AS GLOBALISATION and technological advances reshape economies at all levels of development around the world, the role of human capital - making the best use of talent - in commercial growth is coming into ever sharper focus.
Understanding these issues will be critical as Latin America seeks to build on a decade of economic growth funded by an extraordinary boom in prices for its traditional commodity exports.
For emerging markets, such as those of Latin America, populations equipped with skills to develop higher value-added economies will be crucial for increasing productivity and competitiveness. After decades of false starts, the question remains: how to achieve such educational progress.
The experience of Latin America has, unfortunately, demonstrated what does not work - throwing money at the problem.
Despite region-wide education spending which tracks the Organisation for Economic Cooperation and Development (OECD) average of five per cent of GDP - with some countries, including Mexico, spending significantly more - performance has stagnated.
Latin America is at the bottom of international rankings such as the OECD’s Programme for International Student Assessment, or PISA, and only around half the students finish high school.
Recent research suggests that getting the best education system is a matter of balance and priorities, rather than sheer expenditure. Spending alone quickly reaches the point of diminishing returns and the amount spent explains very little about the performance differences between countries.
Understanding these issues will be critical as Latin America seeks to build on a decade of economic growth funded by an extraordinary boom in prices for its traditional commodity exports, and reaches a higher plane of development.
Its middle classes have expanded, creating a new generation which has come to expect higher standards of living and greater educational opportunities. For the region to become truly high income, it will need to switch to an economy based on higher productivity and innovation.
Several countries are tackling these challenges head-on, providing some first-hand, trial-and-error experience of what reforms may be the most effective - and politically feasible - in an emerging market context.
How students perform: OECD 2012 figures for 15-year-olds
- Reading: mean score 496 points. Shanghai-China 570, Singapore 542, Germany 508, UK 499, US 498, Russian Federation 475, Chile 441, Mexico 424, Brazil 410
- Maths: mean score 494 points. Shanghai-China 613, Singapore 573, Germany 514, UK 494, Russian Federation 482, US 481, Chile 423, Mexico 413, Brazil 391
- Science: mean score 501 points. Shanghai-China 580, Singapore 551, Germany 524, UK 514, US 497, Russian Federation 486, Chile 445, Mexico 415, Brazil 405
- Brazil, Mexico and Chile are three of the nations making special efforts to improve their systems - each with potential lessons for the rest of the region.
The highly contested, often bitter, election in Brazil in October 2014, may cause President Dilma Rousseff and her allies to reconsider their administration’s approach to human capital issues.
While the Workers’ Party, now in power for well over a decade, has greatly expanded access to basic services such as healthcare, education for young children and potable water, opponents argue that Brazil has been spending too much with too little to show for it.
Over the past year, millions took to the streets to protest against failing government services. And despite successes in getting more children in the classroom, Brazil’s educational quality, as measured by the PISA evaluations, has remained troublingly low, while access is still extremely unequal.
Meanwhile, the approach of the current administration has largely centred on spending even more money. The new National Education Plan (PNE) approved by Brazil’s Congress in June 2014, and expected to be implemented in the next Rousseff term, would increase education spending to at least 10 per cent of GDP, guarantee basic universal schooling and further expand access to public higher education.
Even before the election campaigns, there was spirited debate within Brazil over whether such a focus on funding levels, rather than indicators of quality, was really the right approach, especially given Brazil's budgetary troubles.
President Rousseff, shaken by the widespread protests and her narrow re-election, may well realise the need to advance deeper reform. She would do well to recognise the potential of the private sector, which is already stepping in to help meet the educational demands of a rising middle class.
The higher education market in particular has been extremely active in Brazil. Two of the leading publicly traded teaching firms, Kroton Educacional and Anhanguera Educacional, have merged into the world’s largest higher education company, worth more than US$8 billion. International investors including US-based Laureate Education have been expanding aggressively into Brazil, acquiring 12 universities there with a total of 200,000 students in the past decade.
We expect President Rousseff to move forward in modernising the economy, cautiously pushing to reduce regulations and open some industrial sectors.
She will also need to meet her voters’ demands in terms of improving social services and carry out the promises to raise the quality of education. In the current context of economic problems, it will be hard to increase the education budget, so she will need to be more creative in bringing reforms which will not require much more funding.
In Mexico, deep and controversial education reforms have dominated the early years of the administration of President Enrique Pena Nieto, elected in 2012.
In particular, they focus on reforms to increase quality, such as increasing the evaluation of teacher performance, ending the tenure system which allowed for the buying and selling of posts, and devolving more autonomy to state and local authorities to pursue new approaches to educational principles and staff recruiting and training.
