International Journal of Educational Development 32 (2012) 499–506

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International Journal of Educational Development

journal homepage: www.elsevier.com/locate/ijedudev

Education, development and poverty reduction: A literature critique§

Peadar Cremin a,*, Mary Goretti Nakabugo b
a
Mary Immaculate College, South Circular Road, Limerick, Ireland
b
University of KwaZulu-Natal, South Africa

A R T I C L E I N F O A B S T R A C T

Keywords: The concept of development has evolved from an exclusive focus on economic growth towards an
Human development
interrelated, even integrated approach involving progress across a range of disciplines such as health,
Economic development
education, economics and agriculture. The Millennium Development Goals (MDGs) are rooted in this
Education
Poverty reduction evolved conception of development. A concerted global effort embracing multiple disciplines in the
Developing world formal and informal sectors is now essential for their achievement. This paper traces the changing
meaning of development, while at the same time tracing the benefits of investing in education for
poverty reduction, and the conditions that facilitate and/or hamper education’s contribution to poverty
reduction.
ß 2012 Elsevier Ltd. All rights reserved.

1. Introduction 2. Changing ideas of development: a general overview

The concept of development has evolved from an exclusive
focus on economic growth towards an interrelated approach
involving progress across a range of disciplines such as health,
education, economics, and agriculture. Various empirical and
theoretical studies have shown that rather than expecting
economic development to bring about improvements such as
the alleviation of poverty, better educational standards or
improvements in health, development should be pursued in all
of these areas directly in the knowledge that progress in each area
will interact favourably with the others. The global development
agenda embedded in the Millennium Development Goals (MDGs)
appears to be rooted in this evolved conception of development.
The eradication of poverty and hunger, the achievement of
universal primary education and gender equity, the reduction of
child mortality, improvement of maternal health, combating HIV/
AIDS, malaria and other infectious diseases, and ensuring
environmental sustainability all require a concerted global effort
embracing multiple disciplines in the formal and informal sectors.
This paper traces the changing meaning of development, while at
the same time tracing the benefits of investing in education for
poverty reduction, and the conditions that facilitate and/or hamper
education’s contribution to poverty reduction.
While dictionary definitions of development point to meanings
such as ‘growth’, ‘evolution’ or ‘advancement’, the concept of
development which relates to international development high-
lights a process of ‘change for the better’. A clear distinction can be
made between ‘growth’, which is limited, and ‘development’,
which is not (Meadows et al., 1992: p.xix). If development is
perceived as a continuing process, then it is clear that no person,
group or country ever reaches the state of being ‘developed’. It is an
ever-moving target which ‘‘can never be finally achieved and the
process should never be arrested’’ (Bown, 1999). This points to an
intrinsic difficulty in the dominant terminology, which divides the
world into ‘developing’ and ‘developed’ spheres.
There is no single or generally accepted theory of development,
nor is there any agreement on how development takes place. In the
period after the Second World War, the dominant approach to
development was through economics, based on the idea that
economic growth could be the driving force generating greater
wealth which would, in turn, trickle down to eradicate poverty and
all its attendant problems. Within a few decades, and most
especially, in the aftermath of the economic recession of the late
1970s and early 1980s, with its attendant retrenchment, this
conviction began to wilt.

Economic growth had been achieved in many Third World

countries, but mass poverty had also increased. Many grandiose
§
An earlier version of this paper was presented at the 10th UKFIET International development projects had gone disastrously wrong or, succeed-
Conference on Education and Development, 15–17 September 2009, New College, ing in their own terms, had in the process brought unforeseen
Oxford. The paper is based on themes initially presented in a doctoral study
misery to vulnerable groups (Farmar, 1988: p.xiv).
conducted by the second author. It has been expanded as part of a contribution by
both authors to the activities of the Irish Africa Partnership for Research Capacity
Building, a project supported by Irish Aid.
The problem was that, ‘for three decades, the highest rates of
* Corresponding author. Tel.: +353 61 204 998; fax: +353 61 204 392. economic growth in the world [had] been achieved among
E-mail address: Peadar.cremin@mic.ul.ie (P. Cremin). developing countries, notably in Asia and Latin America’, with

0738-0593/$ – see front matter ß 2012 Elsevier Ltd. All rights reserved.
doi:10.1016/j.ijedudev.2012.02.015
500 P. Cremin, M.G. Nakabugo / International Journal of Educational Development 32 (2012) 499–506
many formerly poor countries making ‘rapid advances in standards
of living, fuelled by expanded trade, capital and technology flows’
(OECD, 1996), while, side by side with these advances, the number
of absolutely poor people, the ‘truly destitute’, in World Bank
terms, had grown to 1.3 billion in 1993. Though there has been
notable progress in poverty reduction since then, inequality and
unevenness across regions remains.
For 2005 we estimate that 1.4 billion people, or one quarter of
the population of the developing world, lived below the
international line of $1.25 a day in 2005 prices; 25 years
earlier there were 1.9 billion poor, or one half of the population.
