A Case for Public Education in Democratic States with Low Fiscal Capacity

Image by Global Partnership for Education via Flickr

By Garret Dellwo

In the global South, democratic states with low fiscal capacity and weak public school systems (underfunded primary and secondary schools), governments should seek to bolster their public education system through tax-funded investment rather than turning toward profit-motivated private options. Such investments in public education are more likely to result in better and more equitable educational outcomes for citizens, promote political participation and inclusive economic institutions, boost state legitimacy, grow the tax base, and diminish political instability.

Properly funded public school systems will produce better educational results for students. Private school systems that operate as businesses should be assumed to be primarily motivated by profit maximization rather than providing the highest quality education. Thus, they can be expected to provide the minimum quality of education possible to maximize profit so long as increasing educational quality would also raise costs at the profit-maximizing level of investment.  In contrast, education provided through a public system aligns the interest of governments with those of students.

Providing the highest quality of education is in the best interest of the government as a more educated populace will grow the economy and thus increase tax revenue for governments. This should be especially true for governments with long time horizons including those who expect to regain power even if they lose it in the short term.[1]  Wantchekon et al showed that education leads to higher standards of living, a higher percentage of residents employed outside of the agricultural sector, and higher incomes amongst the populace.[2] Furthermore, higher levels of education increase entrepreneurialism, technological advancement, and provide a workforce capable of utilizing new technologies.[3] 

Investments in education, such as those made by the Taiwanese government in the 1960s, have proved to not only grow the economy but to do so efficiently, yielding returns that surpass the costs of investment.[4] As governments should have a vested interest in providing high-quality education to their citizens in order to boost their economies and grow tax revenue, and as these investments in education prove to be efficient, public school systems are best incentivized to provide high-quality education.

Public schools will provide educational access to all willing school-aged citizens, resulting in greater equity. Conversely, private schools use a market model that excludes those who are unable to pay. Private education systems, therefore, tend to predominately educate and benefit the wealthy and thus increase inequality both through the offering of education to only those who can afford it and through the benefits associated with educational opportunity.[5] Acemoglu and Robinson note that the price nations pay for inequitable institutions which fail to provide educational opportunities for all is high.[6] Such an approach causes nations to miss out on highly talented individuals and underutilize their citizen’s natural abilities.[7] Providing increased public goods not only provides more equal opportunity but increases equitable outcomes as well. As seen in Taiwan, the public investment in education resulted in greater social mobility, a larger middle class, and decreased wealth inequality.[8] 

Public school systems will result in higher levels of political participation amongst the populace. In order to fund public schools, states with low fiscal capacity will need to grow their tax base by raising taxes and likely growing the number of citizens that they seek taxes from.  When states provide little in the way of public services they often choose not to tax their entire body of citizens, instead they trade potential tax revenue in exchange for portions of their populace, typically those located in rural geographies, not challenging their authority or expecting the distribution of public goods.[9] In The Participation Dividend of Taxation, Johnathan Weigal highlights that when governments begin to tax previously untaxed citizens, those citizens become more engaged in the political process and thus demand more public goods.[10] It is widely believed that higher levels of education result in a public that is better prepared for political organization and communication.[11] A more politically active and competent populace increases political competition,[12] which in turn increases the quantity and quality of public goods.[13] Thus, if we believe that public school provides a higher quality of education for a wider range of constituents, and if such systems must be funded by widening the tax base, we can expect that public schools will increase both political activity and political competency, and in turn, enhance the public goods provided to the citizenry

Establishing a strong public school system would strengthen the legitimacy of the state. Robert Rothberg in The New Nature of Nation State Failure makes clear that nation-states fail when they cannot deliver public goods to their population.[14] States that don’t provide public goods risk losing legitimacy in the eyes of citizens and become inherently undemocratic as they use the power of the state to enrich only a small group of political elites.[15] As a state’s legitimacy wanes,  its citizens begin to look elsewhere for the provision of needs, turning instead to “clan and group leaders.”[16] Rothberg notes that in failed states, education will most likely be privatized resulting in “shady” schools, interested only in quick profit, that provide inconsistent services unfit to best serve the needs of students.[17] Moreover, as states gain legitimacy, they are increasingly successful at raising revenue through taxation.[18] In order to maintain legitimacy and avoid state failure or collapse, democratic governments should therefore seek to invest in and strengthen public schools rather than abdicating the role in favor of a private system.

Through increasing equality, a publicly run school system would decrease political instability. Investments in public schools have been shown to increase equality through both more equitable access to education and greater economic equality among a publicly educated populace.[19] Greater inequality has been found in some studies to be causally responsible for increased political instability.[20] Additionally, privatizing the education system risks increased factionalism. A private education system would disproportionately benefit those able to afford such a service. As recipients of education benefit from a higher quality of life, increased incomes, and are more likely to live in urban areas,[21] educational privatization would likely grow the social, economic, and geographic divide between the educated and uneducated class. Such a divide would result in disparate political needs and desires for both the educated and uneducated. Goldstone et al might define such a situation as factionalism, “a pattern of sharply polarized and uncompromising competition between blocs.”[22] Factionalism is found to be one of the most accurate predictors of political instability, particularly in partial democratic states.[23] Accordingly, to maintain political stability states should seek to boost equality through the funding of public schools.

Favoring a public rather than private school system would establish an inclusive institution. Inclusive economic institutions are those that encourage economic growth through the provision of economic opportunity for all members of society.[24] Acemoglu and Robinson include in their definition of inclusive institutions, “provision of public services that provide a level playing field.”[25] Public schools, which provide equal opportunity to all willing students and through education foster economic growth, would serve as an example of an inclusive institution. Private schools on the other hand are by nature exclusive.  Private schools provide opportunity for only those that can afford to purchase it, while also optimizing their own profits, seeking to maximize tuition payments while reducing costs through the elimination of services not deemed profitable. Further, Acemoglu and Robinson argue that although many public services could be provided through markets, most often only a central authority can effectively coordinate consistent implementation, thus ensuring that institutions are truly inclusive.[26]  To that end, in order to promote economic growth, inclusive public schools are superior to private education systems.

