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The efficiency of the public education system in Kuwait
The Social Science Journal 39 (2002) 277–286
The efficiency of the public education system in Kuwait Nadeem A. Burney∗ , Othman E. Mohammed Techno-Economics Division, Kuwait Institute for Scientific Research, P.O. Box 24885, 13109 Safat, Kuwait
Abstract Based on a cross-country comparative analysis, the efficiency of public education in Kuwait has been examined. The analysis indicates that compared to countries with comparable incomes, the overall level of public expenditure on education in Kuwait is not excessive. While the returns to investment in education are reasonably high and are comparable to those in other countries, internal inefficiencies exist within the public education system. Some of the specific inefficiencies are low spending on textbooks and teaching materials, short length of the school year, a low student–teacher ratio, and a high repetition rate. © 2002 Elsevier Science Inc. All rights reserved.
1. Introduction Education contributes positively to the growth of national income both directly, through enhancing the skills, knowledge, and productivity of the labor force, as well as indirectly, through better employment opportunities, low population growth rates, improved health standards and nutrition, reduced poverty level, and improved distribution of income and assets within the economy. Furthermore, education enables endogenization of technological advances within the system and offset diminishing returns to physical capital investment. For education to deliver the benefits effectively, it is imperative that the output of the education system corresponds to the needs of the society, and that the graduates be productively employed. In other words, the link between economic growth and human capital is the development of a robust demand for skills, an efficient labor market, and an efficient education system. For Kuwait, good quality education for all is essential not only to sustain rising standards of living for individual families, but also to reduce dependence on oil, an exhaustible natural resource, which must gradually be replaced with greater dependence on skill-intensive production within and outside the petroleum sector.1 Realizing that the benefits to the society of ∗
Corresponding author. Tel.: +965-483-6100, ext. 4918. E-mail address: [email protected] (N.A. Burney).
0362-3319/02/$ – see front matter © 2002 Elsevier Science Inc. All rights reserved. PII: S 0 3 6 2 - 3 3 1 9 ( 0 2 ) 0 0 1 6 8 - 4
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investments in education far exceed those to the individuals, the government in Kuwait, as in most developing countries, has taken a leading role in the provision of educational services. During the last four decades, the government has devoted a substantial amount of resources to the expansion of educational facilities.2 In addition, because of the economic externalities that flow from the spread of education, education in public educational institutions is provided to nationals free of charge. While the expansion of educational facilities has helped improve the literacy level in the country, the development of various skills has remained low compared with international standards.3 Due to uncertain and declining oil revenues, and the increasing demand on resources from other important competing sectors, such as health, housing and defense, the sustainability of the public sector’s commitment to the development and provision of free education is questionable. At present, approximately 55% of the nationals in Kuwait are below 20 years of age, and 48% are in the school-going age group (5–24 years). With high fertility and population growth rates, this puts enormous pressure on the amount of resources required to meet the educational needs of the ever-growing population and maintain the public education system. If education is to make a major contribution to the socio-economic development of Kuwait, public investment in education should continue and even increase with time. Given the constraints on the availability of resources, this means that the overall efficiency of the public education system, which includes improved quality without increased cost and equity of the education sector must be improved. This paper investigates the efficiency of the public education system in Kuwait.
2. Efficiency of the public education system: a conceptual framework In the context of allocation of resources, analysis of efficiency has been a central concern of economic theory, and is an essential element of modern microeconomic theory. The ends of economic actions are seen to be the satisfaction of human wants through the provision of goods and services, which are supplied by production and exchange and are limited by scarcity of resources and technology. In this context, efficiency means going as far as possible in the satisfaction of wants within resource and technological constraints, and entails organizational constraints on information processing and transmission. Thus, the concept of efficiency is linked to decentralized modes of economic organizations, particularly competitive mechanisms. The absence of competitive markets makes empirical investigation of the efficiency a challenging proposition. This is more so in the case of social sectors where the benefits are spread over a long period of time, and are not always quantifiable. This is particularly true in the case of education, where the benefits (in the form of increased earnings) are not only spread over one’s life, many economic externalities flow from the improvements in educational attainments in a nation. Thus, benefits to the society far exceed those to individuals, and it is not possible to assign a monetary value to the benefits. For the society and the individuals, education is both a investment and a consumption good. Furthermore, the fact that both the society and the individuals benefit from education justifies sharing of cost of education. A real key to improving the efficiency of education is greater attention to the ultimate outcomes, which occur over the life cycle of graduates (including increased income, improved health status, reductions in inequalities, and good citizenship), and can be evaluated. But,
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there are also intermediate, more approximate, outputs and process indicators that relate to the current state of education. Improving the quality of these outputs and processes is conducive to improving the ultimate outcomes, many of which cannot be measured until years have passed. Thus, at a conceptual level, there are two levels of efficiency, internal efficiency and external efficiency, each of which is important to the determination of the overall efficiency of an education system. External efficiency refers to the success of graduates, in terms of ultimate outcomes, which definitely include non-monetary returns and are different from improvements to non-cognitive personal characteristics that can be monetary since they are also productive and much desired by employers (e.g., dependability). In other words, external efficiency is concerned with the cost-effectiveness with which schools and colleges serve the broad economic and non-monetary cultural needs of society, whatever they might be. In contrast, internal efficiency focuses on the internal operation of the school or college. It can be broken down into technical efficiency (e.g., the most effective teaching and learning techniques), and allocative efficiency (e.g., the mix of good textbooks, libraries, class size, computer problems, and teacher time that should be used to produce the most cost-effective learning results). A slightly different manner in which to describe internal efficiency is to think of production and consumption efficiency. Production efficiency requires that skills and graduates are produced at minimum cost, and the concept is intended to capture the relationship between inputs and outputs. Consumption or exchange efficiency requires that goods be purchased at prices approximately equal to marginal cost. A major problem with using market analysis for Kuwait is that the public education system provides free education to nationals. There are neither market-determined prices (competitively or non-competitively determined) nor non-zero government-established prices against which to compare the marginal costs of production. Then, the labor market in Kuwait is highly segmented. Most of the Kuwaiti graduates end up working in the public sector where the wages have been kept high compared to the private sector. The provision of free education may have the effect of distorting the types of skills and graduates that come out of the public education system. The first result of this price distortion may be the enrollment of too many students in different levels of education, particularly higher levels. Parents may be more likely to have their children continue their education than they would if the higher levels of education were to involve a real price. Then, the students may take longer to complete a given level of education. The second result may be distortions in the types of skills that are acquired and enrollment of students in different subjects. It could result in enrollments in disciplines for which the marginal benefits fall short of the marginal costs. In the extreme, students and parents view the marginal costs of the skill as being zero to themselves and pursue skill and discipline to the point at which marginal benefits are zero, even though the marginal production costs to society may be significantly greater than zero. Finally, the administrators of the public education system may influence students’ choices because at a zero out-of-pocket price to the students, the administrators have more flexibility in directing the students to the types of skills and subjects that reduce the inconvenience cost to the administrators. To overcome the problems related to the analysis of the efficiency of an education system, particularly like the one in Kuwait, a comparative approach based on efficiency norms is a useful option. A major component in the comparative analysis of the efficiency of the education system is the nature of the norms of efficiency against which the system can be compared.
