Tuesday, June 23, 2009

The myth of the 8 percent

In Mexico, most policy and political debates on the topic of education financing refers to the mythical figure of 8 % of GDP, as the optimal government investment in this sector. Discussions in the House of Representatives, the Ministry of Education, the National Association of Universities (ANUIES), and even in the academia, all refer to the "UNESCO´s recommendation" to achieve this level of investment.

This "optimal percentage" even became part of the Federal Law of Education in 2000, when a reform to the article 25 stated that "the amount that the State invests in education can not be less than eight percent of GDP". Having permeated the national policy debate, I started an inquiry on the actual origins of this supposedly recommendation from an international organization. I started reviewing the justification of the bill that introduced this reform back in 2000; the Report of the Committee on Education argued that the notion came from a Conference of Latin American education ministers, which took place in Mexico City back in 1979, and was hosted by UNESCO. At the end of that Conference, a document called the Declaration of Mexico was presented and signed by all the present ministers. This document states, among other policy proposals, that member countries should gradually increase the level of public investment until "reaching the 7 or 8 percent of the GDP, with the goal of overcoming the educational problems of the region".

Theoretically, there is no rational for proposing the investment of 7 or 8 % of GDP in education, instead of 6 or 9 %, for instance. The Declaration does not explain nor justify this notion with hard data or a model. Giving that this recommendation -not advocated by UNESCO itself but by the education ministers present at that Conference- lacks policy rigor and was given 30 years ago with a different educational, political and economic context, I argue that it is completely outdated and arbitrary. This notion has distorted the policy debate because we should not be focusing on achieving an arbitrary investment goal, but on pursuing structural reforms to increase the quality of educational institutions -whatever investment it takes.

According to the OECD report, Education at a Glance 2008, Mexico has shown rises in its investment in education, not just in absolute terms, where increases were observed in most countries over recent years, but also relative to national income: over the period 1995-2005, spending on educational institutions in Mexico increased from 5.6% to 6.5% of GDP (including private investment), a level that is above the OECD average of 5.8%. Mexico is one of the three countries with the largest increases in educational expenditure as a percentage of GDP over this 10-year period.

The OECD, in this same document estimates that at the current levels of investment , if used more efficiently, countries could improve their academic performance by 22 percent, measured by the PISA exam. This implies that Mexico would obtain 500 points on the exam (Level 3), instead of the current 410 points (Level 2).

In conclusion, diverse studies on educational policy have demonstrated that it is not enough to just pour more money in education. Therefore, our main goal should not be the achievement of a magic investment percentage, but to improve our results on academic performance evaluations; if this goal can be achieved by investing 8 % of the GDP, or more, then we should do it; however, the empirical evidence does not support such a claim.


  1. Hey I randomly found your blog and I'm glad I did. Very interesting stuff! I'm a conservative writer/grad student/blogger in Chicago (rjmoeller.com). Keep up the good work!

  2. Thanks Robert, I´m glad you like the policy ideas. I find your blog very interesting too. Lets keep in touch. Cim