Human Capital and Social Development in MENA Countries

NS4053Spring Term 2017Cammett: Chapter 5Human Capital: Health and Education

Overview I • First two decades after independence, governments in most MENA countries made human development a priority • Statist development models involved major government investments in • Social sectors, and • Public infrastructure • Populations enjoyed significant advances in • Social development and • Tangible social mobility • Facilitated by • establishment of basic public welfare programs and • The expansion of government employment

Overview II • In 1980s and 1990s with the rollback of the state and gradual decline in public welfare infrastructure • Human development slowed and • In some cases even stalled or declined • After the lost decade of the 1980s all but the well-to-do lived increasingly tenuous and precarious lives • For middle classes who had been the prime beneficiaries of expansive government employment programs aspirations of social mobility increasingly out of reach • For the poor, cuts in subsidies as well as deterioration of public services limited prospects for escaping poverty • Middle Eastern societies increasingly characterized by sharp inequalities of opportunity

Social Services I • Important “virtuous circles” among education, health, fertility decline and labor productivity • Neoclassical economists point to high rates of return on investments in human capital • Marxists stress the need for socialist regimes to liberate the productive potential of the masses • Rare to find substantially similar conclusions from such radically different perspectives. • Human capital issues particularly important in MENA countries because with exception of oil, region relatively poor in natural resources

Social Services II • Although performance varies widely by country, generally the region made dramatic progress during the past two generations • Life expectancy has improved markedly • A child born today in Arab countries is expected to live to seventy one years – eighteen years longer than one born in the 1970s • Massive improvements in education with youth illiteracy nearly eradicated and • Male female education gap closing

Social Services III • With the shrinking of the fiscal gains of the 1970s boom era government spending on health and education has been less affected than other sectors • Except in the RRLA countries where it fell from 6.5% of GDP in the early 1980s to 3.8% in the early 1990s • Reflects largely low levels in Syria • In other two regions it fell from 7-9% GDP to about 6% • Recently it rose again in GCC countries reaching 12% in Saudi Arabia • Recent patterns of the Human Development Index (HDI) show gains slowing significantly since the 1990s

Educational Systems I • Present levels of literacy in the Middle East are not as high as would be expected given income levels • On the other hand, most nations have expanded educational opportunities rapidly in the past few decades • Education levels vary considerably by country, region, and social class • Education of women has also advanced markedly in recent years – from a very low starting point • The rapid quantitative expansion of school systems, particularly when combined with fiscal austerity has generated serious qualitive deficiencies in education

Educational Systems II • Middle Eastern students tend to score lower than those in other regions on international standardized tests • Social inequalities also affect educational achievement in the region these include • Gender • Family background and • Ethnicity • Negatively affects achievement especially in math and sciences

Educational Systems III • In addition to low test scores, common complaints abut Middle Eastern education are that • Its quality is very low • Dropout rates are high and • Too few students master technical subjects, especially math and science • Class size does not seem to be a cause for concern and has not been a significant problem in primary education • More important than class size are factors such as • Methods, • Teacher quality and • Morale

Educational Systems IV • Other problems • Instruction often adopt rote learning rather than problem-solving, writing skills, creativity • Teachers receive low pay and lack proper training • Up to 60% of parents hire private tutors further sharpening inequalities (Egypt) • Costly regionwide effort to expand secondary and university education has proved impossible to maintain exacting standards of instruction at the same time • Many teachers have sought employment in the oil states • Egyptian teachers make twice a much in Saudi Arabia

Educational Systems V • Education Allocation Decisions and their Effects • Most governments allocate a relatively high percentage of expenditure to education. Shares range from • Low of 7.1% in Lebanon and Qatar to a • High of 25.7% in Morocco • During the austerity of the 1980s real spending slowed and in some cases declined • How money is spent also a problem • Gender, class, and rural/urban biases remain factors in many country’s allocation decisions • In Morocco, children from upper income families are twice as likely to be enrolled as children from low income families

Educational Systems VI • Problems in rural education • Rural enrollment rates are still lower than urban rates • Promoting rural education is challenging. Children of widely dispersed rural families often live far from any school • Countries that insist on separate schools for girls and boys multiply costs of schooling • Many rural families see no point in educating their children • Spending on tertiary education is far more expensive to fund that other levels and uses anywhere from 15% of the educational budgets in Morocco to 31% in Lebanon.

Educational Systems VII • Higher Education • Spending on tertiary education is far more expensive to fund that other levels and uses anywhere from 15% of the educational budgets in Morocco to 31% in Lebanon. • Private vs Social Returns to Education • If education is properly treated as in investment, the social rate of return is highest for investment in the lower grades • However private returns increase with investment in higher education • Politics not economics dictates the bias in favor of secondary and especially higher education.

Educational Systems VIII • Economic and Political Roles of the Universities • Prior to the twentieth century, the Middle East had no modern public universities • First university on the Western model in the region was the American University of Beirut • By 1925 Cairo University charted as a fully public institution and national universities started in Turkey and Iran. • With full independence throughout the region, an explosion of new universities and in the number of students attending them • Algeria which had no universities in 1962 now has 130 universities and colleges • The institutional expansion within the region necessarily sacrificed educational standards

Educational Systems IX • Also problems with employment for flux of graduates • For many years growing economies and governments of Middle East could absorb all the graduates produced by the universities almost regardless of the quality of their preparation • By late 1970s however administrations were clogged with fairly young civil servants • The expansion of public sector enterprises also slowed and except in the Gulf the construction booms of the 1960s and 1970s were over • The formation of a “dangerous” class of the educated unemployed had begun.

Educational Systems X • Vocational Training • In recent years in many parts of the Middle East there have been reassessments of educational policies • Often these produce attempts to slow the rate of increase in secondary school enrollments and • To restrict the admission to universities • Often accompanied by efforts to orient primary school students and those who fail general secondary school exams toward vocational training institutes • Such institutes have been regarded as dead ends and students and parents alike have gone to great lengths to avoid them

Educational Systems XI • As in many developing countries still a marked preference for white-collar, desk-bound employment • Even in vocational schools Middle Eastern, students opt for potentially white-collar skills in accountancy rather than certifying themselves as electricians, mechanics or plumbers • Governments in region trying to promote technical and vocational education but without much success • Attitudes may be changing • Great construction boom of the 1970s in the Gulf states created a heavy demand for electricians and the like • Wages for these trades continue to increase rapidly throughout the region

Conclusions I • Nearly all post-independence Middle East governments promised their citizens health, education and jobs. • Progress in health and education was rapid and real • Starting from such low levels, these improvements in basic living conditions were transformative for earlier generations • However progress was not commensurate by international standards for countries of similar levels of income • Rapid increase in population made the effort to catch up extremely costly

Conclusions II • In countries with sizable oil resources, fiscal crises and economic adjustment beginning in the 1980s led to major cuts in public sector employment which was the avenue to social mobility for the middle classes • At same time public investment in the social sectors stalled or froze which was especially damaging to the poor. • Importantly however • The region has seen major gains in human development • Nearly all children are in school in most countries • Literacy rates have increased rapidly even among women and infant mortality has declined significantly

Conclusions III • The initial gains and especially the emergence of a middle class composed of civil servants and professionals created a paradox • This progress that was not sustainable may have sowed the seeds of discontent in a later period, when aspirations for social mobility would be increasingly thwarted.

Human Capital and Social Development in MENA Countries