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In this context, there can be two types of norms: absolute and relative. While no absolute standards of efficiency can be applied to Kuwait’s public education system, much can be achieved by the use of relative standards, which are in widespread use by many countries across the world. Two types of relative standards have gained widespread acceptance as powerful means for examining the efficiency of national education systems. These are comparisons across countries and across time. Cross-country comparisons, being widely used by economists, are generally accepted for establishing standards of relative efficiency. However, there is the risk that all countries are inefficient, in which case each country is compared with other inefficient countries. But, economists generally rely on the principle that behavior of individual units across groups of economic units is rational. Thus, it is believed to be appropriate and safe to assume that rational behavior for the case at hand would lead each country to seek an efficient level and mix of educational skills. An additional concern with cross-country comparisons is the choice of appropriate countries for comparison. While the choice of countries for comparison depends on the availability of data, some objective criterion is essential for a meaningful analysis. In this context, certain types of relationships, which have been observed to be very accurately predictable across countries, are extremely useful. For example, per capita income has been found to be a very accurate and stable predictor of per capita expenditure on education. The general pattern that has been observed is that, on a per capita basis, rich nations spend more on education and poor nations spend less.4 The main issue is the determination of the most appropriate countries with which to compare Kuwait. Kuwait is unusual because it is a very wealthy country, but the wealth has come about very recently and is tied to oil production. Therefore, the infrastructure in the country has changed rapidly and recently. Thus, Kuwait is comparable with the wealthiest countries of the world in some aspects, whereas it is more comparable with less wealthy countries in many other aspects. In terms of income, which has been found to be the main determinant of development of an education system, Kuwait compares favorably with the developed countries. In the comparisons that follow, Kuwait’s efficiency indicators were compared with the same indicators for both developed and newly industrialized countries.5
3. Measures of efficiency While there are a number of indicators (measures) that can be used to examine the overall efficiency of Kuwait’s education system, this paper relies on per capita expenditure on education, private returns to education, social rate of return to investment on education, pupil–teacher ratio, repetition rate, time-on-task (or length of school year), budgetary allocations, and time taken to complete degree program. The efficiency indicators for both Kuwait, and developed and newly industrialized countries correspond to the year 1990, the last year before the invasion for which data are available, some of which are summarized in Table 1. In the case of per capita expenditure on education in relation to per capita gross national product (GNP), the evidence places Kuwait at the lower end of the group of countries. The public investment in education by the government in Kuwait was 5% of the GNP in 1990, which is not high by international standards when Kuwait is compared with countries with the
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same or lower per capita incomes. In the group of countries, public expenditure on education as a percentage of GNP is higher in Malaysia, Saudi Arabia, Israel, Ireland, New Zealand, and the U.K., and approximately the same in Italy, Australia, and Spain. The expenditure on education (as a percentage of GNP) in Kuwait is a lower public effort for good quality, universal, 12-year (K-12) education than that made by the rapidly growing East Asian countries. It may be worth pointing out that whereas total public expenditure per student at the primary and secondary levels in Kuwait is comparable to other countries, it is far above for the higher education (tertiary level). Based on the data on earnings, the private returns to individuals of higher education in Kuwait were computed. The evidence indicates that the private returns on higher education in Kuwait are very high. They are rather typical of returns in the industrial countries to individuals who complete college. The average earnings of high school graduates (aged 22–60 years) in Kuwait are KD 3,731 (or $12,313), and those of university graduates in the same age range are KD 6,181 ($20,399). This means that an employed college graduate was earning about 165% more than a high school graduate. This ratio of earnings is very close to the ratio of earnings of college graduates to high school graduates in the U.S. (170%). The private rates of return are high in light of the public subsidy. The social rates of return for Kuwait along with those available for some other countries are presented in Table 2. The extremely high rate of return of 24% for primary education of Table 2 Rate of return to investment in education in Kuwait and selected countries Country
Primary
Middle
Secondary
PAAET
Higher
Kuwait citizensa Male Female
24.0 7.0
8.0 10.0
4.0 11.0
21.0 26.0
12.0 14.0
Intermediate regionb Europe/Middle East Latin America Asia Sub-Saharan Africaa OECD
15.5 17.9 19.9 24.3 14.4
Selected countriesb Kuwait (1983)c New Zealand (1966) Singapore(1966) Hong Kong (1967) Israel (1958) Spain (1971) South Korea (1986) Mexico (1984)
6.6 16.5 17.2 19.0
11.2 12.8 13.2 18.2 10.2
10.6 12.3 11.7 11.2 8.7
4.5 14.4 17.6 15.0 6.9 8.6 8.8 9.6
13.2 14.1 12.4 6.6 12.8 15.5 12.9
PAAET = Public Authority for Applied Education and Training (1–3 years program). a Computed from National Labor Force Survey Data (1988). b Psacharopoulos (1993). c Al-Qudsi (1989).