Barely half of Mexican students finish a basic high school-level education. Less than one per cent achieves ‘excellence’ in maths – compared with 30 per cent in Hong Kong
The teacher tenure reforms have generated vociferous opposition among many in the national unions, but have otherwise found broad support, leading to the relatively quick passage of the legislation through the Mexican Congress. The law includes a new evaluation institute which will prepare exams that all teachers must pass.
And Mexico, like Brazil, would be wise to keep pushing for greater autonomy over education policy, both for state administrations and individual schools.
In a country with more than 120 million people (Brazil has 200 million), it is unwieldy - if not impossible - for a centralised reform process adequately to address local realities and needs.
An approach holding everybody to a unified standard while allowing them to pursue their own means of getting there is a compromise which can drive innovation and best practices.
The need for change in Mexico is particularly great. Today it scores more than 70 points below the OECD average in maths and science.
Barely half of Mexican students finish a basic high school-level education. Less than one per cent achieves ‘excellence’ in maths, compared with 30 per cent in Hong Kong.
Of course, there are many devils in the details. It remains to be seen how effectively the implementation of the measures can be carried out, and how much and how quickly they will truly raise educational quality.
What is clear is that without serious improvements to its education system, Mexico’s pursuit of sustainable, high productivity, and high value-added economic development will remain quixotic.
Even given the other critical reforms Mexico is pursuing in the realms of energy policy and telecommunications, success in this field would surely be President Pena Nieto’s most lasting legacy.
However, in the context of its current security crisis and the apparent murders of more than 40 students still missing after clashing with police in the town of Iguala, we expect the Pena Nieto administration to have too little political capital to keep pushing for education reforms and probably to stay in this middle-of-the-road situation where the reforms now stand.
Over the past two decades, Chile has risen to the top of the region’s ranks. When it comes to the PISA evaluations, for instance, it scored the best in the region in reading, maths and science by a wide margin, while still coming in below the OECD average.
And yet, despite being a positive exception in the region, Chile has experienced several recent waves of education-related social unrest.
Frustrations remain over the persistently high inequality and rising costs of schooling, particularly higher education. Private universities play a large role in Chile’s system, offering choice and opportunity, but the prices can be high and affordable student loans difficult to secure.
What Chile needs now is better quality – and mandating totally free higher education will probably do little to achieve that, while adding to an already overburdened state budget
Scholars are increasingly graduating with large amounts of debt and few job opportunities, or even worse, accumulating debt without graduating at all.
Making matters worse, Chile’s education system does little to improve the country’s inequality, the highest in the OECD. Instead, it reproduces and amplifies socio-economic disadvantages. Among students as young as 10 years old, there are already sharp differences in school performance based on household income.
It is this reality which has driven the disruptive street protests and heated political debate over education which have come to define Chile's public life.
In response, President Michelle Bachelet, who was re-elected in March 2014, has sought to revamp the entire framework to accommodate demands for universal free education based on ending the private school sector. Reform legislation to implement this vision has passed the lower house and now moves to debate in the Senate.
Chile’s system has major flaws, but it is far from clear that President Bachelet’s approach will address any of them. In effect, a largely successful, decentralised, multi-pronged system would be replaced with a uniform, top-down approach - the type other countries in the region are moving away from.
That may be good for quickly expanding access, but Chile already enjoys widespread education access. What is needed now is better quality, and mandating totally free higher education will probably do little to achieve that, while adding to an already overburdened state budget.
At the same time, the current reform proposal does not address raising quality for low income pupils. Evidence from around the world has shown that early childhood interventions, for instance, have positive effects which multiply throughout a student’s academic life and subsequent career.
Targeted policies, like those pursued in Brazil and elsewhere, to expand pre-school access, increase parental involvement and offer better workforce-training for employees with children, may ultimately do more good with less downside than the current attempt to alter the funding structure of the entire system.
In Chile, the Bachelet government has probably two choices. The first is to forge ahead with its plans for reform and to set aside the resources necessary to reach for the goals of free instruction and open access. This will have a negative impact on the higher education sector.
The other option is to compromise with the opposition, preserve the role of the private sector in education and work for wider access over a longer period of time. The second option is more likely and is better for Chile in the long run.
Ultimately, Brazil, Mexico, and Chile are very different countries with divergent histories and cultures surrounding their education practices. Yet as middle-income Latin American countries which have made major economic progress, they are united in their need to break through the plateau created by poor human capital development.
The struggle for higher productivity and sophisticated, sustainable economies will, in the years and decades to come, largely hinge on the success or failure of their respective education reform experiments.