Chapter 8
Basic Objectives of Development:
1. Education
- Essential for satisfying and
rewarding life.
- Plays a key role in the ability of
a developing country to absorb
modern technology and self-
sustaining growth and
development.
2. Health
- Is central to well-being.
- A prerequisite for increases of
productivity, and successful
education relies on adequate
health.
Note:
 Both are fundamental to the
roader notion of expanded
human capabilities that lie at
the heart of the meaning of
development.
 They are vital components of
growth and development.
 The distribution of health and
education within countries is as
important as income
distribution; life expectancy
may be quite high to better off
people in developing countries
but lower for the poor. That’s
why child mortality rate remain
more than 10 times higher than
rich countries.
Literacy – the ability to read and write.
Human Capital
- Productive investment
embodied in human person.
- The skills, knowledge, and
experience possessed by an
individual.
- The term economists often use for
education, health, and other
human capacities that can raise
productivity when increased.
Higher household income is no
guarantee of improved health and
education.
Health and education are two
human capital issues and if not
treated or invested equally health,
education, income, wealth may be
distributed unequally.
Also, improved health and
education help families escape
some of vicious circles of poverty.
Therefore, investing in human
capital has to be undertaken with
both equality and efficiency to a
better effect on income.
Health and education are
investment made in an individual.
Greater Health Capital may raise the
return on investment in education
because:
 Health is an important factor in
school
 Healthier children are more
successful
 Longer life span
 Healthy individuals are more
productive.
Greater education may raise the return
on investment in health because:
 Health programmes rely on skills
learned in school
 Teaches basic hygiene and
sanitation
 Education delayed childbearing,
which improves health.
 Education raises the return on a
lifelong investment in health.
 Health and education levels
improved in developed countries
but it is measured that developing
countries have improved more
rapidly.
Health and education level is high-
income countries are much higher
and believed to have a good effect
because a higher income means
people and government can afford
to spend on education and health
and great health and education
means higher productivity which
leads to a higher income also.
Increasing income does not lead to
substantial increase in investment in
children’s education and health
because of two factors:
 Income is spent on other goods,
beside food.
 Part of the increased food
expenditure is used to increase
food variety without necessarily
increase the consumption of
calories
Discount rate
- In present value calculations,
the annual rate at which future
values are decreased to make
them comparable to values in
the present.
Social Cost of education
- Costs borne by both the
individual and society from
private education decisions,
including government
education subsidies.
Private costs of education
- The costs that accrue to an
individual economic unit.
- Payments made by parents for
tuition fees, registration, uniforms,
etc.(cost incurred by parents or
firms)
Social Benefits of Education
- Reduce crime and violence
- Broaden minds and visions
Private Benefits of Education
- Greater employment stability
- Greater upward mobility in income
Child Labour
- Widespread phenomenon
- When an individual under the
minimum age for work is
engaged in a work that threat
their health, safety, morals or
subject to forced labor.
- Takes away the childhood of a
child
Poverty is the reason why child labour
exist. When families cannot afford to
meet the basic necessities, they send
their child to word to supplement
household income.
International Labour Organization (ILO)
- United Nation agency who
mandate to advance social and
economic justice by setting
international labour standards.
- -they played a leading role on
child labour issue.
Worst forms of child labour:
 Selling a child
 Slavery – a child is owned by
someone and made to work for
another person without having any
say.
 Sexual Exploitation – sexual
activities exchange for money
 Trafficking - the recruitment of
child to work away from home and
his family
 Serfdom – forced to live and work
on a land with little to no pay
 Debt Bondage – a forced labour.
This is when a child work to pay off
debt.
Note:
Child labour is not an isolated
problem but a widespread one.
An immediate ban on all forms
of child labour is always in the
best interest but without work:
 Child may be severely
malnourished
With work:
 Can pay off school fees
 Afford basic nutrition
 Health care
Multiple Equilibria
- a one set of circumstance which
both the child labourer and the
family may be ambiguously better
off with a ban
- Kaushik Basu has provided an
analysis on this where he made 2
important assumptions.
2 Assumptions for modeling Child parents and children
Labour with Multiple Equlibria: working on the streets.
1. Luxury Axiom: Household with
sufficiently high incomes would not 4. Banning child labour in its most