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males suggests that the returns for keeping primary education universal are extremely high. This is a strong argument against imposing any user fees on primary school attendance since such fees are known to drive children from lower income families out of the schools. Most of the illiterates in the population are Kuwaitis who are 45 years of age or older. These illiteracy rates exceed 50% among Kuwaitis aged 55 or older. The primary schools cannot do anything about this. The high rate of return for primary education is not an argument for investing more in primary schools, but it does show, that if there is failure to sustain the primary schools, the same illiteracy pattern could emerge in the future again, with the resulting very heavy social and economic loss to the society. The rates of return to education of Kuwaiti males through middle school and high school are mediocre and lower than those achieved in most other countries. The rates of return to the education of females are more substantial at the middle school and high school levels. They are very typical of what is observed in other countries, and typical of high school rates of return for both males and females in the U.S. Females have much lower foregone earnings costs in Kuwait, which reduces the total social costs of their education. So even though their earnings are lower, the rates of return are reasonably high, and their education is economically advantageous to them and to the society. To get a more meaningful measure of education outcomes, percent ‘not employed’ by education level were computed from the data reported in the labor force survey. The underemployment rates revealed that underemployment falls steadily as education levels increase from illiterates up through college level. This indicates that education is a key factor in enabling people to enter the labor force. Another indirect measure of external efficiency is the illiteracy rate. Table 1 shows illiteracy to still be reasonably high for Kuwait, certainly far higher than in Malaysia, South Korea, or Thailand, all of which have lower per capita incomes. Even Indonesia, Sri Lanka, and Turkey have lower illiteracy rates. This alone is not a serious problem for the education system because most of the illiteracy is found to be in the older age groups. Illiteracy has fallen dramatically in the age groups of age 40 and younger (35 for females) as a result of universal public education, and is one of its major accomplishments. The mean number of years of schooling in Kuwait is low. It is about 5.5 years in Kuwait, compared with 9 in South Korea, and 10–12 in Australia, the U.K., and New Zealand. This remains low, probably partly because expatriates do not have access to the free public schools. It is an additional reason that user fees are not recommended at the primary, middle school, or on a non-targeted basis at the high school levels. It is well known from international research that expenditures on good quality textbooks and teaching materials, libraries, instructional time, and teacher subject-knowledge are by far the most effective in increasing learning. Inputs in these categories therefore should have the highest priority for expenditure. Kuwait spends far too little of its public funds on textbooks and teaching materials (and presumably also on libraries) by international standards. The amount spent in primary and secondary levels in Kuwait is 0.6% of total public expenditure, whereas it is 1.1% in South Korea, 4.8% in Malaysia, 4.0% in Thailand, and 2.3% in Singapore. At the school level, laboratory equipment is expensive, and beyond basic levels, research indicates that it is not nearly as crucial to effective learning. Textbooks and teaching materials, as well as good quality books for the libraries, however, should be at least 7% of school budgets.
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Instructional time is another key factor that shows a positive effect in 90% of the studies on effective learning. In Kuwait, the length of the school year is 150 days per year, and the lowest in the comparison group, including Malaysia, South Korea, Thailand, Jordan, Sri Lanka, Syria, and the U.A.E. Among the selected countries, Thailand and Sri Lanka lead in the length of school year with 1,200 hr per year, followed by Syria with 1,100 hr per year, Jordan with 1,050 hr per year, and Malaysia and South Korea with 1,000 hr per year. International research finds that investing funds in reducing class size, unless they are extremely large, does not have a demonstrable effect on enhanced learning. And yet, in many countries, education systems have made a practice of hiring more teachers to reduce class size. In Kuwait, the overall average class size in public schools at the primary or secondary level was about 30 students per classroom during the scholastic year 1994/1995. When compared with private schools, the overall mean class size at the primary levels in public schools was similar to those of private schools. The student/teacher ratios in public schools were 14 and 10 students per teacher for primary and secondary education, respectively. Private schools in Kuwait have higher student/teacher ratios than public schools at every level of education. At the primary level, the student/teacher ratio was 19, and for secondary level the ratio was 12. Student/teacher ratios in Kuwait are lower at the primary and secondary levels than in the other countries in the comparison group. In the case of higher educational institutions (i.e., Kuwait University and Public Authority for Applied Education and Training), the student/teacher ratios are lower than those in higher education in South Korea and Italy, and about the same as in Australia. They are higher, however, than in the U.K., New Zealand, Ireland, or Malaysia. Kuwait University, at 20 students per teacher, remains far below the 36 students per teacher in South Korean universities, but substantially above the 10–18 students per teacher in the other countries. Thus, it can be concluded that low student/teacher ratio is not the cause of the extremely high public cost per pupil in the Kuwait University. Internal efficiency is concerned with the extent to which particular educational goals are achieved with a given input of resources. The goal is for students to flow through the system and graduate with minimum waste. Wastage in the flow of students is expressed quantitatively in the forms of dropouts and repeaters. This is because repeaters stay in school longer than the normal duration, and thus reduce the intake capacity of the corresponding grades and increase education’s unit cost. About 3,000 of the 82,000 primary school places; 5,700 of the 75,500 intermediate school places; and 13,000 of the 53,000 secondary school places in Kuwait’s public schools were occupied by repeaters during the 1991/1992 scholastic year. Thus, as much as 35% of the public budget on general education is spent to teach repeaters. In other words, if there had been no repetition in the general education level, the Ministry’s budget on general education could have been reduced by one-third.
