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Education and the economic crisis: Is education a victim or part of the solution?

Education and the economic crisis: Is education a victim or part of the solution?. Yael Duthilleul IIEP Strategic Debate Paris-October 21st, 2009.

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Education and the economic crisis: Is education a victim or part of the solution?

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  1. Education and the economic crisis: Is education a victim or part of the solution? Yael Duthilleul IIEP Strategic Debate Paris-October 21st, 2009

  2. The views and opinions expressed in this presentation are those of the author and do not necessarily represent the views of UNESCO or IIEP.

  3. Outline • 1. Introduction-CEB • 2. CEB trends in education lending: • 1998-2007 versus 2008-2009 • 3. The impact of the crisis on the implementation of education projects • 4. Implications

  4. IntroductionCEB: A Multilateral Development Bank with a Social Vocation 1945: WWII aftermath, more than 30 million displaced people 1949: Creation of the Council of Europe-Human rights, support for economic and social development 1956: Creation of the Council of Europe Resettlement Fund:The oldest Pan-European financial institution, set up by 8 member countries of the Council of Europe to help refugees resettled. 1999: The Fund becomes a Development Bank, 40 members by 2009.

  5. The Council of Europe Development Bankwww.coebank.org

  6. Three Sectoral Lines of Action Strengthening social integration(aid to refugees and migrants, social housing, job creation, urban and rural improvement, judicial) 2. Managing the environment(environmental protection, natural disasters, cultural) heritage 3. Developing human capital(health and education-mostly infrastructure investments)

  7. Trends in CEB Education lending 1998-2007

  8. CEB Education lending in relation to total lending 1998-2007

  9. 2008-2009 International Context • Increased demand for loans from IFI’s; • Increased interest by CEB to lend to national governments;

  10. CEB Education lending in relation to total lending 2008-2009

  11. CEB lending 1998-2009 data for 2009-forecast

  12. 2003-2007Distribution of Lending for Education 6% Other 7% Albania, BiH, Croatia, FYROM, Slovenia 22% Finland, Sweden, Norway & Iceland 5% Poland 6% Spain 19% Cyprus 16% Romania 19% Italy

  13. CEB Education Lending: Who borrows during the 2008-2009 crisis?

  14. Why are they borrowing? • Germany: region of Hesse-part of economic stimulus package, education investment program for schools and universities for €1.7 billion. • Portugal: Education Investment Program to renew secondary education infrastructure was in the pipeline when the crisis hit (€ 1.9 million planned), Government pushed for its quick implementation as part of economic stimulus program. • Poland: regional and city development programs; • Hungary: EU co-financing of Operational Programs.

  15. Implications At time of economic crisis, Education can be part of the solution • Education can offer opportunities for investment in infrastructure and contribute to economic growth; Sector needs to be ready: vision, plan and capacity to manage in place to seize the opportunity; • Incentives and decentralization play a role: central levels sometimes favor big infrastructure projects; education is becoming more and more a responsibility of the local level; • within EU, big incentives at regional level to support water/environmental projects, expensive penalties if not ready by 2013.

  16. Implementing education projects at times of financial-economic crisis: Evidence from the field • Project cancelled- financial problems of Borrowing Banks; (CEB’s lending through financial intermediaries to municipalities) • Constructor bankruptcy; delays, cost implications; PPP’s projects exposed; • Government/municipal education investments on hold or reduced as a result of shrinking revenues; • Efforts to reduce costs: quality implications? • Change of ownership in schools;

  17. Implications At time of economic crisis, Education can also suffer • 2009 budgets-were prepared in 2008, before the crisis; have been reduced but survived; engagements incurred were most times completed; • 2010-most likely to see reduced investments; (unless appropriate incentives are in place)

  18. Implications At time of economic crisis, Education can also suffer • Operating budgets will be preserved –no interest in adding social instability to the crisis-but non-permanent jobs, in non-essential positions could be sacrificed if needed; • Constrained resources: quality implications; • Local governments called to be more efficient;

  19. Not a single answer to the question • In terms of infrastructure investments, it will vary by country and region;on resources available, opportunities and incentives in place; • In terms of education access and outcomes….let’s start the discussion!

  20. Thanks! yael.duthilleul@coebank.org

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