As dawn spills on to Ha Thuong, Vietnam, Bui Thi Bich Phuong is preparing for a long day of collecting waste coal from the nearby Mo Me coal mine and catching crabs at the edges of the fields near her house. If she’s lucky, she’ll eek out $4 today. As she’s washing her face, soon to be covered with coal dust, her son Nam is getting ready for his day at school. There, he’ll study a new curriculum of mathematics and literacy in a new classroom, both of which are paid for by the Asian Development Bank, who hopes it’s dawn for education in Southeast Asia, too.
Governments and development agencies, along with the UN, hope for more examples of the younger Phuong in Southeast Asia—bright students preparing for jobs in the service sector—than the older, agrarian Phuong. There are billions of dollars in education aid flowing into the region, most of which comes in the form of ADB loans and implemented by local governments. Is education really critical to development in Southeast Asia? Will the ADB’s programs be successful? There are few resources that answer these questions; this post hopes to provide insight to both, as well as providing case studies in Cambodia and Vietnam.
How important is education for Southeast Asia?
By investing in education, Southeast Asian governments and the ADB hope to approach developmental parity with their successful peers to the northeast. South Korea and Taiwan are the darlings of Asian development as they have made the jump from low-end to high-end manufacturing and are now centers of service and entertainment industries. “Gangnam Style” came from South Korea for a reason: the song parodies the high-end lifestyle in a Seoul district that only exists due to Korea’s rapid development. Taiwan, once a hub of simple computer assembly a-la China, is now a hub of computer design and engineering. Most assembly now takes place around Shanghai.
The transition to high incomes in these countries was not serendipitous; they had laid the framework for development through heavy investment in education at all levels. In 1993 a World Bank report praised these High Performance Asian Economies (HPAEs): “The growth and transformation of systems of education and training … has been dramatic … the HPAEs’ enrollment rates have tended to be higher than predicted for their level of income … By 1987, East Asia’s superior education systems were evident at the secondary level … Primary education is by far the largest single contributor to HPAEs’ predicted growth rates … Physical investment comes second … followed by secondary school enrollment.” Physical investment is a story for another day, right now the focus will be on education: primary and secondary.
So far, the path to development in Southeast Asia seems clear: invest in education while the economy produces low-skill intensive goods so, after a decade or two, the economy can transition to high-quality manufacturing. The graph above shows that the poor Southeast Asian countries spend less than 4% of GDP on education, while Thailand, a more developed country, spends more. Moreover, the poorest countries often neglect to report data to UNESCO. Surely simply spending more money will solve Southeast Asia’s problems?
Not so fast. Due to two different types of competition, these economies might have to transition faster than Taiwan and South Korea did. First, as other developing countries clue in (on their own accord or via a friendly push by the IMF) to the famous/infamous export-based model of development, the rise in international arbitable labor supply will keep wages low, limiting welfare gains like Taiwan and South Korea enjoyed. Second, exploitation of natural resources, plentiful in Southeast Asia, could lead to comparative advantage-killing inflation, further reducing competition. It is important to note that South Korea and Taiwan have few natural resources that would lead to this pesky trend. Therefore, Southeast Asia needs to hit the books sooner rather than later.
Assessment: How is Southeast Asia doing on education?
Not so good. The 1997 economic collapse among ASEAN countries had at least as much to do with lower export levels as it did with currency appreciation. Southeast Asian countries were unable to transition to high-quality exports as other countries (read: China) took the region’s market share in low-quality exports. The region has since recovered, with sustained growth rates in the high single digits. Nevertheless, the region’s better-perming economies, Thailand, Indonesia, and Malaysia, are arguably in the ‘middle-income trap’ of around ten thousand PPP-adjusted dollars per capita, years from becoming rich countries.
Southeast Asian countries as a whole will have to somehow leverage (read: educate) their substantial populations in order to develop past $10k per capita. There are three areas the region should focus on in order to improve their education prospects:
School Attendance: Somewhat surprisingly, the region, even including laggard countries like Cambodia and Laos, is almost at the worldwide average of 90% primary school attendance. Less surprisingly, survival rates, or the percent of school-aged children who complete primary or secondary school, are lower. In Cambodia, the Philippines, and the Lao PDR, primary school dropout rates are over 25%: poverty calls many students away from school in order to help out at home. In order for countries to improve their skill base, both enrollment and survival must increase.
Inequality: Like their counterparts in developed countries, urban children in developing nations attend school at higher rates than rural children. The gap in countries in Southeast Asia is larger, though, due to severe infrastructure constraints. Since many rural residents cannot afford a bicycle, let alone a car, children are limited to attending schools within a few kilometers of their house. This limits many children to a few years of primary school, which end when the grades offered in the local school do.