4. Concluding remarks This paper has analyzed the efficiency of Kuwait’s public education system. The analysis has relied on comparative analysis and is based on cross-country data. The evidence for Kuwait has been compared with that of countries with comparable income levels based on the finding
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that income is one of the main determinants of expenditure on education. The discussion on efficiency focused on the external as well as the internal efficiency of the public education system. The level of public expenditure on education was found to be not excessive. This does not necessarily mean that the government should spend more on education. One of the reasons that Kuwait has relatively lower per capita expenditure on education is that the expenditure data does not include expenditure in the private sector. The finding that the rate-of-returns to education in Kuwait are comparable to other countries may appear to suggest that overall economic efficiency is satisfactory in the sense that the education system is producing graduates who are being rewarded reasonably for their skills and investments. They, however, do not reflect on the fact that approximately 95% of the Kuwaitis who have been through the public education system end up working in the public sector where earnings are not necessarily linked to productivity, and where total earnings are high compared to the private sector and are also distorted due to the various benefits in the form of allowances that the government gives its citizens. To determine the true rate-of-returns to education, a systematic study needs to be undertaken that takes proper account of some of these characteristics of the Kuwaiti economy. To analyze the efficiency of the public education system, the study constructed and examined a number of efficiency indicators that relate outcomes to the inputs used in the provision of educational services. By international standards, the public education system in Kuwait is found to be relatively inefficient, which has resulted in a high cost per student. For instance, it has been found that Kuwait spends too little on textbooks and teaching materials, the length of school year is short compared to other countries, the student/teacher ratio is low, and the repetition rate is high. In the final analysis, these inefficiencies cost the authorities a high proportion of public allocation to education.
Notes 1. Kuwait is a small (approximate area 17,818 km2 ) open economy that relies heavily on a single natural resource. It is rich in oil reserves, expected to last more than 100 years (at the end of 1996, the proven reserves were 96.5 billion barrels), and has one of the highest per capita income in the world (approximately $19,360 in 1993). By the end of 1999, it had a population of 2.21 million, of which the Kuwaitis were only 35%. The domestic non-mining production base is limited, with agriculture and manufacturing (which includes petroleum refineries that constitute 67% of manufacturing value-added) accounting for 0.4 and 1.1%, respectively, of the country’s gross domestic product. Most of the country’s crude oil output and related products are exported (oil revenues account for approximately 90% of government revenues), and the necessary capital and consumer goods imported. 2. In Kuwait, the government has taken a leading role in the provision of educational services, and the public education system dominates the sector. Between 1982/1983 and 1994/1995, the government, on average, spent approximately KD 380 million (or 9.8% of its total expenditure) annually on education. Although there are a large number of private educational institutions in the country, they are restricted to the secondary level
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of education. In 1995/1996, private schools accounted for 32, 21, and 29% of the total number of schools, teachers, and students up to the secondary levels of education in the country. Whereas the private schools charge high tuition fees and serve the expatriate students, the student population in the public schools is skewed heavily towards the Kuwaiti population where only about 12% of the students are expatriates. The current system consists of general education, which is comprised of kindergarten, primary (4 years), intermediate (4 years), and secondary (4 years), and higher education. The higher education is a combination of junior colleges (grades 13–14) and a general degree university (grades 13–20). Over the years, the public education system in the country has expanded considerably. For instance, in 1995/1996, the number of public schools was three times its 1969/1970 level. The increases in the number of teachers and students during the same period were 3.4 times and 2.3 times, respectively. Furthermore, increases in the physical facilities (schools) and teachers over the years have been faster than the number of students, resulting in declining student/teacher and student/school ratios. For a detailed discussion of the structure of the public education system and its development over the years, see Burney, Al-Ramadhan, Khalaf, Hoque, and Dashti (1995). 3. Between 1970 and 1995, the adult literacy rate increased from 54 to 85%. However, in a recently completed study, Third International Mathematics and Science Study, 8th grade students from Kuwait were ranked 39th in a group of 41 countries in terms of their abilities to solve mathematics or science problems. 4. The relationship between income and expenditure on education, in fact, is recursive, which means that as parents and the government invest in the education of children early in their life cycle, after a relatively long lag, their earnings later in their life cycles are higher. With higher incomes, they are able and willing to invest more in the education of their children. 5. The cross-time (or intertemporal) comparison, the other approach for assessing efficiency, is not being used in this study. Such an approach, while useful, is more relevant to situations where abrupt changes in the specific category or type of education are being examined. For a temporal examination of different efficiency indicators for Kuwait, see Burney et al. (1995).
References Al-Qudsi, S. S. (1989). Returns to education: Sector pay differentials and determinants in Kuwait. Economics of Education Review, 8(3), 263–276. Burney, N. A., Al-Ramadhan, M. A., Khalaf, B., Hoque, A., & Dashti, R. (1995). Fiscal constraints, cost efficiency of social services, and determination and evaluation of fees on users (Vol. III). Kuwait: The Public Education System, Kuwait Institute for Scientific Research, Report no. KISR4712. Psacharopoulos, G. (1993). Returns to investment for education: A global update (pp. 1–60). Working Paper #1067, Latin American and Caribbean, The World Bank, January.