Progress was uneven across regions. The poverty rate in East
Asia fell from almost 80 percent to under 20 percent over this
period. By contrast it stayed at around 50 percent in Sub-
Saharan Africa, though with signs of progress since the mid
1990s (Chen and Ravallion, 2008: p.2).
A Rural Poverty Report, published by the International Fund for
Agricultural Development (IFAD) in 2001, highlights the finding
that the majority (almost three quarters) of the very poorest people
live and work in rural areas (IFAD 2001, cited in Lines, 2008: p.6).
Therefore, issues of rural development need to be at the heart of
any discussion of reducing poverty and most especially in regard to
poverty reduction in rural areas.
The questioning of development, to which this seeming
paradox between growth and poverty gave rise, generated
different camps within development economics as well as other
related fields and led to a view that no single discipline could
monopolise the debate, and that the insights of other disciplines
and sciences might need to be brought to bear on this, one of the
most crucial issues facing mankind (Colman and Nixson, 1986:
p.xiv). It also led to the emergence of a rich and diverse ‘Third
World’ critique of western conceptions, definitions and processes
for generating ‘development’. One of the dominant strands of this
critique was that of Andre Gunder Frank who, along with others,
argued that the concept of development as an active process
should also be accompanied by one of ‘underdevelopment’, also as
an active process. In this, he argued that, just as development could
occur, so also could underdevelopment. Additionally, he argued
that the process of development was neither inevitable nor linear
(from ‘underdevelopment’ to ‘development’). Most importantly,
Gunder Frank strongly challenged the belief that development
flowed inevitably from economic growth (Chew and Denemark,
1996: pp. 17–57). This view has been upheld by more recent
research into the relationship between economic growth and
poverty reduction. For example, King (2009) has observed that,
while one of the most successful stories in Africa has been the
steady increase in economic growth in the decade up to 2008, there
has not been a corresponding decline in poverty levels in most
countries. In fact, as Powell notes, ‘‘most of Sub-Saharan Africa not
only fails to get rich but is instead actually getting poorer’’ (Powell,
2008: p.1). Palmer offers Ghana as an example of a country where
growth has been in the range of 4–5% for more than 20 years and
where it was projected to reach 7% in 2008 (Palmer, 2009). Yet,
despite these levels of growth, there are persistently high levels of
unemployment in the informal sector, together with significant
regional imbalances and ongoing poverty in Ghana. Poverty trends
in Sub-Saharan Africa for the period 1981–2005 highlight the fact
that economic growth is not synonymous with poverty reduction:
In Sub-Saharan Africa, the $1.25 a day poverty rate has shown
no sustained decline over the whole period since 1981, starting
and ending at around 50 percent. In absolute terms, the number
of poor people has nearly doubled, from 200 million in 1981 to
380 million in 2005. However, there have been signs of recent
progress; the poverty rate fell from 58% in 1996 to 50% in 2005
(Source: World Bank, 2009).
The changing perspectives outlined above represented, in some
ways, a maturation of the debate as those involved abandoned
earlier, simpler ideas and began to grapple with the complexity of
the issues involved and the complexity of the solutions which
might be required (Chambers, 1997: p.1).
Arising from these ongoing debates, there has been a
fundamental reappraisal and realignment in thinking on
development and on how it might be measured. The dissemi-
nation and application of systems theory in various disciplines
has fuelled a fundamental reappraisal of how systems work and
how change takes place (Ståhle, 1998). As a more vitalistic view
of systems gradually replaced earlier more mechanistic views, in
fields as diverse as physics, chemistry, psychology and philoso-
phy, the systemic concept began to be used loosely in a popular
way, outside systemic research, being applied to ‘‘the short-term
planning of the economy, production, and administration of
large companies, long-term planning in futurology and for
solving complex global problems’’ (Ståhle, 1998: p.21).
Following the popularisation of systemic thinking, significant
paradigm shifts took root (Capra et al., 1992: p.83). Within
development studies and development economics, the application
of systems thinking led to new analyses. Where the dominant
development paradigm had previously focused on individual but
unconnected initiatives and projects which sought to bring
improvements within areas such as education, health or the
infrastructure of developing countries, without attempting to trace
links between these aspects, a new viewpoint supporting the
adoption of multi-faceted and inter-disciplinary approaches
emerged. The emergent view was that, rather than relying on
economic development to bring about such improvements as the
alleviation of poverty, better educational standards or improve-
ments in health, ‘‘development should be pursued in all of these
areas directly in the knowledge that progress in each area will
interact favourably with the others’’ (Hayes in Irish Aid Advisory
Committee, 1998: p.44). This systemic view, which defends an
integrated perspective on development that is mindful of the
complex relationships among the myriad factors influencing a
particular context, has been discussed in the pages of this journal,
principally within the rubric of complexity theory (see Mason,
2009; Nordtveit, 2010).