Besides economic inequality, Southeast Asian students have to deal with gender bias against both girls and boys. Girls face the more obvious bias: when pressured by resource limitations, many families call girls back from school before boys, who are assumed to be a more worthwhile investment. Many development agencies, especially the ADB, have remedied this problem to the point that in many countries more girls attend school than boys. The school gender ratio should match that of the population. Besides years of schooling, girls are also discriminated against when it comes to types of education, a problem that persists through secondary and vocational education. Responding to cultural stereotypes perpetuated in and out of school, girls self-select into traditionally female professions; employers respond by recruiting females to the same jobs. A comprehensive overhaul of education must include the systematic of gender stereotypes in classroom materials and instructor biases.
Skill Gap: Even students that complete tertiary education in many Southeast Asian countries often lack the skills needed by the companies that may hire these most educated workers. Vietnam’s own Ministry of Education reported that only 30% of college graduates had the skills demanded by the workforce. Other indicators of gaps in the quality of skills are a high education premium or a low unemployment rate, both of which indicate low high-skill labor supply. The latter indicator is produced below; Indonesia and the Philippines (more developed countries) have high unemployment rates, but the least developed countries with the greatest skill gaps have the lowest unemployment rates.
The Philippines, however, serve as a warning of the effects of a reverse skill gap where high-skill supply is higher than high-skill demand. Until the 1990s, the Philippines had the highest tertiary education enrollment in the region. At the same time, macroeconomic fluctuations that discouraged fixed capital formation resulted in an unfriendly environment for professionals, leading to ‘brain drain’ where highly skilled workers went abroad to find work. As a result, remittances are now 13% of the Philippines GDP, exceeding FDI. The lesson is that graduates have to be able to find work quickly, otherwise educated, unemployed graduates will leave or worse: stay and start a revolution.
How is the ADB addressing education?
As Southeast Asia’s main development agency, the Asian Development Bank is providing the lubrication to meet the UN’s “Education for All” goal. Education is one of the ADB’s eleven focus sectors in development programs; in its Education 2020 report, the bank pledged $1.5 billion in education assistance between 2010 and 2012, 4% of its funds for loans and grants. There are three areas the ADB is focusing on specifically in the region: building new schools; increasing school and teacher quality; and decreasing the skill gap with vocational training.
New Schools: A large, but shrinking, number of rural children in Southeast Asia do not have access to even primary education because their families can not get to the schools. Bicycles, motorbikes, and cars cost more than many families can afford, limiting the radius of education to a few kilometers. So, an easy area for the ADB to direct its loans to is building new schools, as the increase in enrollment is immediate and large. This solution, however, does not address the survival rate. Students will stay in school if they perceive education to be meaningful, which is largely dependent on teacher quality. Teachers that inspire students to achieve, and give them the intellectual tools to do so, are more likely to increase the survival rate than teachers who are not. Thus, the ADB must invest in school quantity and quality, though much of the focus is understandably on quantity, the lower-hanging fruit.
Indonesia is a cautionary tale for the ADB in this regard. Lush with oil money following a 1970s oil boom, the country built hundreds of new schools, but faster than teachers could be trained. Education quality subsequently decreased; some scholars say that quality is still decreasing. Consequently, the country lacks the high-quality development that HPAEs won in their own education investment. The difference is that investment in HPAEs was comprehensive, but investment in Indonesia was one-dimensional.
School Quality: Teacher and school quality must come at the same time as new school buildings, as well as permeate existing institutions. Unfortunately, as we will see, ADB reports mention construction of new schools much more often than they mention training new teachers. Education for All efforts have been remarkably successful in increasing the number students that want to attend primary school. Excellent. Now, the ADB and local education ministries must ensure that teachers will inspire students to at least complete primary school. One way to promote high-quality instructions is to vet teachers before they complete teacher training.
The ADB has been more successful in increasing the quality of curricula. The bank’s loans to education ministries usually require that education policy follow a decentralized approach, meaning tailoring curricula to local needs. Southeast Asian countries have the relatively unique characteristic of hosting a plethora of indigenous languages in addition to the official language. Classes taught in the national tongue can alienate ethnic minorities and discourage school completion. Fortunately, the ADB recognizes this problem and supports initiatives for local-language instruction. The bank could go further to ensure that more of classroom content is tailored to local conditions. While it is tempting to imagine every young villager going on to study at the national college and inventing a generator that runs on the sweat of foreign tourists, it is not realistic. Many students will finish primary school and forever remain in their village, so it is important to ensure that they are educated in the latest techniques to maximize their contribution at the local level.
Vocational Training: The ADB has also been successful in promoting vocational training. The skill gap in Southeast Asian countries exists because current curricula do not reflect the demands of employers at all levels. Existing state-provided vocational programs are insufficient because local governments cannot competently handle both vocation policy and program implementation. Further, women are often excluded from these programs, for reasons mentioned above. The ADB recognizes this opportunity for growth and ensures that some of its loans and expertise are directed to creating and reforming vocational programs.