The efficiency of the public education system in Kuwait Nadeem A. Burney∗ , Othman E. Mohammed Techno-Economics Division, Kuwait Institute for Scientific Research, P.O. Box 24885, 13109 Safat, Kuwait
Abstract Based on a cross-country comparative analysis, the efficiency of public education in Kuwait has been examined. The analysis indicates that compared to countries with comparable incomes, the overall level of public expenditure on education in Kuwait is not excessive. While the returns to investment in education are reasonably high and are comparable to those in other countries, internal inefficiencies exist within the public education system. Some of the specific inefficiencies are low spending on textbooks and teaching materials, short length of the school year, a low student–teacher ratio, and a high repetition rate. © 2002 Elsevier Science Inc. All rights reserved.
1. Introduction Education contributes positively to the growth of national income both directly, through enhancing the skills, knowledge, and productivity of the labor force, as well as indirectly, through better employment opportunities, low population growth rates, improved health standards and nutrition, reduced poverty level, and improved distribution of income and assets within the economy. Furthermore, education enables endogenization of technological advances within the system and offset diminishing returns to physical capital investment. For education to deliver the benefits effectively, it is imperative that the output of the education system corresponds to the needs of the society, and that the graduates be productively employed. In other words, the link between economic growth and human capital is the development of a robust demand for skills, an efficient labor market, and an efficient education system. For Kuwait, good quality education for all is essential not only to sustain rising standards of living for individual families, but also to reduce dependence on oil, an exhaustible natural resource, which must gradually be replaced with greater dependence on skill-intensive production within and outside the petroleum sector.1 Realizing that the benefits to the society of ∗
Corresponding author. Tel.: +965-483-6100, ext. 4918. E-mail address: [email protected] (N.A. Burney).
0362-3319/02/$ – see front matter © 2002 Elsevier Science Inc. All rights reserved. PII: S 0 3 6 2 - 3 3 1 9 ( 0 2 ) 0 0 1 6 8 - 4
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investments in education far exceed those to the individuals, the government in Kuwait, as in most developing countries, has taken a leading role in the provision of educational services. During the last four decades, the government has devoted a substantial amount of resources to the expansion of educational facilities.2 In addition, because of the economic externalities that flow from the spread of education, education in public educational institutions is provided to nationals free of charge. While the expansion of educational facilities has helped improve the literacy level in the country, the development of various skills has remained low compared with international standards.3 Due to uncertain and declining oil revenues, and the increasing demand on resources from other important competing sectors, such as health, housing and defense, the sustainability of the public sector’s commitment to the development and provision of free education is questionable. At present, approximately 55% of the nationals in Kuwait are below 20 years of age, and 48% are in the school-going age group (5–24 years). With high fertility and population growth rates, this puts enormous pressure on the amount of resources required to meet the educational needs of the ever-growing population and maintain the public education system. If education is to make a major contribution to the socio-economic development of Kuwait, public investment in education should continue and even increase with time. Given the constraints on the availability of resources, this means that the overall efficiency of the public education system, which includes improved quality without increased cost and equity of the education sector must be improved. This paper investigates the efficiency of the public education system in Kuwait.
2. Efficiency of the public education system: a conceptual framework In the context of allocation of resources, analysis of efficiency has been a central concern of economic theory, and is an essential element of modern microeconomic theory. The ends of economic actions are seen to be the satisfaction of human wants through the provision of goods and services, which are supplied by production and exchange and are limited by scarcity of resources and technology. In this context, efficiency means going as far as possible in the satisfaction of wants within resource and technological constraints, and entails organizational constraints on information processing and transmission. Thus, the concept of efficiency is linked to decentralized modes of economic organizations, particularly competitive mechanisms. The absence of competitive markets makes empirical investigation of the efficiency a challenging proposition. This is more so in the case of social sectors where the benefits are spread over a long period of time, and are not always quantifiable. This is particularly true in the case of education, where the benefits (in the form of increased earnings) are not only spread over one’s life, many economic externalities flow from the improvements in educational attainments in a nation. Thus, benefits to the society far exceed those to individuals, and it is not possible to assign a monetary value to the benefits. For the society and the individuals, education is both a investment and a consumption good. Furthermore, the fact that both the society and the individuals benefit from education justifies sharing of cost of education. A real key to improving the efficiency of education is greater attention to the ultimate outcomes, which occur over the life cycle of graduates (including increased income, improved health status, reductions in inequalities, and good citizenship), and can be evaluated. But,
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there are also intermediate, more approximate, outputs and process indicators that relate to the current state of education. Improving the quality of these outputs and processes is conducive to improving the ultimate outcomes, many of which cannot be measured until years have passed. Thus, at a conceptual level, there are two levels of efficiency, internal efficiency and external efficiency, each of which is important to the determination of the overall efficiency of an education system. External efficiency refers to the success of graduates, in terms of ultimate outcomes, which definitely include non-monetary returns and are different from improvements to non-cognitive personal characteristics that can be monetary since they are also productive and much desired by employers (e.g., dependability). In other words, external efficiency is concerned with the cost-effectiveness with which schools and colleges serve the broad economic and non-monetary cultural needs of society, whatever they might be. In contrast, internal efficiency focuses on the internal operation of the school or college. It can be broken down into technical efficiency (e.g., the most effective teaching and learning techniques), and allocative efficiency (e.g., the mix of good textbooks, libraries, class size, computer problems, and teacher time that should be used to produce the most cost-effective learning results). A slightly different manner in which to describe internal efficiency is to think of production and consumption efficiency. Production efficiency requires that skills and graduates are produced at minimum cost, and the concept is intended to capture the relationship between inputs and outputs. Consumption or exchange efficiency requires that goods be purchased at prices approximately equal to marginal cost. A major problem with using market analysis for Kuwait is that the public education system provides free education to nationals. There are neither market-determined prices (competitively or non-competitively determined) nor non-zero government-established prices against which to compare the marginal costs of production. Then, the labor market in Kuwait is highly segmented. Most of the Kuwaiti graduates end up working in the public sector where the wages have been kept high compared to the private sector. The provision of free education may have the effect of distorting the types of skills and graduates that come out of the public education system. The first result of this price distortion may be the enrollment of too many students in different levels of education, particularly higher levels. Parents may be more likely to have their children continue their education than they would if the higher levels of education were to involve a real price. Then, the students may take longer to complete a given level of education. The second result may be distortions in the types of skills that are acquired and enrollment of students in different subjects. It could result in enrollments in disciplines for which the marginal benefits fall short of the marginal costs. In the extreme, students and parents view the marginal costs of the skill as being zero to themselves and pursue skill and discipline to the point at which marginal benefits are zero, even though the marginal production costs to society may be significantly greater than zero. Finally, the administrators of the public education system may influence students’ choices because at a zero out-of-pocket price to the students, the administrators have more flexibility in directing the students to the types of skills and subjects that reduce the inconvenience cost to the administrators. To overcome the problems related to the analysis of the efficiency of an education system, particularly like the one in Kuwait, a comparative approach based on efficiency norms is a useful option. A major component in the comparative analysis of the efficiency of the education system is the nature of the norms of efficiency against which the system can be compared.
