Investing in Education Is the Most Effective Way to Reduce Poverty Essay

â€Å"Investing in education is the most effective way to reduce poverty† In many ways this is a difficult statement to assess. There is no doubt that education is a key initiative in the reduction of poverty. Whether it is the most effective is harder to say for sure. We can easily confirm correlation in the relationship between reduced poverty and increases in factors such as education and health. However it is no simple task to measure and compare the level of impact a component such as education has on poverty. There are many factors and variables that influence the poverty of a country and many of these factors influence one another, strengthening or weakening their individual effects and implications. However after researching the topic I feel I agree with the statement. Before I continue to argue my stance on the title statement I will discuss the basic problem of poverty and the accepted policies and solutions. Poverty is arguably the greatest obstacle facing developing countries in the world today. Poverty can be defined in two ways; absolute poverty and relative poverty. The absolute poverty of a country relates to the number of people who have a standard of living below a certain level. In essence it is a person’s inability to command sufficient resources to satisfy basic human needs. This quantity of resources is called the poverty line. Relative poverty on the other hand refers to the income share of the poorest section of society (Tara Mitchell, 2012). Absolute poverty can be abolished by directly raising the living standards of everyone in a country above the established level – poverty line. Relative poverty however can only be combatted by reducing the gap between the rich and the poor so that the poorest section of a society receives an acceptable percentage of the total income. In other words inequality is the obstacle to overcome. Growth is the key initiative in ending absolute poverty in developing countries. Aid can be supplied to help boost living standards temporarily but growth and development allow countries to support themselves. Growth has a positive correlation with reduction of absolute poverty. Investment in areas such as education, health and gender equality induce growth within early stage developing countries (World Health Organisation, 2008). It is not as clear with relative poverty as it is a share of total income received by the poorest section of society. It can only be reduced not eradicated, by lowering inequality. However many experts differ in opinion on whether reducing inequality has a positive effect on growth. There are two main types of inequality. The first, structural, which relates to historical factors of social divide and infrastructure is definitely bad for growth, as it confines people to predetermined sectors with no drive to innovate. The other type, Market inequality has a much more ambiguous relationship with growth. Some argue that inequality is necessary for growth as there are incentivises people to achieve more. In terms of the most extreme poverty and basic growth, the reduction of inequality seems to be a positive approach (M. Ravallion, 2005) Health and education are important objectives and components of growth and development. For developing countries these two objectives are pivotal in the early eradication of poverty. There is a positive correlation between the number of years of schooling and both income and growth (Cohen & Soto, 2007). In terms of health (which is usually measured in life expectancy at birth or daily per-capita calories) there is also a positive correlation with increases in income (Heston, summers & Aten, 2006). This increased income and/or growth would be seen as direct reduction in poverty. It is difficult to determine whether health or education has a stronger effect on income. This is because they are both heavily intertwined and overlap in many regards. It is found that increased investment in health boosts education and vice versa (Bloom, 2007). In Miguel and Kremer’s 2004 paper they examine the effect of de-worming programs on Kenyan primary school kids. The investigation, which randomized more than 75 schools, shows that the de-worming lowered absenteeism from school by one-quarter in the treatment group and also improved health and school participation in students who were not included in the program (Miguel & Kremer, 2004). In 2005 at the UN’s World Summit, the international community pledged half the number of people living in extreme poverty by 2015 outlining the Millennium Development Goals (MDGs). These are a series of eight dead lined targets, most of which aim to eradicate the root causes of poverty worldwide. These goals highlight the main forms in which poverty appears hunger, education, inequality and various health related problems. These are therefore the main areas that investment is made to reduce poverty (UNFPA, 2005). The eight MDG’s are: eradicating extreme poverty and hunger, Achieving universal primary education, promoting gender equality and empowering women, reducing child mortality rates, improving maternal health, combating HIV/AIDS, malaria, and other diseases, ensuring environmental sustainability, and developing a global partnership for development. Looking at these MDG’s, which area of investment would be most effective in reducing poverty? You can see from the above goals that health is a dominant issue, as many of the goals can be attributed to health deficiency problems. It is also true that hunger is maybe the most important and fundamental form of poverty and so must be invested in foremost. Strong investment in improved agriculture practices and technology can stabilise extreme hunger and famine. Gender equality is vital for general welfare of all people but it also gives women an equal control within marriages and families helping to reduce birth rates and HIV levels. When women can negotiate their reproductive health decisions with men, this gives them greater rights and increased decision-making in families and communities that benefits all. This enables people to have fewer children and helps to stimulate development. The average per-capita income increases, as families are smaller and income is shared. Also countries with the most rapid increases in population and the high fertility levels generally have the highest poverty levels (UNFPA, 2005). In my opinion education is the most effective investment. As well as being a major component of growth and development it also provides a foundation for all the other battles against poverty. Health and education are invariably interconnected. Educating and informing people to learn about and maintain their own health is as important as the medicine and infrastructure provided. It also provides an educated population to provide future health resources. Education also gives sustainability to policies aimed at eradicating hunger and starvation e.g. modern agricultural methods. A well founded education system is a platform to give men and women the knowledge and information needed to combat overpopulation and the spread of crippling