need to send children to work. abusive forms
-associated with ILO, favors
2. Substitution Axiom: child and banning child labour and if not in
adult labourers are substitutes, its abusive form sale of children,
and adults are actually more child prostitution and other illicit
productive than child. Adults can activities that harm the child’s
do any work that children can do. health, safety or morals.
(This not just an assumption, it is
also proven to be true according to 5. Imposition of trade sanctions
the studies of the productivity of against countries that permit
children in many countries) child labour or ban the goods on
which children work. (Good
4 Approaches or Policies to Child intention but if children can’t
Labour work in formal sector, they
1. Child Labour as an expression might have to work in informal
of poverty sector where conditions could
-put an emphasis on eliminating be worse)
poverty rather than directly
addressing child labour. Note: Approach number 5 is imposed by
activist in developed countries and not by
2. Get more children into school a formal organization or agency.
-recommend that expanding
school places and giving Educational Gender Gap
conditional cash transfer (CCT) to - male-female differences in school
persuade parents to send their access and completion
children to school. - evident in least developed
-more effective approach than countries in Africa like Niger, Mali,
making basic education and Benin
compulsory because without
complimentary policies, parents Young females receive less education
will still send their children to work. than young males in developing countries
and due to this educational discrimination
Conditional Cash Transfer (CCT) against women, economic development
program shows a slow progress.
-aims to reduce poverty by
making welfare benefits Closing Education Gender Gap is
provided conditionally on family economically desirable because:
behavior. 1. The rate of return on women’s
-cash transfer to assist families education is higher than on men’s
living in poverty in most developing countries.
2. Education for women increases
3. Child labor is inevitable in the productivity and lowers fertility and
short run improves a child health and
- -associated with UNICEF knowledge because of having an
and recommends to educated mother.
expand educational 3. Education for women has an
opportunities, encourage impact on breaking poverty and
strict law enforcement inadequate schooling.
against illegal child labour,
and provide support for
 Discrimination in Health care is
also experienced by girls in
developing countries.
Health spending on men is higher
than on women
Female Genital Mutilation – a health and
gender tragedy that is mostly practiced in
Sub-Saharan Africa and Middle East that
violates the rights of the women.
Discrimination against girl in
education is inequitable and very
costly in achieving development
goals.
It has been shown that education
of girls is one of the most cost-
effective means of improving local
health standards.
Expansion of Basic education of
girl earns the very highest rates of
return of any investment – much
higher than infrastructure projects.
Greater education for mothers
improves the prospect of the
child’s health and education. But
higher income in family do not
automatically improved health
status and educational attainment.
Private Benefits – the benefits that
accrue directly to an individual economic
unit. Not share to the public.
Derived Demand – demand for a good
that emerges indirectly from demand from
another good.
Educational Supply and Demand:
- the relationship between
employment opportunities and
educational demands
Demand Side:
a) More educated student’s prospect
to earn more income through
modern sector employment.
(Private benefit)
b) The educational cost that student
or family must bear. (Derived
Demand) = Access to job is
determined by an individual’s
education
Supply Side:
a) Quantity of school places at the
primary, secondary, and university
level is determined by political
process.
Amount of schooling demanded to
qualify an individual for modern sector
job is determine by 4 variables:
1. Wage or Income differential
2. Probability of success in finding
a modern sector employment
(Employers tend to hire those with
highest education even if that level
is not needed for job)
3. Direct Private Cost of Education
(costs taken on by families like
tuition fee, books, etc.)
4. Indirect or Opportunity Cost of
Education (cannot be readily
identified)
Social Benefits of Education
- Benefits of the schooling of
individuals, including those that
accrue to others or even to the
entire society.
- Benefits of a more literate
workforce and citizenry
Education Certification
- Particular jobs require specified
level of education.
- Government and formal-sector
private employers in many
developing countries tend to
reinforce this trend.
Basic education
- The attainment of literacy,
arithmetic competence, and
elementary vocational skills.
Operating for over education in
developing countries should not
lead us to despair over the
possibility of fostering development
through greater education.
In developed countries,
educational benefits are broadly
available to the economy or to the
poor and rich, in rural and urban
areas.
