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Fiscal Discipline and Educational Quality

ANKARA – The world is moving into a post-industrial age in which manufacturing is becoming ever more complex and competition has become global. To succeed, countries increasingly need a highly skilled and educated workforce. Therefore, raising the level of skills conferred by secondary schools has become an urgent priority for developing and developed countries alike.

For me, the issue of education is no mere academic matter. I was born into a family of nine children. My parents were illiterate, and none of my sisters attended school beyond the primary level. However, in my family’s next generation, all of my nieces and nephews have a high-school diploma and most have attended university. Improving the education system of a country with more than 16 million primary and secondary school students – more than the combined population of 20 European Union member states – poses considerable fiscal challenges. So the first step is to create a sound macroeconomic basis for reform.

For many years, high public debt and macroeconomic mismanagement forced Turkey to pay a huge interest-rate premium in international financial markets – money that might have otherwise been invested in schools. However, since assuming office in 2003, Prime Minister Recep Tayyip Erdoğan’s government has reduced the fiscal deficit as a share of GDP by nearly ten percentage points, from 10.8% in 2002 to 1% in 2013, and cut the public debt/GDP ratio from 74% in 2002 to 36.3% in 2013. As a result, government interest payments as a share of tax revenues fell from 85.7% to 15.3% during this period.

These fiscal improvements have freed up funds for sizable investments in education, without adding to public debt. From 2002 to 2014, Turkey doubled the proportion of education spending in the total budget to 18% without hurting the country’s fiscal position. Since 2003, this extra money has allowed the government to hire some 410,000 more teachers, add 205,000 classrooms, and distribute 1.8 billion free textbooks.

But to compete with the world’s economic powerhouses, like China, we also needed to improve the overall quality of our labor stock. From the 2002-03 academic year to 2012-13, gross schooling rates (which includes students whose age exceeds or falls short of the official age group) increased from 96.5% to 107.6% in primary education; 80.8% to 96.8% in secondary education; and 35.8% to 92.1% in higher education.

Pupil-teacher ratios have also fallen. In the 2002-03 school year, there were 28 students per teacher in primary education and 18 in secondary schools; by 2012-13, this had fallen to 20 and 16, respectively. And in 2012, Turkey raised the minimum period of compulsory education to 12 years. This is an important reform, given that the average schooling of people over 25 is only 6.5 years in Turkey, compared to an OECD average of more than 11.

Moreover, the government has improved educational opportunities. As part of the FATIH project to help underprivileged students, Turkey has allocated 1.4 billion lira ($665 million) in 2014 to equip its schools with broadband Internet and the latest information technology. Other initiatives, such as “Baba Beni Okula Gönder” (Daddy, Please Send Me to School) and “Haydi Kızlar Okula” (Girls, Let’s Go to School), have improved enrollment gender ratios, from 91.1 girls for every 100 boys in 2002, to 101.8 girls for every 100 boys in 2012. This is likely to improve female labor-force participation in Turkey, which is around 30% on average, but 72% for those with a university diploma.

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Given Turkey’s geographic size (twice that of Germany but with a similar-size population), it has been a challenge to ensure that all pupils, regardless of their location or socioeconomic background, receive a good education. But one of Turkey’s most remarkable successes since 2003 has been to break the intolerable link between a child’s household circumstances and his or her chances to succeed in school.

Consider that in 2003, the test scores of 28% of Turkish students could be explained by their socioeconomic standing – in other words, the poorer the pupil, the lower his or her PISA scores. This was in line with the OECD average. But the OECD’s 2012 report found that only 15% of lower test scores among Turkish students could be explained by their socioeconomic standing, a better outcome than the OECD average.

Turkey is also narrowing the gap with OECD countries in terms of educational quality. In 2006, Turkey scored 76 points lower than the OECD average in science exams and 74 points lower in math. By 2012, the gap had fallen to 38 points in sciences and 46 points in math.  Given these achievements, it may be no coincidence that Turkey’s youth unemployment rate has also declined, from 25.3% in 2009 to 17.3% in January 2014, below the EU average of 22.8%. What is clear is that improving education and bolstering economic growth go hand in hand.

Of course, more needs to be done to realize Turkey’s human-development potential; but the past decade of educational reforms and their beneficial economic effects demonstrate that the foundations are being laid for rapid, sustainable, and inclusive growth.

Mehmet Şimşek is Minister of Finance of Turkey.

Copyright: Project Syndicate, 2014.

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