One of the major problems in Latin America is a high drop out rate amongst students, which in some countries begins with graduation from primary school. In classic economic development thinking this problem has many dimensions:
- Politics--unemployed youth can be easily encouraged to protest or join criminal enterprises
- Social--uneducated youth are likely to enter a life of poverty
- Culturally--uneducated youth frequently come from minority groups
- Structural--uneducated, unemployed parents tend to have children with the same future
- Economic--uneducated youth provide no economic contribution and may become a burden on the society
As you can hopefully see, this drop out problem can be analyzed in quite a complex way and the solutions developed typically incorporate this complexity to be responsive to all the objectives.
On the other hand consider the simple but elegant solution used by Mexico City’s Education Secretary Mario Delgado Carrillo. Mexico City pays a student $45 per month to stay in school and up to $65 per month if their grades are As or Bs. Payments are direct to the student through a bank card. In the program's three year history the drop out rate has decreased from 20 to 6 percent and grades have also improved.
Milton Friedman would be proud of this use of student self-interest to solve a problem. I particularly like the concept of meritocracy in higher pay for better grades.
I found the example of Mexico City in a story in the Miami-Herald by Andres Oppenheimer.
The two previous posts on economic development are here and here.
The views expressed here are my personal opinions and do not reflect the views of any organization with whom I am affiliated.
Mexico City image credit