debt relief and education in hipcs
43
Figure 2.4 Distribution of Education Expenditures in Pre–Decision Point, Interim, and Post–Completion Point HIPCs 100 90 80
percent
70 60 50 40 30 20 10 0 pre–decision point
interim period
post–completion point
stage of HIPC Initiative process primary
secondary
tertiary
Source: Authors’ compilation based on World Bank data.
flawed, in the sense that belonging to each one of the stages of the HIPC Initiative is not a randomized experiment. To the extent that observed and unobserved country characteristics affect both the stage of the HIPC Initiative of a country and the process of human capital accumulation or education policy measures, the effects implied by statistical tests will not necessarily capture a causal effect of debt relief on educational variables. To address these issues, Crespo Cuaresma and Vincelette (2008a) estimate the effects on the change in educational variables of HIPCs reaching the decision or completion point, after controlling for selection factors, such as the quality of democratic institutions, inflation, armed conflicts, net aid transfers, per capita income, GDP growth rate, and country size, among others. They use estimation procedures based on propensity score matching methods and Heckman’s (1979) sample selection estimator. Their results imply that countries that reach the completion point exhibit declines in primary school dropout rates that are about 5–9 percentage points lower than those in interim countries, where the average dropout rate is 43 percent. Less robust results are found for changes in repetition rates, educational expenditures, and student-teacher ratios, although several specifications point toward a positive effect of debt relief on these variables.