School Privatisation and Universal Education in Asia – Some Equity and Efficiency Considerations Convenor Sarmistha Pal PhD , CEDI, Brunel University, UK and IZA, Germany E-mail: email@example.com Introduction Investment in education is critical for economic growth and poverty alleviation. Eight out of ten of the world’s children live in developing countries (World Bank, 2003). For economists working on education, the study of developing countries thus offers policy questions of fundamental importance. Investment in schooling has often been financed by the state. In an era of stagnating public budget for education (as well as other accounts), private financing of education has gradually been gaining importance across the world, including many low-income countries. It has often been argued that greater market orientation makes private schools and teachers more accountable to children and parents, more sensitive to input costs and thereby more efficient, especially for countries with tight fiscal constraints. The question however remains whether and how this efficiency argument in favour of school privatisation could be compatible with the UN’s Millenium Development Goals (MDG) of securing universal education and gender equality at all levels by 2015. One problem is that parents with little or no education may find it difficult to identify which schools provide a better education. Another issue is that increasing private provision of education may lead to the exclusion the disadvantaged groups. Finally, given the importance of son preference in some Asian countries, school privatisation could also widen the gender gap between boys and girls, especially for resource constrained households. Thus a fast pace of school privatisation could raise concerns for equity reasons, especially in view of the Millenium Development Goals. The proposed session will explore this in three Asian countries, namely, India, Nepal and the Philippines all of whom are committed to the MDGs. Growth of private schools in India remained rather unregulated, giving rise to a growing numbers of unrecognised private schools; schools and parents do not seem to consider government recognition as a stamp of quality. In contrast, with the recent political turnover in Nepal that replaced the old Kingdom, the ruling Communist Party (Maoists) have generally been very opposed to a two tier schooling system and has been focusing more on improving the quality of government schools. Government in the Philippines has in stead gradually liberalised the private sector, allowing greater autonomy to private schools in most areas of management. This session would thus examine the public-private dichotomy and also its implications for the Millennium Development Goals in a comparative perspective. It is time to take a stock of things so that corrective measures could be adopted. Papers: (1) Growth of Private Schools and Universal Education in India – A district Level Analysis, by Geeta Kingdon (Institute of Education and CSAE, Oxford) and Sarmistha Pal (Brunel University and IZA). While the state sector still dominates the schooling market in India, an important feature of the 1990s has been a significant growth of private schools across India (PROBE, 1999; Muralidharan and Kremer 2007). While India’s recent economic liberalisation and subsequent economic growth have generated much optimism about its prospects for social and economic development, effects of liberalisation/privatisation on universal education has not been analysed very carefully. The present paper examines the effects of school privatisation on growth of male and female literacy rates over 1992-2002 with a view to explore evidence of gender difference, if any. (2) ‘Public and Private Schools in Nepal –A Comparative Perspective’, by Uttam Sharma (University of Minnesota). The paper focuses on the two-tier education system in Nepal where pass rates in the Secondary School Leaving Certificate Examination in public schools is less than half that in the private schools. Despite this staggering difference between the two sectors, there has hardly been any attempt to examine this issue. Using a unique data obtained from the school, teachers and households from Nepal, this study explores why the productivity of public schools lags behind that of private schools and also its possible policy implications. The study is particularly pertinent in view of the recent political turnover in the country. Nepal’s Communist Party (Maoists) has now replaced the old Kingdom and they are, in principle, very opposed to private schools. (3) Are Private Schools More Effective Than Public Schools? Estimation Issues and Evidence from the Philippines, by Azucena Derecho (University of North Carolina, Chapel Hill) and Paul Glewwe (University of Minnesota and World Bank). Studies in both developed and developing countries often find that students in private schools appear to perform better on academic tests than otherwise comparable students in public (government) schools. Some interpret this finding as evidence public schools are inherently inefficient, while others argue that the studies are flawed because students in private schools differ in unobserved ways from students in public schools. This study uses longitudinal data from the Philippines (the Cebu Longitudinal Health and Nutrition Survey) to examine whether private schools are indeed more effective and, if so, what the reasons are for this difference in effectiveness.