For example, in Lao PDR the bank is implementing a Strengthening Technical Vocation Education and Training (STVET) that seeks to establish vocational programs in the employment-rich carpentry, construction, and maintenance industries. The program specifically includes a Gender Action Plan that requires women fill 20% of the spaces in these nontraditional training programs. The number might seem small, but it is much larger than the current 0-1% women enrollment in these areas. The STVET also has private sector programs in mining that require 40% of the students to be women, and has 50% quotas for programs that do include more traditionally female occupations. Overall, the ADB recognizes the need for vocational training that is accessible to all.
Cambodia at a glance
ADB programs in Cambodia include school construction and vocational programs. Since Cambodia lags the rest of the region in most educational indicators, these basic programs are important to establish a good educational foundation for the nation. For example, there are 48 students per teacher in Cambodia, higher than in 1990. A problem like this requires short-term focus on quantity rather than quality, which the ADB can easily address. In the future, though, the country will need to invest more heavily in teacher training programs in order to improve its educational prospects.
The ADB is laying the foundation for educational success in Cambodia by building new schools and information centers (or as non-development agencies call them, libraries). The $25 million Second Education Sector Development Project provides funds for 215 lower secondary schools, 15 upper secondary schools, and community development projects. The lower secondary schools incentivize children to finish primary school, which the World Bank cites as the most important reason for rapid development in the HPAEs, by providing further educational pathways. Previously, the children who did complete primary school were unable to attend secondary schools because there were too few within walking distance. The new schools will allow students to further explore their educational ambitions, overcoming the previous economic limitations. In addition to schools, the ADB and World Bank are building “public information centers” with books, internet access, and World Bank and ADB research (for aspiring development scholars), in order to allow poor people to access the internet and bright students to study beyond what their perhaps poor quality schools allow. The new infrastructure the ADB is building is admittedly the very first step to a well-educated society, but will solidify the currently unsatisfactory educational base.
Besides educational infrastructure, the ADB is also investing in vocational programs in order to educate people outside the Cambodian schools. A $45 million ADB loan for nonformal skills funded programs that help people like Thav Heat increase their productivity; instead of making one mat a week to sell to tourists, she can make 3-4 in a day. Similarly, Ley Leup, a farmer, learned how to use organic fertilizer to increase yields and decrease environmental damage. His income subsequently increased enough to buy more land, a motorbike, and a bicycle. This program also allows some, like Long Borin, to return home after working as migrant laborers due to higher income opportunities.
Vocational programs like these highlight the importance of education to low-income countries like Cambodia. With just a few weeks of training, these three individuals were able to use existing resources combined with new knowledge to improve their productivity and incomes. Education in general allows countries to become more efficient, using existing human and natural resources to their fullest extent.
Vietnam at a glance
Vietnam is an interesting case study because while the education system is more developed than lowest-income countries like Cambodia, it suffers from low quality and equality. ADB programs are generally focused on increasing marginalized peoples’ access to education while ensuring existing teachers reach the frontier of teaching methods. Vietnam is unique with respect to education in the region because in order for educational reforms to be fully effective, the state must also reform.
In 1996 the Vietnamese government launched a $71.5 million project, of which $50 million came from the ADB, in order to construct new schools and improve ethnic minority enrollment. The program was successful: the 366 new schools in 21 provinces and cities increased enrollment of ethnic minorities by 62% to 924,867 in the 2005/2006 school year. Further, all teachers were introduced to new curricula that included bilingual instruction. In a more recent project, the ADB targeted women and rural populations by constructing boarding schools with 50% female dormitories and ensuring that teachers are 50% women, compared to the national average of 10%. With respect to inequality, the ADB is ensuring that those at the left side of the Lorenz curve get access to not only basic education, but also high-quality basic education.
Higher education will lag, however, if the Vietnamese government does not change its state owned enterprise system. Now, state firms get cheap credit at the expense of the private sector, so state firms can hire the highest-quality labor. Since state firms are often not allowed to produce for the world market, output is constrained by insufficient domestic demand, meaning that the state companies cannot hire as many high-paying jobs as they would if they produced for the world market. As a result, these high-skill, high-paying jobs generate rents (the advantage workers gain from working at a state firm) that can be as high as two years of state sector salary. Meanwhile, the private sector has only low-skill jobs that offer low returns to high education. Further, the state sector jobs that do exist often demand credentials rather than actual skills, a problem so bad that Vietnam’s own Ministry of Education estimates that only 30% of college graduates with credentials actually have the skills they need to perform the jobs they want. This is a problem the ADB cannot address; change must come from within the Vietnamese government if it wants to develop in the long-term.
Education is important for development in the short term because export-focused industries require basic skills, and in the long term because high-income countries are powered by high-income, high-skill people. Southeast Asian countries for the most part meet world averages for basic educational indicators, but lag in teacher quality and educational equality. ADB programs have been more or less sufficient in meeting demand for schools in under-served regions, and should soon shift to higher quality teaching. Some easy targets are better teacher training and reforming the rote memorization practice so popular in Asian countries. In order to reach and overcome the middle-income trap, Southeast Asia must commit to high quality education in the decades to come.