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Demand-Side Financing

Women's and Men's Wages Relative to Wages with No Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0. 1. 2. 3. 4. 5. 6. . . . . . . . . Indonesia. Thailand. Peru. Cote d'Ivoire. USA. Slov

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Demand-Side Financing

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    1. Demand-Side Financing Harry Anthony Patrinos World Bank Washington DC 20433 U.S.A. hpatrinos@worldbank.org

    2. Women’s and Men’s Wages Relative to Wages with No Education {derived from "Human Capital Theory and Benefit-Cost Analysis in Education" (Emmanuel Jimenez) http://kms.worldbank.org/docs/courses.htm} {derived from "Human Capital Theory and Benefit-Cost Analysis in Education" (Emmanuel Jimenez) http://kms.worldbank.org/docs/courses.htm}

    3. Why Should the Public Sector Invest in Education? Income distribution Capital market imperfections Information asymmetries Externalities

    4. Financial Issues Public spending often inefficient Fiscal constraints Who should pay for schooling? What share of costs to be borne by beneficiaries? Provision of schooling by government Immense national expansion Schooling not appropriate for all Disparity in services Inefficient: Over-subsidized higher education: eg Africa Higher ed 44 times spending on primary ed. Provision of schooling by government Immense national expansion Schooling not appropriate for all Disparity in services Inefficient: Over-subsidized higher education: eg Africa Higher ed 44 times spending on primary ed.

    5. Financing Private Public How to Intervene: Finance & Provision

    6. How to Intervene: Finance & Provision Financing Provision Private Public Private Public

    7. Financing Provision Private Public Private “0” Vouchers Public Cost Recovery Supply How to Intervene: Finance & Provision Subsidies, directly to schools or pupils? Subsidies, directly to schools or pupils?

    8. Demand-Side Mechanisms Stipend Community Financing Targeted Bursaries Vouchers Public Assistance to Private Schools Student Loans Community Grants

    9. Demand-Side Financing Examples Bangladesh Belize Bolivia Brazil Botswana Chad Chile China Colombia Côte d’Ivoire

    10. Demand-Side Financing Examples Australia Belgium Canada England France Holland Hungary Japan

    11. To increase girls’ enrollment at primary level Scholarship (equivalent to US$4) Given directly to cover school-related costs Experimental alternatives: Outreach worker Educational materials Parent committees Demand-Side Financing Guatemala: Eduque a la Nińa

    12. Demand-Side Financing Guatemala: Eduque a la Nińa

    13. Demand-Side Financing Guatemala: Eduque a la Nińa

    14. Demand-Side Financing in Europe Denmark 85% public subsidy Australia public subsidy to private schools, esp. poorest Netherlands 67% of students enrolled in private schools, funded by Government

    15. Demand-Side Financing: Colombia’s Voucher Program Established 1991 Cost-sharing (80% central, 20% local gov’t) Targeted using poverty mapping Only Grade 5 graduates can apply, renewable to grade 11 Value of voucher covers tuition, matriculation fees; inflation-adjusted ceiling $177 (1996)

    16. Reached over 100,000 students in 5 years Effectively targeted to poorest, little leakage Increase in attendance: 1992-1994: 35% per year 1994-1996: 6% per year 77% of unit cost of public secondary education Demand-Side Financing: Colombia’s Voucher Program

    17. Assistance to Private Schools Catering to Low-Income Students Public schools inadequate space, poor quality Private schools educate 20% of urban primary students Demand-Side Financing: Dominican Republic

    18. Assistance to Private Schools Catering to Low-Income Students How? Depends on number of students transferring to private schools Provision: school supplies, expanded preschool places, school feeding programs, institutional support Demand-Side Financing: Dominican Republic

    19. Lessons Learned Participation Private sector Flexibility Capacity building NGO participation Cultural relevance Equity Transparency Participation: Active involvement, support of beneficiaries, participation of parents Private sector: Involvement of private sector, partnerships with commercial enterprises Flexibility Capacity building NGO participation Cultural relevance Equity Transparency Participation: Active involvement, support of beneficiaries, participation of parents Private sector: Involvement of private sector, partnerships with commercial enterprises Flexibility Capacity building NGO participation Cultural relevance Equity Transparency

    20. Messages Increase effectiveness of public finance Investigate the market for education Alternative financing mechanisms can work

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