Education Distribution in Developing
Countries:
 Focus on big subsidies and higher
education
 Educational benefits go to elites
 System of educational
advancement and selection is
sometimes based not on merit but
on family wealth
Remember: A nation’s educational
system can be improved or worsen
income inequality depending on how it is
designed and financed. Levels of income
are clearly dependent on the years of
completed schooling.
World Health Organization (WHO)
- The key UN agency concerned
with global health matters.
According to them, health is
- a state of complete physical, mental,
and social well-being and not merely
the absence of disease and infirmity.
Disability-Adjusted Life Years (DALYs)
- an alternative measure of health
promoted by the WHO to help quantify
the burden of disease from morbidity
as well as from mortality.
 One DALY = one lost year of
“healthy” life.
Developing Countries faces a far
more crippling disease burden
especially regarding infectious
diseases than developed countries
because they already live in a
situation compounded with by
infectious diseases.
Malnutrition – a form of diseasing that is
particular among children.
Health Challenges faced by Developing
Countries:
 Malnutrition
 AIDS
Malaria
 Tuberculosis
 Cholera
 Dengue
 Leprosy
 Hepatitis
 Ascariasis
 Acute Respiratory Infection
Deadly interaction of diseases:
 Malaria and Acute Respiratory
Infection
 Aids and Tuberculosis
Integrated Management of Childhood
Illness (IMCI) programme
- Implemented by WHO and other
national/international health
authorities to address the problem
of ARI, malaria, malnutrition, and
measles.
- Aimed at improving the training
and performance of national health
organizations and personnel in
disease prevention and the
treatment of sick children.
Poor Sanitation – one of the root causes
of the burden of disease.
3 major infectious diseases faced by
developing countries are:
 AIDS
 Malaria
 Parasites
Human Immunodeficiency Virus (HIV)
- Virus that causes the AIDS.
Acquired Immunodeficiency Syndrome
(AIDS)
- Viral disease transmitted
predominantly through sexual
contact.
- Transmitted primarily through
heterosexual intercourse, contact
with infected blood and drug
needles, and perinatal
transmissions.
- AIDS was widely perceived as a
disease of developed countries,
- Primarily affecting men who have sex
with men.
- the leading cause of death of adults
Malaria
- Lowers productivity and can
possibly reduce growth rates.
- Victims tend to come from low-
income countries.
-
WHO’s Roll Back Malaria Partnership
- seeks to eradicate malaria
Parasitic diseases plaguing people in
the developing world:
Schistosomiasis
- also called bilharziasis, or snail fever
- Cause by waterborne flatworms
(bloodflukes) called schistosomes.
- Can result to liver and kidney
damage and causes bladder-
cancer.
African Trypanosomiasis or sleeping
sickness
- parasites (Trypanosoma) are
protozoa transmitted to humans by
tsetse flies.
Aventis Pharma provided 3 key drugs
essential to treat sleeping sickness:
PENTAMIDINE, MELARSOPROL, and
EFLORNITHINE
Neglected Tropical Diseases
- Thirteen treatable diseases, most
of them parasitic, that are
prevalent in developing countries
but receive much less attention
than tuberculosis, malaria, and
AIDS.
Policies and Programmes to Improve
Physical and Mental Health:
 Combining financial with psycho-
social support
 Deterring Violence and Criminality
with Psycho-social Interventions
 The Importance of Being Reminded
 Providing self-commitment
opportunities
Do poor health conditions in
developing countries also harm the
productivity of adults? The answer
appears to be yes.
Studies show that healthier people
earn higher wages.
Higher productivity of healthier
workers allows them to get better-
paying jobs.
Robert Fogel (Nobel Laureate)
- Argued that stature is a useful
index of health and general well-
being of a population.
- Has found that increases in height
in developing countries means
improvement in health conditions.
John Strauss and Duncan Thomas
- Found that taller men earn more
money in Brazil.
- Conclude that health and nutrition
do increase productivity, with the
greatest improvements occurring
for those who are initially least
educated and poorest.
Health and nutrition do affect
employment, productivity, and
wages, and very substantially so
among the poorest of the poor.
This finding magnifies the policy
priority of health in development;
health is not only a major goal in
itself, but also it has a
significant impact on income
levels.
A healthy population is a
prerequisite for successful
development.
Health System
- All the activities whose primary
purpose is to promote, restore,
or maintain health.”
- Include the components of
public health departments,
hospitals and clinics, and
offices of doctors and
paramedics.
5 performance indicators to measure
health systems in the 191 WHO
member states:
1. The overall level of health of the
population
2. Health inequalities within the
population
3. Health system responsiveness
4. The distribution of responsiveness
within the population
5. The distribution, or fairness, of the
health system’s financial burden
within the population.
An effective government role in health
systems is crucial for at least four
important reasons:

1. Health is central to poverty

alleviation
2. Households spend too little on
health
3. Market would invest too little in
health infrastructure
4. Public health programmes in
developing countries have proven
many successes

Remember: The Health of people is

always a nation’s priority: government
responsibility.

Conclusion:

Health and education play pivotal

roles in economic development,
both as inputs into production
enabling higher incomes, and
outputs directly affecting human
well-being.

Many health and education

problems plague developing
countries, ranging from child
labour to heavy disease burdens.
Education and health will not
always automatically improve with
higher incomes. And market
failures mean that too few
investments in education and
health will be made from the social
point of view.

Moreover, the wrong kinds of

government policies have
sometimes led to distortions in the
educational systems that have
reinforced inequality; and
inequities in health systems are
common. Thus, government plays
an essential role in health and
education and in most developing
countries considerable
improvements in policy are needed

1. What reasons would you give
for the rather sizeable school
dropout rates in developing
countries? What might be done
to lower these rates?
2. What are the differences
between formal and non-formal
education? Give some
examples of each. (Formal
Education is everything learned
from the academe or
classroom, informal education
on the other hand, is something
learned from real life
experiences)
3. It is often asserted that
educational systems in
developing countries, especially
in rural areas, are unsuited to
the real social and economic
needs of development. Do you
agree or disagree with this
statement? Explain your
reasoning.
4. How would you explain the
fact that relative costs of and
returns to higher education are
so much higher in developing
than in developed countries?
5. What is the supposed
rationale for subsidising
higher education in many
developing countries?
Do you think that it is a
legitimate rationale from an
economic viewpoint? Explain
your answer.
6. Early-childhood environmental
factors are said to be important
determinants of school performance.
What are some of these factors, how
important do you think they are, and
what might be done to ensure that
these factors are not negative?
7. What do we mean by the economics
of education? To what extent do you
think educational planning and policy
decisions ought to be guided by
economic
considerations? Explain, giving
hypothetical or
actual examples.
8. What is meant by the statement,
“The demand for education is a
’derived demand’ for high-paying
modern-sector job opportunities”?
(Access to such job is determined by
an individual’s education)
9. What are the links among
educational systems, labour markets,
and employment determination in
many developing countries? (Having a
higher level of education increases the
likelihood of being employed)
.
10. Distinguish carefully between
private and social benefits and costs of
education. What economic factors give
rise to the wide divergence between
private and social benefit-to-cost
valuations in most developing
countries? Should governments
attempt through their educational and
economic policies to narrow the gap
between private and social valuations?
Explain.
11. Describe and comment on each of
the following
education development relationships:
a. Education and economic growth:
does education promote growth?
How?
b. Education, inequality, and poverty:
do educational systems typical of most
developing countries tend to reduce,
exacerbate, or have no effectbon
inequality and poverty? Explain with
specific
reference to a country with which you
are familiar, or investigate.
c. Education and migration: does
education stimulate rural–urban
migration? Why?
d. Education and fertility: does the
education of women tend to reduce
their fertility? Why?
e. Education and rural development:
do most formal educational systems in
developing countries contribute
substantially to the promotion
of rural development? Explain.
12. Governments can influence the
character, quality, and content of their
educational systems by manipulating
important economic and noneconomic
factors or variables both outside of and
within educational systems. What are
some of these external and internal
factors, and how can government
policies make education more relevant
to the real meaning of development?
and weaknesses of these
approaches? (Child l
20. What are the relationships
between health and education on the
one hand, and productivity and
incomes on the other? (Healthier
children are more successful and
productive. A productive individual
means greater income.)

21. What can governments do to make

13. What explains the large gains in
health and education in recent
decades? (Education create an
opportunities for better health and it
also develops one skills to daily living
health systems more equitable?
(Investing in health education,
addressing income inequality)

14. Why are health and education so

closely linked in the development
challenge? (Because they are both join
investments fro development)

15. What are the most pressing health

and education challenges today? What
makes them so difficult to solve?
(Preparation for Epidemics and don’t
have a full access to health care and
education for those people in a worst-
off situation.)

16. What makes for (a) a good and fair

health system and (b) a good and fair
education system?
(It is a good and fair health system if it
is effective, equitable, and efficient)
(Everyone has the access to
education, no discrimination among
men and women)

17. What are the consequences of

gender bias in health and education?
Can a large gap between male and
female literacy affect development?
Why? (It will lead to exposure to
violence, discrimination, and
socioeconomic inequality)

18. What is the human capital

approach to health and education?
What do you think are its most
important strengths and weaknesses?
19. What are the strategies being
discussed to address the problem of
child labour? What are the strengths