The attacks on the traditional model of development have
had support from a growing environmental lobby, which has
highlighted the non-sustainability of this model, both in the
developed and in the developing world, when set against its
attendant destruction of the environment and of the finite
resources of the planet. Reports such as those of the Brandt
(1979), Brundtland (1987) and South (1990) Commissions
reinforced the dawning awareness of the need for a model,
global in scope and global in perspective. This broadening in
scope was paralleled by argument for the adoption of more
people-centred development, with greater emphasis on bottom-
up development and the adoption of a learning process
approach in the functioning of development and funding
agencies (Korten, 1980: p.480).
Various World Conferences (on Children, Water, Food, Habitat,
Women, Social Summit, Sustainable Development and other
themes), sponsored primarily by the UN, helped to carry forward
the debate in regard to development, leading to change which is
characterised by three aspects.
 Firstly, the more traditional, narrow, economic conception of
development has been replaced by a model which places a
premium on sustainable human development.
 P. Cremin, M.G. Nakabugo / International Journal of Educational Development 32 (2012) 499–506
 Secondly, the relationship between donor and recipient has been
redefined, with an older dependency model being replaced by a
model which emphasises a new development partnership
through which countries in the South assume responsibility
for their own development and also promote activity in the
private sector, while those in the North recognise their potential
complementary role in supporting development through aid,
trade, investment, etc. An older emphasis on aid agency projects
and initiatives began to be replaced by sector-wide approaches
and budgetary support, often with a range of donors collaborat-
ing to give such support. Ultimately, this trend led to the Paris
Declaration on Aid Effectiveness of 2005, with its emphasis on
the core principles of ownership, harmonisation, alignment,
results and mutual accountability, and the Accra Agenda for
Action of 2008, conceived to accelerate and deepen the
implementation of the Paris Declaration on Aid Effectiveness.
Both of these frameworks require developing countries to
commit themselves to taking control of their own futures, and
require donors to coordinate better amongst themselves, as well
as ensuring that both parties are accountable to each other and to
their citizens.
 Thirdly, the participation of the people in decision-making, allied
to good and open governance, was recognised as an essential
element in promoting sustainable human development (DSIE,
1997).
Parallel to the ongoing debate on the meaning of development
arising from and within these conferences, two other strands of
debate have emerged. One relates to the overall role and impact of
aid (most often known as ‘development assistance’) in develop-
ment. The other strand relates to issues of good governance and
respect for human rights and their relationship to the development
process. Within the human rights dimension, there is ongoing
concern for the role and contribution of women in the develop-
ment process.
As indicated above, the reappraisal of the meaning and
purposes of development has engaged a global audience. Voices
from the developing world have been pointing out the extent to
which traditional understandings of development are based on so-
called ‘Western’ concepts and philosophies and the extent to which
other cultures may have different concepts of development linking
to their cultures, values, religions or other societal benchmarks (de
la Court, 1990: p.128).
Developing world thinkers have argued for a view of develop-
ment which does not have economic development as its goal but,
rather, the development of ‘‘the political system, community,
social cohesion, the ecology, culture and values’’ of the developing
country (Luthra in DSIE, 1997: p.3). In part, this view of
development may have been drawn from the fact that for many
countries in the South the process of development was taking place
at the same time as the process of liberation and so there was a
close linkage of development with the post-colonial period. The
perception had been that underdevelopment was a strategy of the
colonial powers and therefore the struggle for liberation was
synonymous with promoting economic empowerment, self-
determination and development (Regan et al., 2006). This view
could draw some support from certain systems theorists who
perceive changing value systems accompanied by ‘‘a shift from
competition to cooperation. . ., from self-assertion to integration;
from expansion to conservation; from quantity to quality; from
domination to partnership’’ (Capra et al., 1992: p.74). There is a
danger, throughout the debate and dialogue on these issues, to
ascribe rather simplistically the more negatively perceived
attributes to the ‘Western’ model while ascribing positive
attributes to alternative models. While this may be understandable
on the part of some developing world thinkers and writers in the
501
light of colonial domination and later exploitation of the
developing world, it is less than honest in that there is an implied
assumption that there is a single view of development in the ‘West’
(or ‘North’) and that the promotion of integration, conservation,
quality, partnership and other similar values is somehow alien to
the ‘North’ or that its evolution might be traced to the ‘South’. It
also ignores the fact that thinkers in the North who are engaging
with these issues are involved in the same search for a better
understanding of development and how it may be promoted as
thinkers in other parts of the world are.
