In Washington: Sergio Jellinek (202) 294-6232
Stevan Jackson (202) 458-5054
WASHINGTON, April 21, 2009—Early Childhood Development (ECD) programs provide a cost effective way to reduce poverty and inequality in Latin America and the Caribbean in the medium and long-term at a time when the global financial crisis which continues to roil economies in the region, the World Bank warned regional policy makers today.
A new regional report released ahead of the World Bank-International Monetary Fund annual spring meetings notes the coverage of ECD services across Latin America remains low as existing programs cover only a small fraction of potential beneficiary populations, especially amongst the younger children.
The new report entitled The Promise of Early Childhood Development in Latin America and the Caribbean: Issues and Policy Options to Realize It notes that more than 20 percent of people in the region are poor, and the proportion of poor children in some countries in the region exceeds 40 percent. The region is one of the most unequal regions in the world, second only to Sub-Saharan Africa in measures of inequality with respect to income distribution, political influence, voice, and most health and education outcomes.
“Investing in people has been long shown to be a good investment,” says Pamela Cox, World Bank Vice President for Latin America and the Caribbean. “High proportions of children of poor households are not able to reach their full development potential, lowering their physical, cognitive, and socio-emotional development,” she added.
In the region, as elsewhere, poverty and inequality begin at birth and children who are born into poor families are much more likely to have parents who have low levels of education attainment, low quality jobs and wages, and lower access to public services such as water and sanitation, health, and education, the report notes.
ECD Programs are Cost Effective for governments to implement
Empirical evidence in the new report demonstrates that intervening early in childhood is economically efficient and produces higher returns than investments made later in life on disadvantaged youth. The report also shows that efficiency of public spending could be enhanced if investment was directed toward the young. In fact, at current levels of spending, the rate of return to investment in the young is high and the rate of return on the adult is low.
“While Early Childhood Development programs concern a well-defined population and are investments with proven returns, only recently are Latin American countries moving towards a holistic approach for ECD implementation,” says Evangeline Javier, Regional World Bank Director for Human Development. “And only a few countries are in the process of developing a national ECD policy. Most of the programs in the region are independent efforts which vary in scale, services offered, and mode of delivery,” Javier added.
In the United States, a cost-benefit study of the Perry Preschool program documented a return to society of more than $17 for every $1 invested in the program. Likewise, a cost benefit analysis of the Chicago Child Parent Center program indicated that each component of the program had economic benefits that exceeded the costs, with an average cost per child of $6,730 for 1.5 years of participation, the preschool program generated a total return to society of $47,759 per participant.
Similar benefit- cost analysis carried out for selected programs in developing countries show large benefits. In Brazil, a benefit-cost ratio for preschool was estimated at 2 and the rate of return is 12-15 percent, while in Bolivia benefit cost ratios were estimated for 2.4-3.2. Meanwhile, a recent evaluation which examines the impact of preschool expansion in Uruguay on schooling outcomes estimates the rate of return to the expansion of preschool as high as 14 percent and benefits-cost ratios greater than 2.2.
The new report offers three important policy implications:
- All else being equal, returns to investments in early childhood will be higher than returns to investments made later in life simply because beneficiaries have a longer time to reap the rewards from these investments.
- Investments in human capital have dynamic complementarities, so that improved early childhood development outcomes will result in improved educational attainment levels, health outcomes, and labor market outcomes as well.
- While education policies are important, what happens in schools is not sufficient to equalize opportunities and reduce inequality.
It is crucial to invest early in children and their families, as family environments also play an important role in the development of cognitive and non-cognitive skills.
“Ensuring that all individuals have equal opportunities to develop their full potential and to lead a fulfilling life is fundamental for economic and social development,” says Emiliana Vegas, World Bank Senior Education Economist and author of the report. “In Latin America, inequality of opportunity accounts for a substantial share of observed economic inequality in Latin America: between 20 percent and 50 percent,” Vegas added.