Macroeconomic Crisis, Primary Education and Aid Effectiveness

While the relationship between macroeconomic crisis, human capital investment and international aid is intensively discussed by the international community, rigorous macroeconomic evidence is still missing. Using system GMM on a sample of 109 developing countries over the period 1999-2012, our analysis indicates that macroeconomic crises have strong and significant impacts on primary school enrolment. Aid to education and public spending on education tend to strongly react to political crises and internal conflicts. Our study shows that aid to education is more effective during macroeconomic crises. During political crisis, our results indicate that while the aid absorptive capacity is lower, aid to education tends to be also more effective. Regarding gender issues, aid to education appears to be especially efficient for girls’ access to education during political crises. The heterogeneous natures of internal conflict and natural disaster do not allow us to draw any clear conclusions.