Public Investment in Education: Benefits, Challenges and Opportunities

Abstract

The chapter undertakes an analysis of public investment in education in Sri Lanka. Several dimensions of education benefits are examined within an econometric framework. These include the returns to education investment, the association between education and economic welfare, inter-generational benefits of investment in education and the promotion of gender equity, and the relationship between education and poverty reduction. The economic and social benefits of education are shown to be high. Next, several dimensions of public investment in education are analyzed. These cover the time trend of education investment, international comparisons of investment in education, and the pattern and composition of education expenditure. Over the period of the study public education expenditure is shown to have been low. The negative consequences of low investment in human capital is discussed. This is followed by an analysis of the institutional framework for the delivery of education services, and the incentives for performance in the system. The paper then studies the equity of public investment in education, which is shown to be high. The analysis concludes by recommending increased public investment in education, as it both yields strong economic and social benefits and enhances equity.