Borrowing from the World Bank for Education : Lessons from Korea and Mexico

By comparative static analyses, this paper tests the hypothesis that greater educational investment in Korea than in other developing countries led to the greater contribution to rapid economic growth in Korea during the 1960s-1990s. The empirical data do not support the hypothesis. No greater investment in education, including borrowings from the World Bank for education, was made in Korea than in other developing countries with the same level of per capita income. This paper therefore investigates whether the investment in education in Korea was more efficient than in other developing countries at the same level of development during the period observed. This investigation was made by comparing the characteristics of World Bank educational loans/credits for Korea and Mexico, respectively. The results do reveal significant differences between the two countries in several aspects and lend some lessons for both lenders and borrowers of educational development loans.