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I* ED Precisrn
| Operations vauation {uDepartment                                                October1991
Indonesian Education and
the World Bank
Out of the economic and social  development, the lending program    The Bank viewed higher
chaos of the mid-1960s, Indonesia has  has played an important role.  education as the main source of
achieved one of the most significanzt                               skilled manpower for economic
transformatiotns in education in the  Tracing the history of the    growth. In the earlier years this
developing world. It nIow has     Bank's assistance is complicated by  view tended to confine the Bank's
universal access to primary education;  the intricate nature of the Indone-  potential contribution. More
it is expanding secondary         sian administration and the       recently, lending has aimed at
participation, and gradually      delicate shifts in government/    building a self-sustaining develop-
strengthening post-secondary      Bank relationships over the period.  ment capacity. At the same time,
education. A key factor has been the  One general characteristic of the  the focus of vocational education
Government's consistenit econoniic  lending program has been the    has shifted from school-based to
and educational policies, which were  seemingly inexorable way in   occupation-based training. Bank
responsive to changing conditions.  which one project has followed  support for nonformal education
another, no doubt reflecting a    continues, although information
The Bank's $1.5 billion of    common interest in maintaining    gaps about its reach and effective-
education lending to Indonesia, for  the flow of funds into the sector.  ness remain.
25 projects since 1969, is its largest  At times, this may have ruled out
education portfolio. An OED study*  the search for other investments.  Despite the great progress
assesses the Bank's important role in  Bank project selection lacked a  made, the education system still
educational development in Indonesia  single common set of criteria,  suffers from shortcomings in
through the contribuitions made by  instead stressing individual    quality and external efficiency.
individual projects, seen against the  subsectoral "needs". Thus, regard-  Thus Bank assistance in recent
background of government education  less of their undeniable merits, one  years has focused on addressing
policies and the Bank's ownI evolving  cannot tell whether the various  efficiency and quality problems
approach to educatioin development  investments have been economi-  throughout the system, and on
issues.                           cally optimal.                   fostering institution building at
central and subsidiary levels of
The Bank's direct involvement  government.
wo features of the Bank's   in primary education has been
role are striking: the sheer  minor. In secondary education it
size of the lending program,  pursued vocational goals early on,
and its diversity-covering every  then focused on improving qual-
subsector in education. The Bank  ity. Both primary and secondary
has been only one of several      education have benefited from       "'Indonesian Education and the
sources of external assistance, and  textbook and teacher training    World Bank: An Assessment of Two
its financing has formed a rather  projects. But important elements of  Decades of Lending', Report No.
modest proportion of the          quality, such as the deployment,   9752. June 28, Z 991. OED reports are
government's education budget.    productivity, pay, and working     available from the Internal
Nonetheless, with its emphasis on  conditions of teachers, remain    InDorumtion Servites Centers.  l
innovation and institutional      wanting.                           _   m     __            _



Lessons                              *   Spending on public education        Projects were begun in re-
has remained somewhat low by         sponse to perceived needs, and
*   There is a need for flexibility in  international standards (2.3 per-  were judged on specific
the use of manpower planning         cent of GDP, vs. 4.0 on average for  subsectoral criteria, rather than on
elements and in the design of        all developing countries, in 1985).  the basis of relative economic rates
educational strategies, including the  Some increases will be needed to  of return or similar overall yard-
proper use of labor market infor-   finance several needed initiatives,  sticks. It may be that the same
mation in upgrading manpower         such as tackling the problem of     output levels could have been
through on-the-job training.         teachers' deployment and salaries,  achieved by more efficient means,
ensuring adequate operation and      or the same resources might have
*   The efficacy of training compo-  maintenance, and supporting         been put to a better use.
nents needs improving at all         educational decentralization.
stages, from candidate selection                                             The lack of clearly articulated
through re-entry into the work-      *  Private schools have made        goals means that the ex post
place. A closer look at benefits and  important contributions to educa-  evaluation of projects has to be
costs of overseas vs. local training  tional development over the past   based on narrow input-centered
is needed.                           20 years; broader Bank support for  targets (e.g. for enrollments or
private, as well as public, educa-   school places). Monitoring and
*  Institution building still shows  tion is warranted.                  evaluation in projects have not
shortcomings and should remain a                                         been pursued with enough deter-
central goal of the Bank's assistance.  Basic issues                     mination.
*   The value of the policy dialogue    This review also discusses the       These conclusions reinforce
is apparent, as is its dependence on  Bank's global approach to educa-   the case for developing a sectoral
sound sector work.                  tion lending, and the lessons it has  strategy that:
learned throughout the world
*   Sector leniding began too        about the economics of education.   *   is based on the economic and
recently for a full evaluation to be  Over the two decades, the Bank     social objectives of the borrowing
made, but experience thus far        selectively introduced the calcula-  country;
shows that success depends on a      tion, interpretation, and use of     *  takes account of the country's
solid empirical base, an effective   social rates of return (or similar  manpower supply and demand
policy dialogue, consistent Bank     indicators) into its information    situation, without being unduly
and government goals, and sound      base for sectoral lending. It became  influenced by it;
implementation procedures.           more aware of the problems with      *  can respond to changes in
traditional manpower forecasting     economic conditions and labor
*   Educational equity remains,     methods, improved its perception     market signals;
rightly, a central goal of govern-   of educational efficiency and the    *  provides a solid basis for
ment policy and Bank lending, but    economic value of educational       investment priorities through an
one should avoid spreading           quality, and heightened its concern  understanding of relative social
benefits too widely in pursuit of    over problems of data and meth-     rates of return, or similar broad
unrealistic goals. Promising         odology. Its projects in Indonesia  benchmarks; and
avenues to greater equity include    reflected this overall gain in       *  includes appropriate monitor-
targeted quality improvements        experience, and most can be         ing and evaluation, so that
and financial help to poor families to  judged quite successful.         progress toward goals can be
offset the direct and indirect costs of                                  assessed.
educating their children.               From a sectorwide perspective,
however, one cannot discern a        Such an approach would make
*   Experience with project imple-  common criterion by which to         best use of all relevant data,
menztation confirms the advantage    judge these operations, except for  without relying exclusively on a
of compact uncomplicated             the most general aims of develop-   single method. Its key elements
projects, the need for realistic time  ing trained manpower and of       would be economic rationality,
schedules, and the importance of     providing basic education of        sector-wide consistency, and
appropriate covenants.               satisfactory quality.               flexibility.
OED Precis is designed to help inform Bank managers and staff of new evaluation findings and recommendations for the Bank's current and future
work programs. It is produced by the Operations Evaluation Department of the World Bank for distribution to the Bank's executive directors and staff.
The views here are those of the Operations Evaluation staff and should not be attributed to the World Bank or its affiliated organizations. Please address
comments or enquiries to the managing editor, Rachel Weaving, T7-015, World Bank, ext. 31719.
October 1991