Developing countries should invest in schools before roads—at least for now

“More schools, please.”
“More schools, please.”
Image: Reuters/Habibou Bangre
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In recent years, discussions on how to jump-start development in sub-Saharan Africa have largely been about addressing the infrastructure deficit. The lack of everything from roads and railways to electricity and running water are recognized as huge obstacles on the journey to sustainable development.

The World Bank estimated in 2009 that addressing the infrastructure deficit in Africa (pdf) would cost $93 billion each year, in order for the continent to have any chance of catching up to developed countries. However in 2014, IMF reckoned just $51.4 billion was spent on infrastructure—a $40 billion shortage. 

But most of these discussions have focused on physical infrastructure. A paper this month from the Centre for Economic Policy Research argues the challenge for many countries is not so much investing in infrastructure as working out the trade-offs between physical infrastructure, like roads and railways, against social infrastructure, like schools and hospitals, a dilemma that’s summed up as “roads versus schools”.

Here’s the issue for policy makers, particularly those in the least developed countries: There’s plenty of research which shows investing in roads and railways will boost economic growth “relatively quickly” by increasing the productivity of local private firms. But the same case can’t be necessarily be said for schools, for example. 

Yes, it’s true that for largely the same upfront costs, building more schools and scaling up education will raise workers’ productivity—”potentially to a larger extent” than roads. But compared with roads, the benefits of schools come mostly over the long run. In addition, the schools require teachers and books, so there are larger current expenditures compared with maintaining a road. Governments might also be concerned with their debt profile as it takes longer for schools to produce notable economic returns (24 years versus 15 years for roads, according to research). 

The authors suggest a “big push” investment in schools would be the way to help the output from education match or exceed that from roads. They seem to suggest few governments take this approach.

While it’s not an either-or situation, the common sense, long view does seem to favor schools as the better investment. Yet, the everyday reality of political and economic policy management means many governments will make the calculation that interrupting much-coveted economic growth and expanding debt commitments might not be worth it.

That would be a bad calculation.

Having an educated workforce as we move into the so-called “fourth industrial revolution” could not be more crucial for developing countries. For sub Saharan Africa, the value of even the most basic education is vital on a continent where 30 million children are not in school. The Education Commission has urged African countries to raise education spending from an average of 4% of their GDP to 5.8%

The authors of “roads vs. schools” suggest multilateral agencies can help alleviate the short term concerns of governments by incentivizing policymakers to think long term with concessional financing and grants.