A core shift in the development debate over the decades, and
one which is not always adequately recognised in the literature,
has been in the location of the debate and in those who are
becoming literate in this debate. Whereas in the past, development
was seen as a major issue for those living in the global South and for
interested elites in the North, there was little effort to engage mass
audiences who were based in the so-called developed world. This
has changed. The fundamental reappraisal and realignment in
thinking on development has worked to make this an area of
interest and engagement for many. While in the North this might
have grown, initially, from the establishment of ‘development
education’ as a means of encouraging a wider audience to take an
interest in issues relating to the South or for influencing the policy
of government, increasing globalisation has ensured that many
people in the North now see the implications for their lives of what
happens in the South, whether this relates to the price of
commodities or to the migration of people. Increasingly multicul-
tural societies, closer trade links and intense debate on issues such
as aid have allowed for a deeper understanding in the North of
issues relating to development in the South. But this same
awareness, nurtured by various global commissions, such as
Brundtland, world conferences and their accompanying debates,
has triggered a far broader debate among the general population
about the nature of development, its promotion and its sustain-
ability (or otherwise). The strengthening of the Green movement
and various popular mass protests on aid, hunger, poverty, or
similar campaigns, such as the recurring G8 protests, have all
played a role in making development an issue for all.
3. A broadened view of development: the human development
concept and the role of education
A key step towards a more holistic and people-centred view of
development was promoted by the United Nations and made
explicit in the publications of that body and its various agencies. For
example, the UNDPs series of Human Development Reports,
commencing in 1990, were ‘‘very influential in terms of shifting
policy debates in the direction of human rights, human needs and
human development’’ (Leen, 1998: p.28). From the outset, ‘‘the first
HDR in 1990 put forward the UNDPs vision of human development
and explained how this was meant to supplement economic growth
rather than replace it’’ (Morse, 2004: p.85). An insight into this more
comprehensive view of development may be gleaned from the
following statement on the concept of human development, taken
from the 1997 edition of the Human Development Report:
The process of widening people’s choices and the level of well
being they achieve are at the core of the notion of human
development. Such choices are neither finite nor static. But
regardless of the level of development, the three essential choices
for people are to lead a long and healthy life, to acquire
knowledge and to have access to the resources needed for a
decent standard of living. Human development does not end
there, however. Other choices, highly valued by many people,
range from political, economic and social freedom to opportu-
nities for being creative and productive and enjoying self-respect
502 P. Cremin, M.G. Nakabugo / International Journal of Educational Development 32 (2012) 499–506
and guaranteed human rights. Income clearly is only one option
that people would like to have, though an important one. But it is
not the sum total of their lives. Income is also a means, with
human development at the end (UNDP, 1994: pp. 13–14).
Since the publication of the first Human Development Report in
1990, ‘‘human development has become the major policy
orientation and significant intellectual synthesis in development
thinking’’ and, ‘‘unlike alternative development, which has found
little institutional support, except in local niches and among NGOs,
human development has found institutional backing in UN and
World Bank circles and developing country ministries’’ (Pieterse,
1997). In a recent review of its contribution to the development
debate, the UN expressed the view that
the first Human Development Report sent a clear message that
human development is about enlarging people’s choices,
allowing them to develop their full potential and lead
productive, creative lives in dignity and in accordance with
their needs and interests. By ranking countries in a way which is
more consistent with this thinking, the HDR report has helped
shift the debate away from gross domestic product (GDP) per
capita as the only measure of development (http://hdr.und-
p.org/en/statistics/data/hdi2008/).
In summary, the UN view is that ‘‘since 1990, the Human
Development Report has provided analysis, set the agenda and
shifted the course and implementation on development policies
worldwide’’ (http://hdr.undp.org/en/statistics/data/hdi2008/).
The concept of human development as illustrated above derives
significant inspiration from the views of development scholars. As
Morse (2004: p.86) observes, ‘‘the notion of ‘human development’ as
espoused by the UNDP took much from the writings of Amartya Sen,
. . .who has been highly influential with his work on poverty’’. Sen
regards development as the expansion of the capabilities of people
to lead the kinds of lives they value – and have reason to value. The
goal of development, in his view, is to increase the possibilities for
more people to realise their potential as human beings through the
expansion of their capabilities by giving them access to opportu-
nities, such as education and healthcare, that would expand their
chances of leading freer and more fulfilling lives:
While economic prosperity and demographic respite help
people to lead freer and more fulfilling lives, so do more
education, health care, medical attention, and other factors that
causally influence the effective freedoms that people actually
enjoy (Sen, 1997: p.21).
The UNDPs concern for human development also led to the
introduction of a new instrument for measuring human develop-
ment, the Human Development Index, or HDI, using life
expectancy, education and income security as the key indictors.
These are now phrased as a long and healthy life, access to
knowledge and a decent standard of living (http://hdr.undp.org/
en/statistics/data/hdi2008/).
In 2008, the UNDP began to publish the HDI online, separately
from the Human Development Reports. Like the annual Reports,
these indicators have helped to reframe the concept of develop-
ment, most especially with regard to how progress can be
measured. In setting a premium on the measurement of
development through the use of indicators other than the likes
of GNP or GDP, the UNDP may have been engaging in veiled
criticism of those agencies which had relied largely on such
measures and on the accompanying assumption that such
measures adequately assessed the welfare of a people or a state.
Taken together, although the Human Development Reports and the
UNDP development indices ‘‘are not the only examples, or indeed
necessarily the best’’ (Morse, 2004: p.84), they have underpinned,
in tangible and measurable forms, the focus on a more holistic and
people-centred view of development.
