Spillovers to Emerging Markets from US Economic News and Monetary Policy

Abstract

l-Wly does the government have a dominant role in the provision of education ? How should education expenditure be financed? l-Wlat is the scope for user fees? Can the efficiency of public education provision be improved? Education expenditure at the general government level typically represents from 4.5 percent to 7 percent of GDP in industrial countries. In developing countries, education expenditure ranges from 2.5 percent to 7.5 percent of GDP, and represents a smaller share of GDP on average than in industrial countries. As a share of total expenditure at the general government level, education expenditure often exceeds 10 percent. Most governments are direct providers of educational services on a large scale, and at the primary and secondary levels, at least, their share of the total supply of such services typically exceeds 90 percent. In addition to this direct role in the market for education, governments influence the demand for educational services by their provision of scholarships, grants and living allowances for students, through decisions regarding fees and tuition charges, and by the regulatory framework they establish for private education. Because public schools and colleges are often administered at the regional or local level, and because the local revenue base may not be sufficient to finance expenditure requirements, the government's role in education raises important issues concerning intergovernmental fmancial relations and coordination (see the note on Trans fers to Local Government for a general discussion of these issues).