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In this context, there can be two types of norms: absolute and relative. While no absolute standards of efficiency can be applied to Kuwait’s public education system, much can be achieved by the use of relative standards, which are in widespread use by many countries across the world. Two types of relative standards have gained widespread acceptance as powerful means for examining the efficiency of national education systems. These are comparisons across countries and across time. Cross-country comparisons, being widely used by economists, are generally accepted for establishing standards of relative efficiency. However, there is the risk that all countries are inefficient, in which case each country is compared with other inefficient countries. But, economists generally rely on the principle that behavior of individual units across groups of economic units is rational. Thus, it is believed to be appropriate and safe to assume that rational behavior for the case at hand would lead each country to seek an efficient level and mix of educational skills. An additional concern with cross-country comparisons is the choice of appropriate countries for comparison. While the choice of countries for comparison depends on the availability of data, some objective criterion is essential for a meaningful analysis. In this context, certain types of relationships, which have been observed to be very accurately predictable across countries, are extremely useful. For example, per capita income has been found to be a very accurate and stable predictor of per capita expenditure on education. The general pattern that has been observed is that, on a per capita basis, rich nations spend more on education and poor nations spend less.4 The main issue is the determination of the most appropriate countries with which to compare Kuwait. Kuwait is unusual because it is a very wealthy country, but the wealth has come about very recently and is tied to oil production. Therefore, the infrastructure in the country has changed rapidly and recently. Thus, Kuwait is comparable with the wealthiest countries of the world in some aspects, whereas it is more comparable with less wealthy countries in many other aspects. In terms of income, which has been found to be the main determinant of development of an education system, Kuwait compares favorably with the developed countries. In the comparisons that follow, Kuwait’s efficiency indicators were compared with the same indicators for both developed and newly industrialized countries.5
3. Measures of efficiency While there are a number of indicators (measures) that can be used to examine the overall efficiency of Kuwait’s education system, this paper relies on per capita expenditure on education, private returns to education, social rate of return to investment on education, pupil–teacher ratio, repetition rate, time-on-task (or length of school year), budgetary allocations, and time taken to complete degree program. The efficiency indicators for both Kuwait, and developed and newly industrialized countries correspond to the year 1990, the last year before the invasion for which data are available, some of which are summarized in Table 1. In the case of per capita expenditure on education in relation to per capita gross national product (GNP), the evidence places Kuwait at the lower end of the group of countries. The public investment in education by the government in Kuwait was 5% of the GNP in 1990, which is not high by international standards when Kuwait is compared with countries with the
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same or lower per capita incomes. In the group of countries, public expenditure on education as a percentage of GNP is higher in Malaysia, Saudi Arabia, Israel, Ireland, New Zealand, and the U.K., and approximately the same in Italy, Australia, and Spain. The expenditure on education (as a percentage of GNP) in Kuwait is a lower public effort for good quality, universal, 12-year (K-12) education than that made by the rapidly growing East Asian countries. It may be worth pointing out that whereas total public expenditure per student at the primary and secondary levels in Kuwait is comparable to other countries, it is far above for the higher education (tertiary level). Based on the data on earnings, the private returns to individuals of higher education in Kuwait were computed. The evidence indicates that the private returns on higher education in Kuwait are very high. They are rather typical of returns in the industrial countries to individuals who complete college. The average earnings of high school graduates (aged 22–60 years) in Kuwait are KD 3,731 (or $12,313), and those of university graduates in the same age range are KD 6,181 ($20,399). This means that an employed college graduate was earning about 165% more than a high school graduate. This ratio of earnings is very close to the ratio of earnings of college graduates to high school graduates in the U.S. (170%). The private rates of return are high in light of the public subsidy. The social rates of return for Kuwait along with those available for some other countries are presented in Table 2. The extremely high rate of return of 24% for primary education of Table 2 Rate of return to investment in education in Kuwait and selected countries Country
Primary
Middle
Secondary
PAAET
Higher
Kuwait citizensa Male Female
24.0 7.0
8.0 10.0
4.0 11.0
21.0 26.0
12.0 14.0
Intermediate regionb Europe/Middle East Latin America Asia Sub-Saharan Africaa OECD
15.5 17.9 19.9 24.3 14.4
Selected countriesb Kuwait (1983)c New Zealand (1966) Singapore(1966) Hong Kong (1967) Israel (1958) Spain (1971) South Korea (1986) Mexico (1984)
6.6 16.5 17.2 19.0
11.2 12.8 13.2 18.2 10.2
10.6 12.3 11.7 11.2 8.7
4.5 14.4 17.6 15.0 6.9 8.6 8.8 9.6
13.2 14.1 12.4 6.6 12.8 15.5 12.9
PAAET = Public Authority for Applied Education and Training (1–3 years program). a Computed from National Labor Force Survey Data (1988). b Psacharopoulos (1993). c Al-Qudsi (1989).