4. The role of education in the context of human development
Education is one of the original three key indicators in the HDI,
the others being life expectancy and income security. Whereas the
mode of calculation has changed somewhat, the three elements of
the HDI have remained the same since the outset (Morse, 2004:
p.88). Furthermore, since 1990, the UNDP has developed other
measures, including a ‘Human Poverty Index’ and a ‘Gender-
related Development Index’, each of which is designed to address
and assess particular aspects of human development. The Human
Poverty Index is a particularly interesting instrument in that, in
some ways, it represents a contrasting tool to the Human
Development Index.
The contrast between human development and human poverty
reflects two different ways of evaluating development. One
way, the ‘conglomerative perspective’, focuses on the advances
made by all groups in each community, from the rich to the
poor. This contrasts with an alternative viewpoint, the
‘deprivational perspective’, in which development is judged
by the way the poor and the deprived fare in each community.
Lack of progress in reducing the disadvantages of the deprived
cannot be ‘washed away’ by large advances – no matter how
large – made by the better-off people (UNDP, 1997: p.15).
The overall change in the mainstream understanding of
development led to a fundamental review of and change in
approaches to specific areas, such as educational development,
arising from a changing focus on the dignity and worth of the
individual in both development and education, on the role played
by international funding agencies in education and on the
increasing involvement of local communities in the governance
and control of education.
One of the key articles presented in UNICEF’s Adjustment with a
Human Face (1987) focused specifically on education. Writing at a
time of financial retrenchment and in language that has a
particular resonance for the current economic situation, Jolly
argued that ‘‘there is no case in economic logic for cutting back on
this sector’’ (Jolly in Cornia et al., 1987: p.240). What was needed
was not more cutbacks but rather the political commitment and
administrative creativity to sustain and expand the sector despite
financial limitations. It was argued that ‘‘the very constraints of
adjustment policy often set back progress towards . . . broader
education goals and roles, thereby making less effective use of even
those resources which remain committed to education’’ (Jolly in
Cornia et al., 1987: p.233). The author attempted to identify the
priorities for maintaining and restoring the effectiveness of basic
educational provision in developing countries. He argued that ‘‘the
very challenge of bringing human concerns into adjustment policy
should be made into an opportunity for also tackling these
problems of education’’ and proposed that
 curriculum should be made more relevant for social progress,
strengthening linkages between education and the world of
work;
 inflexibly structured systems of fees and subsidies might be
replaced with a focus on equal opportunities for all, with special
financial support for those who need it;
 female participation on a more equitable basis should be
promoted; and
 the wider social and development role of the school system
should be strengthened, making a contribution to adult
 P. Cremin, M.G. Nakabugo / International Journal of Educational Development 32 (2012) 499–506
education and community action and development (Jolly in
Cornia et al., 1987: p.80).
The analysis and debate prompted by UNICEF, through
Adjustment with a Human Face and other publications, as well as
through various international conferences, led other international
agencies to reassess their own views of education and its function
in a development context. The Commonwealth Secretariat saw
education as ‘‘a vision which is placed at the heart of development’’
(Commonwealth Secretariat, 1993: p.5). The OECD claimed that
‘‘while the social and cultural value of education remains
fundamental, today’s knowledge-intensive societies call for a
growing emphasis on education as a key investment’’ and goes on
to give equal weighting to the personal growth of each individual
side-by-side with human resource development in a lifelong
perspective (OECD, 1993: p.9). The balance between social,
personal and economic benefits was to be found in statements
such as the following, which defined educational investment as
an investment that can help foster economic growth, contribute
to personal and social development and reduce social inequality.
Like any investment, it involves both costs and returns. Some of
the returns are monetary and directly related to the labour
market, while others are personal, social, cultural and more
broadly economic. Some returns accrue to the individual while
others benefit society in general, for example, in the form of a
more literate and productive population (OECD, 1993: p.9).
Later OECD statements began to emphasise the merits of
‘‘lifelong investment in human capital’’, arguing that ‘‘investment
in education can have social and economic benefits, through the
development of a greater bank of knowledge and skills, referred to
as ‘human capital’’’ (OECD, 1997: p.29). The publication of the UN’s
Millennium Development Goals (MDGs) (United Nations, 2000)
was an important step in re-affirming a commitment to social
development along with human development as the dominant
paradigm of development. As such, ‘‘the centrality of the MDGs . . .
must be celebrated by all quarters in developing and developed
countries alike because it represents a major step towards placing
real people at the centre of the international community’s actions’’
(Magarinos, 2005: p.80). The global development agenda embed-
ded in the MDGs was rooted in the evolved conception of
development that does not solely rely on economic development to
bring about such improvements as the alleviation of poverty,
better educational standards or improvements in health. The
stipulated goals of eradicating poverty and hunger, achieving
universal primary education and gender equity, reducing child
mortality, improving maternal health, combating HIV/AIDS,
malaria and other infectious diseases and ensuring environmental
sustainability all required a global partnership, embracing multi-
ple disciplines and actors in the formal and informal sectors.