Public schools, however, are not a panacea. Public schools risk inefficiency through corruption, may be woefully underfunded or overcrowded, may lack incentive structures to ensure delivery of high-quality services, may fail to provide opportunities for effective democratic feedback, and may be inequitably funded by politicians seeking to minimize the expenditures required to win elections. Ways to address these concerns are outlined below.


Both public and private schools risk inefficiency through corruption.  Likely the best means of amelioration is through third-party oversight. This could be provided by NGOs or through another independent government agency. Upholding standards across a uniform public school system would likely prove easier than in a private school system with highly differentiated practices across schools.[27] Olken et al suggests that the presence of potential audits would likely reduce corruption and would be economically efficient.[28] Brierly suggests that additional structures that rectify power imbalances among corruptible actors would be necessary to lessen the prevalence of misconduct.[29] Although corruption is a problem faced by both private and public school systems, the universality of standards and relative ease of auditing public school’s spending makes public schools a preferred option.


Proponents of private schools tout that competition will ensure peak efficiency. This argument however relies on the assumption of perfect competition, which in practice, is unlikely to be a universal truth.[30] The capacity and capital to run and fund a new school is held by very few in developing states with low fiscal capacity. Additionally, schools will likely achieve economies of scale due to their high fixed costs. These two factors both lend themselves to local monopolies in which only one educational provider exists to serve a community; this outcome is particularly likely in small rural communities.[31] Such a situation allows private schools to extract higher fees and provide fewer services as students have no other options and few methods to provide feedback besides exiting the school system. Private schools are also argued to be more efficient as public schools produce little incentive for teachers and administrators to provide quality education beyond a baseline minimum. Banerjee and Duflo highlighted multiple incentive structures and technologies that can be utilized to increase educational quality in public schools.[32] Thus, although one may assume, a priori, greater efficiency in a private school setting, in practice there is no guarantee and through technology and carefully crafted incentive structures, public schools can operate in a highly efficient manner. 

Distributive Funding and Under Funding

Public schools like all public goods may be delivered only to areas in which politicians seek to reward constituents for their previous and continuing support in elections or to areas in which politicians seek to gain votes in the future.  Politicians prefer the provision of club goods, like schools, rather than private gifts for voters as these goods are more cost-effective, visible, and allow politicians to take credit for the delivery.[33] There is typically little incentive for politicians to provide goods in areas in which they have little chance to win support. This then may lead to inequities in terms of public school access and funding in regions that do not support the party in power. Even in favored areas, lack of ample allocation of funding and resources is a risk for public schools. As Dasgupta and Kapur showed, underfunded public entities are likely to underperform.[34] This limitation is serious, even so, my argument so far has made the case that the government’s long-term interests should be aligned with educating the populace in order to grow its tax base and that public education will increase political competition.  These two ideas in theory should ameliorate this issue. Additionally, civil society and NGO groups may be able to pressure governments to ensure educational equity in all locations. As private schools suffer to produce equity through the provision of their services to only those who are well to do, they too fail to provide an attractive solution to this problem.

Lack of Feedback

Market-based systems in theory should provide perfectly tuned mechanisms for feedback and response. In the private school system, parents left unsatisfied should be able to pull their children from one school and enroll them in another. Proponents of private education argue that this feedback mechanism ensures that private schools maintain a high quality of education and respond when customers are unsatisfied with the value of their product. Such a correction in the public school setting is unlikely to be as prompt. To address dissatisfaction beyond direct interaction with the school, unsatisfied parents would need to contact local bureaucrats and politicians and ultimately seek recourse through the electoral process. Should change through the electoral process be necessary, identifying which candidate might best bring about change could be difficult. This is especially true in situations where all candidates share the same “development” based ideology as is common in developing states,[35] when there is a lack of candidate information available,[36] or in instances of technical democracy in which opposition parties stand little chance.[37] As previously argued, meaningful feedback mechanisms are unlikely to exist under a private education regime due to highly imperfect competition. Governments opting to provide public education will be interested in ensuring its quality in order to increase long-term tax revenues and in democratic settings, will task constituents with choosing leaders who can most effectively implement successful education programming.[38] Such an option can be deemed favorable as the private option would likely result in little to no choice and broken feedback mechanisms in monopolistic settings.[39]

The implementation of capable public school systems is a tall order for developing states with low fiscal capacity. It requires both time and the dedication of an immense quantity of money and resources. The benefits provided through the implementation of a public education system along with the potential consequences generated by educational provision through private enterprise make such an investment necessary for democratic states. The choice for democratic states with weak public school offerings and low fiscal capacity is clear. 

Garret Dellwo is a graduate student at the Goldman School of Public Policy at the University of California, Berkeley, where he has worked as a graduate student instructor for courses concerning global poverty, international development, and contemporary political economy. He has provided policy consulting work on climate and carbon policy, international cooperation, and strategies for the peaceful and prosperous use of space. Additionally, Garret is a Returned Peace Corps Volunteer having served as a Community Health Advisor in Madagascar.

The views expressed in this article do not necessarily represent those of the Berkeley Public Policy Journal, the Goldman School of Public Policy, or UC Berkeley.

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[37] Platas, Melina Raquel, and Pia J. Raffler. 2020. “Closing the Gap: Information and Mass Support in a Dominant Party Regime.” The Journal of Politics, September, 711719. https://doi.org/10.1086/711719

[38] Kramon. 2016

[39] Härmä. 2021