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males suggests that the returns for keeping primary education universal are extremely high. This is a strong argument against imposing any user fees on primary school attendance since such fees are known to drive children from lower income families out of the schools. Most of the illiterates in the population are Kuwaitis who are 45 years of age or older. These illiteracy rates exceed 50% among Kuwaitis aged 55 or older. The primary schools cannot do anything about this. The high rate of return for primary education is not an argument for investing more in primary schools, but it does show, that if there is failure to sustain the primary schools, the same illiteracy pattern could emerge in the future again, with the resulting very heavy social and economic loss to the society. The rates of return to education of Kuwaiti males through middle school and high school are mediocre and lower than those achieved in most other countries. The rates of return to the education of females are more substantial at the middle school and high school levels. They are very typical of what is observed in other countries, and typical of high school rates of return for both males and females in the U.S. Females have much lower foregone earnings costs in Kuwait, which reduces the total social costs of their education. So even though their earnings are lower, the rates of return are reasonably high, and their education is economically advantageous to them and to the society. To get a more meaningful measure of education outcomes, percent ‘not employed’ by education level were computed from the data reported in the labor force survey. The underemployment rates revealed that underemployment falls steadily as education levels increase from illiterates up through college level. This indicates that education is a key factor in enabling people to enter the labor force. Another indirect measure of external efficiency is the illiteracy rate. Table 1 shows illiteracy to still be reasonably high for Kuwait, certainly far higher than in Malaysia, South Korea, or Thailand, all of which have lower per capita incomes. Even Indonesia, Sri Lanka, and Turkey have lower illiteracy rates. This alone is not a serious problem for the education system because most of the illiteracy is found to be in the older age groups. Illiteracy has fallen dramatically in the age groups of age 40 and younger (35 for females) as a result of universal public education, and is one of its major accomplishments. The mean number of years of schooling in Kuwait is low. It is about 5.5 years in Kuwait, compared with 9 in South Korea, and 10–12 in Australia, the U.K., and New Zealand. This remains low, probably partly because expatriates do not have access to the free public schools. It is an additional reason that user fees are not recommended at the primary, middle school, or on a non-targeted basis at the high school levels. It is well known from international research that expenditures on good quality textbooks and teaching materials, libraries, instructional time, and teacher subject-knowledge are by far the most effective in increasing learning. Inputs in these categories therefore should have the highest priority for expenditure. Kuwait spends far too little of its public funds on textbooks and teaching materials (and presumably also on libraries) by international standards. The amount spent in primary and secondary levels in Kuwait is 0.6% of total public expenditure, whereas it is 1.1% in South Korea, 4.8% in Malaysia, 4.0% in Thailand, and 2.3% in Singapore. At the school level, laboratory equipment is expensive, and beyond basic levels, research indicates that it is not nearly as crucial to effective learning. Textbooks and teaching materials, as well as good quality books for the libraries, however, should be at least 7% of school budgets.
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Instructional time is another key factor that shows a positive effect in 90% of the studies on effective learning. In Kuwait, the length of the school year is 150 days per year, and the lowest in the comparison group, including Malaysia, South Korea, Thailand, Jordan, Sri Lanka, Syria, and the U.A.E. Among the selected countries, Thailand and Sri Lanka lead in the length of school year with 1,200 hr per year, followed by Syria with 1,100 hr per year, Jordan with 1,050 hr per year, and Malaysia and South Korea with 1,000 hr per year. International research finds that investing funds in reducing class size, unless they are extremely large, does not have a demonstrable effect on enhanced learning. And yet, in many countries, education systems have made a practice of hiring more teachers to reduce class size. In Kuwait, the overall average class size in public schools at the primary or secondary level was about 30 students per classroom during the scholastic year 1994/1995. When compared with private schools, the overall mean class size at the primary levels in public schools was similar to those of private schools. The student/teacher ratios in public schools were 14 and 10 students per teacher for primary and secondary education, respectively. Private schools in Kuwait have higher student/teacher ratios than public schools at every level of education. At the primary level, the student/teacher ratio was 19, and for secondary level the ratio was 12. Student/teacher ratios in Kuwait are lower at the primary and secondary levels than in the other countries in the comparison group. In the case of higher educational institutions (i.e., Kuwait University and Public Authority for Applied Education and Training), the student/teacher ratios are lower than those in higher education in South Korea and Italy, and about the same as in Australia. They are higher, however, than in the U.K., New Zealand, Ireland, or Malaysia. Kuwait University, at 20 students per teacher, remains far below the 36 students per teacher in South Korean universities, but substantially above the 10–18 students per teacher in the other countries. Thus, it can be concluded that low student/teacher ratio is not the cause of the extremely high public cost per pupil in the Kuwait University. Internal efficiency is concerned with the extent to which particular educational goals are achieved with a given input of resources. The goal is for students to flow through the system and graduate with minimum waste. Wastage in the flow of students is expressed quantitatively in the forms of dropouts and repeaters. This is because repeaters stay in school longer than the normal duration, and thus reduce the intake capacity of the corresponding grades and increase education’s unit cost. About 3,000 of the 82,000 primary school places; 5,700 of the 75,500 intermediate school places; and 13,000 of the 53,000 secondary school places in Kuwait’s public schools were occupied by repeaters during the 1991/1992 scholastic year. Thus, as much as 35% of the public budget on general education is spent to teach repeaters. In other words, if there had been no repetition in the general education level, the Ministry’s budget on general education could have been reduced by one-third.
