1. Intermediate Economic Analysis of Education Sector Projects Appropriate Private-Public Roles: Analyzing Interactions Emmanuel Jimenez 22 February 2000

2. Analyzing Public-Private Interactions Game and General Lessons How should one analyze the private option in education projects? –Principles –Example from the Philippines

3. Q1: The figure below shows: a) Private education exp as % of total b) Public education exp as % of total 0% 50%100% Malaysia Bolivia Ghana USA GermanyUganda Sierra Leone

4. Q1. The figure below shows: a) Private education exp as % of total b) Public education exp as % of total 0% 50%100% S. Africa Malaysia Bolivia France UK Venezuela Ghana USA Indon. German. Peru Uganda Sierra Leone S. Korea Netherlands

5. Q2. The figure below shows (secondary) a) Private education enrol as % of total b) Public education enrol as % of total 0% 50%100% USA Australia KoreaChile Belgium Netherlands

6. Q2. The figure below shows (secondary) a) Private education enrol as % of total b) Public education enrol as % of total 0% 50%100% Mexico USA Niger Cyprus Kuwait France Australia KoreaChile Belgium Netherlands Mauritius

7. Answers Q1: The figure below shows: a) Private education exp as % of total 0% 50%100% S. Africa Malaysia Bolivia France UK Venezuela Ghana USA Indon. German. Peru Uganda Sierra Leone Source: Psacharopoulos and Nguyen 1995 “Fighting Poverty: the role of government and the private sector” World Bank. Netherlands

8. Answers Q2: The figure below shows: a) Private education enrol as % of total 0% 50%100% Mexico USA Niger Cyprus Kuwait France Australia KoreaChile Belgium Netherlands Mauritius

9. What Lessons? Public intervention through finance is different from provision

10. Options for Intervention Degree of public financing 100% 0% 100% Degree of public provision Unsubsidized private sector (Phils. Tertiary) Voucher supported schools; Regulated priv schools (Neth, Bel) Public schools with no cost recovery (many) Public facilities with cost recovery (US universities)

11. What Lessons? Public intervention through finance is different from provision It’s hard to generalize where the private sector may be large.

12. Enrollment in Slums in Lahore Data: 1,000 HHs in 26 slum areas % of children in HHs living on less than $1/day: 55% Percent of Children Enrolled in Lahore by Income Group, School type Alderman, Orzem and Paterno, “School Quality, Cost and Public/Private School Choice of Low Income HHs in Pakistan WP 2, Impact Evaluation of Education Reforms, DECRG, World Bank 1996

13. What Lessons? Public intervention through finance is different from provision It’s hard to generalize where the private sector may be large. All economic arguments for public intervention are for finance and NOT provision

14. Market Failures in Education Characteristic Excludable and Rival? Externalities –Productivity –Nation-bldg, community Capital Mkt Failures None Primary Levels Research Higher Education

15. Price Quantity 0 Market for EDUCATION private MB private MC social MB Q* Q**

16. If there are no economic reasons for public schools, why are there so many of them? Regulatory capacity Political and social inertia

17. In this setting, what does it mean for project analysis? Get information on the private sector: size, who acceses, where. If there is political room to use public resources to expand private, –compare private-public alternatives –analyze regulatory vs provider capacity Even if politically infeasible to expand private, analyze the NET effect of public on quantity, quality, costs and equity.

18. Comparing Public and Private Options Comparisons of private-public must hold constant for socioeconomic characteristics Also must hold constant for selection Done for the Philippines in the 1980s using household-school matching survey.

19. Private Sec Schools deliver better education at lower cost Ratio of private to public cost and Achievement

20. Estimating NET Impacts What happens to quantity when the public sector expands? Build more schools: –attract more students who didn’t go to school –attract more students from private schools Increase subsidies: –attract more students into schools –cause private spending to decline.

21. Public as % of Total Enrollments, Philippines, 1982-1996

22. How to Estimate the Effects Data: 1987-98 provincial data Regress: private secondary enrollment on: –population –regional domestic product –standardized test scores (public/private) –tuition (public/private)

23. Philippines: Effect of Enrolling 10 more students in public secondary schools

24. Philippines: Effect of Enrolling 10 more students in public schools