While elsewhere the MDGs have been criticised by various
scholars as an ambitious plan that is unlikely to be achieved by the
set date (Haines and Cassels, 2004), world leaders came together in
New York in September 2008 in a high-level meeting convened by
the UN Secretary-General to renew commitment to achieving the
MDGs by 2015 and to set out concrete plans and practical steps for
action (United Nations, 2008). It was further re-emphasised that
although the eight MDGs were quite interdependent, investment
in education and health would play a major role in the
achievement of all.
5. The benefits of investment in education and the conditions
necessary for maximising its impact on poverty reduction
Prior to the MDGs, the case for investing in education had been
presented strongly, and over a number of decades, by various
503
international agencies, particularly those which are active in
developing countries. While acknowledging that ‘‘it is difficult to
measure accurately the return on human capital investment’’, the
OECD has long argued that ‘‘there is strong evidence of the direct
payoff of such investment to individuals and a growing body of
evidence that there are positive external effects for employers,
communities and whole societies’’ (OECD, 1997: pp. 29–30). The
World Bank has argued that ‘‘the importance of investing in human
capital, especially education, for economic growth and household
welfare is recognized worldwide; this realization has contributed
to unprecedented global increases in schooling in recent decades’’
(World Bank, 1995: p.36). It argued, inter alia, that global economic
and political liberalization combined with technological change
make education increasingly important for economic development
and social cohesion and that instead of focusing so heavily on the
supply of education, more attention should be given to the quality
of learning and its impact on preparing people for employment and
society. There is also a growing consciousness of the waste of
resources represented by the failure to make adequate investment
in the young, and a realisation that the deficit arising can be, and
should be, quantified as a real cost.
Children, whose earliest years are blighted by hunger or disease
or whose minds are not stimulated by appropriate interaction
with adults and their environment, pay for these early deficits
throughout their lives – and so does society. Such children are
far more likely than their more fortunate peers to do poorly in
school, to drop out early, to be functionally illiterate, and to be
only marginally employable in today’s increasingly high-
technology world. Collectively, these children who have been
deprived in early life therefore affect labor productivity and
national economic prosperity (World Bank, 1996a,b: Fore-
word).
Taking up the issue of the societal cost arising from the
individual loss, the OECD argues that ‘‘the cost of not investing in
human capital can be great’’, exposing countries to ‘‘the risk of
entrenched unemployment, greater social exclusion, a mismatch
of job skills and a loss of economic opportunity’’ (OECD, 1997:
p.43).
The close link between development, education, health, and
wealth generation has been argued, particularly strongly, by the
World Bank, which holds that
One of the most important lessons from decades of experience
in development is that there is no more direct road to improving
living standards in developing countries than investing in the
wellbeing of people. Healthy, well-educated people will not
only ensure better lives for themselves and their families but
also contribute to the wealth and progress of their societies.
That is what investing in people is all about, and why ‘human
capital’ are the key words in today’s development economics
(World Bank, 1996a,b: p.47).
International research has established the close connection
between education and income (King, 1980; OECD, 1997; World
Bank, 2006). International comparative studies have found that
higher levels of education result in higher average annual earnings.
In every country studied it has been found that workers with
education tend to earn more than those with less education, with
the wage premium depending on the level of education (World
Bank, 1995: p.39). What is more, unemployment rates are
considerably reduced for university graduates (OECD, 1997: p.32).
The World Bank has attempted to trace the relationship
between education and earnings with a view to quantifying the
returns to education (World Bank, 1995: p.21; 2006: pp. 90–91).
One synthesis of studies in this area, conducted on behalf of the
504 P. Cremin, M.G. Nakabugo / International Journal of Educational Development 32 (2012) 499–506
Bank, concluded that the estimated rates of return are typically
more than 10%, with the highest rates of return coming from
investment in the lowest levels of formal education (Psachar-
opoulos, 1985: p.584). More recent studies of a cross-section of
low-, middle- and high-income countries provided further
evidence that investing in education is a profitable policy option
(Psacharopoulos and Patrinos, 2004 cited in World Bank, 2006: pp.
90–91). This is particularly true of investing in primary education
in low-income countries (see Table 1). The authors note that
‘‘returns decline with the level of schooling – that is, one dollar
spent on primary school provides higher returns than one dollar
spent on higher education – and with per capita income’’ (ibid,
p.91). Other studies also indicate that the rate of return on
women’s education is higher than that on men’s education in most
developing countries (Todaro, 1994: p.371).
Other research has established the link between education and
economic growth (World Bank, 1990: p.80). One study of the
period 1930–1980 found that primary education ‘‘had a significant
positive effect on the economic growth of 110 developed and
developing countries’’ (Benavot in Lockheed et al., 1991: p.3).