diseases such as HIV/AIDS. In any form method of fighting poverty the quality is just as important as quantity. There is little point in continued investment in these areas if there are not efforts made to remove and improve on the current inefficiencies. With both education and health many problems have arisen from poor implementation of programs. The lack of fine and accurate systems has seen a lot of invested resources squandered. Absenteeism has been the plight of both health and education efforts in developing countries consistently worldwide. In Uganda 27% of teachers were found to be absent on a daily basis. Likewise, in Indonesia, 40% absenteeism in primary health clinics was occurring daily (Pratham, 2006). Furthermore, even teachers who attend may not actually be in class; in India, only two-thirds of teachers present in school were actually teaching (Kremer et al, 2004). So what is going wrong? Firstly, there doesn’t seem to be any strong repercussions for teachers with poor attendance. In a survey of 3000 Indian government schools astonishingly only one school reported firing a teacher for poor attendance (Pratham, 2006). There are certainly systems in place whereby theoretically, supervisors record absences and deal out punishments accordingly. Some even implemented this on an incentivised reward and punishment basis. However most studies reflect that schemes implemented with a supervisor making judgements at his/her own discretion, do not work. This may seem like a more feasible system, allowing a human element to determine the severity or genuine nature of the reasons for absent teachers. But absences in local communities responsible for self-monitoring and accountability were simply not reported (Pratham, 2006). It is evident that institutions providing public services are very complex and focusing on the details counts. Governments and organisations involved in these areas have to continuously adapt and innovate the systems to fit there region, country and people. There are systems that do appear to be working. They are most notably impersonally monitored and accounted. One study in Rajastan, India where machines were used to check teachers in and provided an incentivised pay system based on attendance with external monitoring. This cut the growing problem with attendance in half (Seva Mandir, NGO). Surprisingly some of the most successful systems are not teacher incentivised. For example a girl’s scholarship program run in Kenya offered scholarships based on high test scores. The result showed a large academic improvement throughout the age group, even boys not included in the scholarship improved their marks dramatically. There was also a significant rise in attendance of teachers, though causality cannot be guaranteed, this is presumably due to increased student motivation to learn (Kremer, Miguel, & Thornton, 2007) Often the most absentee reducing methods are found to be the most cost effective also. What is for certain is that supervisors cannot be allowed discretion to determine rewards. The system must be impersonal. Successful application of such systems can be found in Brazil and Mexico. In Brazil it is known as conditional cash transfer (CCT), this idea was based on Mexico’s original Progressa system. It provides financial support to families for food, school and medical expenses and is weighted dependant on the attendance level (Economist, 2005). Another system known as â€Å"local accountability with teeth†, where locals have the authority to hire and fire themselves has also a lot of potential and most importantly it reduces cost of financial incentive (MIT, 2010). This problem has been subject to great debate and investigation amid governments and agencies involved with the reduction of poverty in the developing world. It is widely acknowledged that improvements in the absentee rate in both schools and health care centres would lead to better living standards in struggling countries. A 2008 study showed that when teacher attendance rose from 58-79% this coincided with a 7% point increase in the number of girls able to write (Duflo, Hanna & Ryan, 2008). However it is not as clear if amendments to absentee levels in healthcare lead to more patients attending clinics (Bjorkman & Svensson, 2007). According to a similar surprise survey visit to schools and healthcare centres on India, Bangladesh, Indonesia, Uganda, Ecuador and Peru checking up on attendance changes and their affects, the results showed a doubling of the country’s GDP resulted in an 8% pt. decline in education absences and only a 3.8% pt. fall in healthcare absences(Chauhury et al, 2006). This shows that whilst health and education both have positive responses to improved attendances, education changes have a stronger positive relationship with GDP (Income) than the health attendance changes. Having read and studied a number of papers and articles on the issue, I am of the opinion that investment in education is the most effective way to reduce poverty. Whilst health issues dominate the main forms that poverty appears in, I feel that a sustainable and affective health system can only be established after there is a strong foundation of education already in place. The same can be said for all problems associated with poverty and so the returns on education investment are wide reaching and long lasting. Education also has a more effective response to investment and absentee improvements than health. It is the basis for a countries future stability; every developed country in today’s world has a strong education system right up to 3rd level. It is crucial investment needed by developing countries to have and advance basic education services to help build all facets of a countries growth. With a more educated population the problems at the roots of poverty can be tackled. Starvation, disease, gender equality, income and the overall quality of life can improve and be maintained without external aid. This is why I think the statement is correct that investing in education is the most effective way to reduce poverty. Bibliography: * Lecture slides EC3040A, Tara Mitchell, 2012 * Human Rights, Health & Poverty Reduction Strategies, World Health Organisation; 2008 * Reducing Poverty and achieving Sustainable Development, United Nations Population Fund, 2005 * Growth and human capital: good data, good results, D.Cohen & M. Soto; 2007 * Penn World Table, version 6.2, Centre for International Comparisons of Production, Income & Price; A. Heston, R. Summers, & B. Aten, 2006 * Inequality is bad for the poor, M. Ravallion, World Bank, 2005 * Education, Health and Development, D. Bloom; 2007 * Fighting Poverty: What Works? Pratham; 2006 * Missing in action: Teacher and Health work absence in developing countries, N. Chaudhury, J. Hammer, M. Kremer, K. Muralidharam & F. Halsey Rogers; 2006 * Power of the people: Evidence from a randomized field experiment of a community based monitoring project in Uganda, M. Bjorkman & J. Svensson; 2007 * Incentives to Learn, M. Kremer, E. Miguel, R. Thornton; 2007 * New thinking about an old problem, The Economist; 2005 * Poverty Action Lab, Abdul Latif Jameel, MIT; 2010