Education and development the issues and the evidence - Education Research Paper No. 06, 1993, 61 p.
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1.2 Recession, debt and structural
adjustment
A common proposition advanced to explain why educational expenditure has been falling in particular
countries is to argue that it has been "crowded out" by other pressing demands on government budgets
(Noss 1991:23). Escalating debt and defence spending are most commonly cited as responsible. Levels of
debt have indeed been increasing (thirteen fold from 1970 to 1990 (UNDP 1992:45) albeit that only 20
countries are responsible for nearly 60% of this debt. In Sub-Saharan Africa debt is comparable in
magnitude to the annual GNP of all the countries together and the IMF alone was receiving net transfers of
0.7 US$ billion a year from these countries between 1986 and 1990 (UNDP 1992:46). Debt servicing
represented 25% (weighted mean) of the value of exports in 1990 and nearly 83% of GNP per capita
amongst low income economies as a whole (World Bank 1992:264 Table 24). The debt burden on
developing countries continues to siphon off as much as US$ 170 billion a year (UNDP 1991:79).
Relatively small concessions or debt swaps for human resource development could therefore have a major
impact on national budgetary allocations in a number of the most indebted countries.
By contrast global military spending is falling after a long period of rapid growth as the cold war comes to
an end. In both developed and developing countries military expenditure appears to have been shrinking at
about 3 % a year potentially releasing large amounts of resources for other purposes. Unfortunately this
trend is not yet observable in many of the poorest countries in Asia and Sub-Saharan Africa (UNDP
1992:85) and it has not been uncommon to find that military expenditure has been rising much faster than
the national budget as a whole. There remain very wide disparities in the relationships between military
and social sector expenditure - in some states military expenditure is between two and five times social
sector spending (e.g. Somalia, Nicaragua, Ethiopia, Pakistan). In others it may be less than one fifth (e.g.
Botswana, Ghana, Mexico and Costa Rica). The ratio of soldiers to teachers varies over a similar range
(UNDP 1992:87). Paradoxically countries that spend a lot on the military (more than 4% of GNP) receive
approximately twice as much Official Development Assistance per capita as those that are low spending
(less than 2% GNP) (UNDP 1992:44).
Some defence spending is of course fully justified. More than 30 developing countries were involved in
armed conflicts in the late 1980's with the effects often spreading well beyond their borders. In those
countries most severely affected there are likely to have been substantial negative effects on GDP growth
and on the level of non-defence related public sector spending. A recent study argues that 21 out of 53
African states have experienced war as one of the largest factors in suppressing economic growth,
comparable only to the effects of decline in the terms of trade. This has resulted in a decline in GDP
growth regionally from a probable 5-6% to an actual 2-3% (i.e. below the average rate of population
growth, representing a per capita reduction in GDP in many cases (Green 1991)).