Others, having studied the relationship between growth in primary
school enrolment and GNP per capita, have found that for the
period 1850–1960, none of the 34 of the world’s richest countries
had achieved significant economic growth before attaining
universal primary education (Lockheed et al., 1991: p.3).
Investment in education beyond the upper secondary level
resulted in greater increased earnings than a lack of an upper
secondary qualification resulted in decreased earnings (OECD,
1997; World Bank, 2006). Studies in OECD states indicate that
‘‘university-educated women earn 61 per cent more on average in
mid-life than those with upper secondary only’’ while ‘‘those
without upper secondary earn 23 per cent less’’. For men, ‘‘those
without upper secondary education earn between 10 and 38 per
cent less than those who have completed upper secondary
education only, in most countries’’ while ‘‘tertiary graduates earn
significantly more than upper secondary graduates in all coun-
tries’’ (OECD, 1997: p.33).
The principal asset of the poor is labour-time and education can
increase the productivity of this asset. Educated farmers are more
likely than others to adopt new technologies and have been shown
to get a higher return on their land. In the wage sector, the
individual returns to education are consistently above returns to
conventional investments. Even in the non-wage sector, there is
some evidence to show that poor, self-employed people have a
wider and more profitable range of earning options when they
have had a basic education. Lastly, educating the children of the
poor greatly increases their chances of escaping poverty (World
Bank, 1990: p.80). Clearly, this is appreciated by parents in low-
income countries. It has been noted that households are prepared
to invest in human capital, even in those low-growth environ-
ments that scare off private investment, and that households are
prepared to invest in schooling, even when it does not translate
into higher levels of labour productivity, because the other benefits
that education provides are valued (World Bank, 1995: p.21).
Table 1
Returns to investment in education by level.
Country group Social returns to education investments, %
Primary Secondary
Low-income countries 21.3 15.7
Middle-income countries 18.8 12.9
High-income countries 13.4 10.3
World 18.9 13.1
Source: Psacharopoulos and Patrinos (2004) in World Bank (2006: p.91).
The UNDP has argued that basic education is one of ‘‘the most
powerful forces for growth’’ and has extolled the ‘‘high rates of
return to these investments, especially for girls’’ (UNDP, 1997: p.8).
The World Bank has given its support to this view, stating that
‘‘there is now wide recognition that investing in girls’ education is
one of the best investments a society can make in its own
development’’ (World Bank, 1997a,b: p.19). For example, educa-
tion increases a woman’s ability to participate in society and to
improve her quality of life and standard of living (UNDP, 1995:
p.110). The literature has strongly linked a mother’s schooling with
the health status and survival of her children (Pitt, 1995: p.1). Girls’
education contributes to better family and child health as well as
greater social cohesion (Koch-Weser, 1996). Wedgwood (2007:
p.385) notes lower levels of fertility among women with secondary
education in Dar es Saalam, as compared to their rural counterparts
with the same level of schooling but attributes the difference not to
education, but to greater levels of poverty in the rural areas.
Women, as workers, parents, partners and mothers, are at the
centre of the cycle of development.
In those parts of the world where developed human capital is
scarce, there is a relatively high return to growth from investment
in education, as compared with more developed countries which
possess a more abundant human capital as a consequence of a
longer education tradition and higher levels of participation. Cross-
country data comparing long-run (1960–85) growth rates in GDP
per worker with estimates of the accumulation of physical capital
and of years of schooling of workers have been studied in relation
to 63 low- and middle-income countries. This research has
indicated a loose link between growth and the number of years
of workers’ schooling. While there are differences between regions,
it was found that education can contribute strongly to aggregate
output as measured in GDP (World Bank, 1990: p.80). One
summary of this research found that education is ‘‘positively
correlated with overall economic growth, with one year of
additional schooling of the labor force possibly leading to as
much as a 9 percent increase in GDP for the first three years of
schooling and to 4 percent a year for the next three years’’
(Summers, 1994: Foreword).
While a positive relationship between investment in education
and growth in output per worker has been identified, the
relationship between investment and productivity growth is not
guaranteed. There is ‘‘no automatic link between growth and
human development’’ (UNDP, 1996: p.1). There is also the problem
of negative growth. While the world’s annual growth rate,
measured in GNP per capita, progressed from a rate of 2.4% for
the period 1965 to 1980, to a rate of 3.3% for the period 1980 to
1991, the corresponding rates for Sub-Saharan Africa regressed
from 1.5% to 1.1% in the same respective periods, with
detrimental implications for education (UNDP, 1994: p.183).
