflecting the privilege of some. And, of course, if we’re thinking of transforming education, we need to discuss financing it and the best way to allocate the budget.

I will conclude with one concern, all of us are facing problems of teacher shortage and if we don’t make the teaching career more attractive, and this requires money, we will not address this problem. So major international organizations have to free the hands of our ministers of finances, so that we can indeed allocate more funds to teachers and to careers.”

  • Shehan Semashinga, State Minister of Finance, Sri Lanka:

“The role of human capital for the economy is well-recognized. Education is critical for both individual well-being, as well as the micro-economic and social development. More ambitious policies are needed to tackle the pandemic challenges and the slow economic recovery, for more rapid social and economic progress.”

  • H. E. Sheku Ahmed Fantamadi Bangura, Minister of Finance, Sierra Leone:

“As a nation, there is clear political will in education, driven by certain tenets. First, the fact that the quality of the development of a nation is a function of the development of the quality of its people. So, it’s a political choice to make education a priority among the different priorities we face. We have held on to investment in education because we believe in our people."

In closing, Stefania Giannini, UNESCO Assistant Director-General for Education said, “Education is a fundamental human right and a critical investment for achieving the Sustainable Development Goals. There is an annual financing gap of $100 billion for low- and middle-income countries to reach their national education targets. With competing priorities, governments have to make difficult decisions.  However, the cost of not financing education is much higher as it is vital to countries’ progress and development.”


    loader image


    loader image