4. Concluding remarks This paper has analyzed the efficiency of Kuwait’s public education system. The analysis has relied on comparative analysis and is based on cross-country data. The evidence for Kuwait has been compared with that of countries with comparable income levels based on the finding
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that income is one of the main determinants of expenditure on education. The discussion on efficiency focused on the external as well as the internal efficiency of the public education system. The level of public expenditure on education was found to be not excessive. This does not necessarily mean that the government should spend more on education. One of the reasons that Kuwait has relatively lower per capita expenditure on education is that the expenditure data does not include expenditure in the private sector. The finding that the rate-of-returns to education in Kuwait are comparable to other countries may appear to suggest that overall economic efficiency is satisfactory in the sense that the education system is producing graduates who are being rewarded reasonably for their skills and investments. They, however, do not reflect on the fact that approximately 95% of the Kuwaitis who have been through the public education system end up working in the public sector where earnings are not necessarily linked to productivity, and where total earnings are high compared to the private sector and are also distorted due to the various benefits in the form of allowances that the government gives its citizens. To determine the true rate-of-returns to education, a systematic study needs to be undertaken that takes proper account of some of these characteristics of the Kuwaiti economy. To analyze the efficiency of the public education system, the study constructed and examined a number of efficiency indicators that relate outcomes to the inputs used in the provision of educational services. By international standards, the public education system in Kuwait is found to be relatively inefficient, which has resulted in a high cost per student. For instance, it has been found that Kuwait spends too little on textbooks and teaching materials, the length of school year is short compared to other countries, the student/teacher ratio is low, and the repetition rate is high. In the final analysis, these inefficiencies cost the authorities a high proportion of public allocation to education.
Notes 1. Kuwait is a small (approximate area 17,818 km2 ) open economy that relies heavily on a single natural resource. It is rich in oil reserves, expected to last more than 100 years (at the end of 1996, the proven reserves were 96.5 billion barrels), and has one of the highest per capita income in the world (approximately $19,360 in 1993). By the end of 1999, it had a population of 2.21 million, of which the Kuwaitis were only 35%. The domestic non-mining production base is limited, with agriculture and manufacturing (which includes petroleum refineries that constitute 67% of manufacturing value-added) accounting for 0.4 and 1.1%, respectively, of the country’s gross domestic product. Most of the country’s crude oil output and related products are exported (oil revenues account for approximately 90% of government revenues), and the necessary capital and consumer goods imported. 2. In Kuwait, the government has taken a leading role in the provision of educational services, and the public education system dominates the sector. Between 1982/1983 and 1994/1995, the government, on average, spent approximately KD 380 million (or 9.8% of its total expenditure) annually on education. Although there are a large number of private educational institutions in the country, they are restricted to the secondary level
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of education. In 1995/1996, private schools accounted for 32, 21, and 29% of the total number of schools, teachers, and students up to the secondary levels of education in the country. Whereas the private schools charge high tuition fees and serve the expatriate students, the student population in the public schools is skewed heavily towards the Kuwaiti population where only about 12% of the students are expatriates. The current system consists of general education, which is comprised of kindergarten, primary (4 years), intermediate (4 years), and secondary (4 years), and higher education. The higher education is a combination of junior colleges (grades 13–14) and a general degree university (grades 13–20). Over the years, the public education system in the country has expanded considerably. For instance, in 1995/1996, the number of public schools was three times its 1969/1970 level. The increases in the number of teachers and students during the same period were 3.4 times and 2.3 times, respectively. Furthermore, increases in the physical facilities (schools) and teachers over the years have been faster than the number of students, resulting in declining student/teacher and student/school ratios. For a detailed discussion of the structure of the public education system and its development over the years, see Burney, Al-Ramadhan, Khalaf, Hoque, and Dashti (1995). 3. Between 1970 and 1995, the adult literacy rate increased from 54 to 85%. However, in a recently completed study, Third International Mathematics and Science Study, 8th grade students from Kuwait were ranked 39th in a group of 41 countries in terms of their abilities to solve mathematics or science problems. 4. The relationship between income and expenditure on education, in fact, is recursive, which means that as parents and the government invest in the education of children early in their life cycle, after a relatively long lag, their earnings later in their life cycles are higher. With higher incomes, they are able and willing to invest more in the education of their children. 5. The cross-time (or intertemporal) comparison, the other approach for assessing efficiency, is not being used in this study. Such an approach, while useful, is more relevant to situations where abrupt changes in the specific category or type of education are being examined. For a temporal examination of different efficiency indicators for Kuwait, see Burney et al. (1995).
References Al-Qudsi, S. S. (1989). Returns to education: Sector pay differentials and determinants in Kuwait. Economics of Education Review, 8(3), 263–276. Burney, N. A., Al-Ramadhan, M. A., Khalaf, B., Hoque, A., & Dashti, R. (1995). Fiscal constraints, cost efficiency of social services, and determination and evaluation of fees on users (Vol. III). Kuwait: The Public Education System, Kuwait Institute for Scientific Research, Report no. KISR4712. Psacharopoulos, G. (1993). Returns to investment for education: A global update (pp. 1–60). Working Paper #1067, Latin American and Caribbean, The World Bank, January.