In the context of limited resources, there is also a consciousness
of the fact that education systems can squander resources or
misapply them. Increasingly, there is a view, benefiting from
hindsight, which finds that in the past, ‘‘only a small proportion of
aid has gone to the most critical inputs, such as educational
materials and teacher training’’, and an accompanying determina-
tion to ensure that, for the future, where aid is provided, it is
allocated to the inputs which are most cost-effective (Lockheed
et al., 1991: pp. 210–214). Increasingly, organisations such as the
World Bank are looking to the results of research on school
effectiveness with a view to identifying the policies, approaches
Higher and inputs which can increase efficiency while at the same time
maximising learning (Lockheed et al., 1991). While recognising the
11.2
11.3
reality of the possible misdirection of scarce resources in some
9.5 countries, the notion that investment in education might be a
10.8 waste of a valuable resource seems to arise, in part, from the more
utilitarian view of education that used to be found in some World
 P. Cremin, M.G. Nakabugo / International Journal of Educational Development 32 (2012) 499–506
Bank reports, where the focus is on education for employment,
rather than for personal satisfaction or development.
Education is essential for raising individual productivity.
General education gives children skills that they can later
transfer from job to job and the basic intellectual tools
necessary for further learning. It augments the ability to
perform standard tasks, to process and use information and to
adapt to new technologies and production practices (World
Bank, 1995: p.36).
Education systems are undoubtedly crucial in equipping all
people with the skills and competencies to play an active role in
society and in the economy. However, education also has much
broader functions which impact on the quality of society and the
capacity of a society to successfully govern itself. Research, based
on studies in Italy and in Tanzania, indicates that governments
perform better where they are subject to the pressures generated
by networks of civil associations and by citizens who are active in
local public affairs (World Bank, 1997a,b: p.115). Equipping people
with the skills for participation in society may also contribute to
their financial well-being. Village studies in Tanzania found that
households in villages with high levels of social capital (defined in
terms of the degree of participation in village-level social
organisations) have higher adjusted incomes per capita than
households in villages with lower levels of social capital. This
research also suggested a linkage between social capital and the
quality of local schooling.
As a consequence of the drive to greater efficiency and
effectiveness, it has been argued that ‘‘in the wrong environment,
investments in people may only yield misspent or idle resources’’
(World Bank, 1995: p.36). It is argued, for example, that
excessive spending on education bureaucracies and school
infrastructure, rather than on teaching staff and supplies,
depresses the quantity and quality of schooling. So do poorly
trained teachers and failure to set high standards for students.
Finally, human capital tends to be relatively unproductive
where the skills acquired in school do not match market
opportunities, or where higher education is promoted at the
expense of primary and secondary schooling (World Bank,
1995: p.37).
Viewed from the perspective of some development economists,
the drive towards Universal Primary Education (UPE) has been ‘‘a
politically sensitive, but often economically costly, sacred cow’’
(Todaro, 1994: p.365). Todaro notes that ‘‘in many developing
countries, formal education is the largest ‘industry’ and the
greatest consumer of public revenues’’, pointing out that ‘‘educa-
tion absorbs the greatest share of LDC recurrent government
expenditures, occupies the time and activities of the greatest
number of adults and children (almost 30% of Third World
populations), and carries the greatest psychological burden of
development aspirations’’ (Todaro, 1994: p.364). He argues that
‘‘many of the early claims made on behalf of the unfettered
quantitative expansion of educational opportunities . . . have been
shown to be greatly exaggerated and, in many instances, simply
false’’ (Todaro, ibid.). This perspective points to the alleged failures
of formal educational systems (‘‘that it would accelerate economic
growth, that it would raise levels of living especially for the poor,
that it would generate widespread and equal opportunities for all’’,
etc.) and challenges educators to answer the charge that ‘‘after
more than three decades of rapidly expanding enrollments and
hundreds of billions of dollars of educational expenditure, the
plight of the average citizen in many parts of Asia, Africa, and Latin
America seems little improved’’ (Todaro, ibid.). Drawing on
evidence which suggests that it is the quality of education (the
505
quality of teaching, facilities and curricula) and not its quantity
which contributes to improved earning power and productivity,
Todaro argues that governments ‘‘should deepen the investment in
human capital rather than extend it to more people’’ by doing
‘‘more to upgrade existing schools and less to expand the number
of school places’’, even though he acknowledges that this raises
serious equity issues (Todaro, 1994: p.370).
6. Conclusion
Fifty years ago, ‘‘development focused on only one objective:
increasing GDP’’, while ‘‘economists and policy-makers viewed
capital accumulation as all that was necessary for growth’’ (Stiglitz,
1997). Dominant economic theories asserted that the generation of
wealth through growth would eliminate mass poverty and its
attendant problems. Experiences of growth, however, failed to
deliver the anticipated gains (Cremin, 1999).
Changing concepts of development have led to an appreciation
of the holistic nature of development. It is acknowledged that
sustainable economic development cannot be achieved without
social development and human development, and that such
development depends, inter alia, on progress towards universal
education with equitable access and assured quality. In this
context, the education of women is particularly critical. Education,
and particularly literacy, contributes to health gains, lower
fertility, improved infant survival, higher labour productivity, as
well as more rapid GDP growth, but also makes a contribution to
social integration through equipping individuals for participation
in all aspects of social, political, economic and cultural life (United
Nations, 1990: 247). Education is both a goal of development and a
means to its achievement.
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