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President Ilan Goldfajn during the Lemman Foundation event

Investment in Human Capital: The Path for Brazil, Latin America, and the Caribbean

September 28, 2023 por Ilan Goldfajn Leave a Comment


**Keynote speech delivered during the Lemann Foundation UNGA 2023 Side event “Eradicating Illiteracy in Brazilian Schools: Lessons for the Global South.”

Let me start by talking about an enormous problem—and then about an enormous opportunity to solve it.

Before the pandemic, in 2018, the OECD published a truly shocking report about social mobility. It looked at how long it typically takes a poor person to rise into the middle class. In Denmark, researchers found that it typically takes two generations. In Australia and Japan, four generations.

Do you know how long it takes someone in Brazil to rise from poor to middle class? Nine generations! Nine!

If this was true before the pandemic, it’s almost certainly worse now—largely because of all the time our youngest generation spent locked out of school.

Brazil had one of the longest school closures of any country in Latin America—287 days for public schools. The IMF calculated that Brazilian students could earn an average of 9% less during their lifetimes because of these school closings and related learning losses.

That brings me to our conversation today about investing in human capital—and the path forward for Brazil, Latin America, and the Caribbean.

Human capital is vitally important to all aspects of human progress. Developing human capital helps people move up the socioeconomic ladder. It helps us achieve our potential by accumulating the knowledge and skills required to do everything from getting our first job to helping solve big problems like climate change. It’s also critical to helping countries reduce poverty and inequality, increase productivity, and accelerate economic growth. Research indicates that increasing the cognitive skills of a country’s workforce by one standard deviation can increase annual GDP growth by 2%.

So, today, to improve the lives of individual citizens—and to better tackle our biggest shared challenges—we must not only invest more in human development, but we must invest smarter.

I will talk about that in greater detail, but first, let me briefly present the state of education in Brazil and Latin America today so we can better understand why improving our investments in human capital is important.

Overview: State of Education in Latin America and the Caribbean

The good news is that more low-income children are pursuing higher education today than their parents’ generation. Today’s youth also acquire more skills than their parents and grandparents did. Today, children have greater access to educational opportunities than previous generations.

The bad news is that the skills of children in Latin America and the Caribbean remain below the average of those of previous generations living in OECD countries.

So, despite the educational progress we’ve seen in the region, our children still lag behind their counterparts in developed countries. What’s more, children in our region were hit harder by pandemic school closings than kids in any other part of the world because our schools were shut the longest.

Even before the pandemic, PISA scores, which are basically the standard for measuring educational progress across OECD countries, showed that 50% of 15-year-olds in the region lacked basic literacy competencies.

They didn’t understand what they read.

Furthermore, there were huge disparities by income: 72% of the lowest-income kids didn’t read at grade level, compared with 28% for the wealthiest kids.

And it’s not just kids who had trouble reading. Other tests showed that 61% of adults in Latin America were at level 1 or below in reading proficiency, compared with just 16% of adults in OECD countries.

Now, remember, this was all before COVID. So, think for a moment about what happened to all those little kids when schools closed:

  • Students lost up to two years of learning.
  • Based on evidence from Sao Paulo—where the IDB published one of the first pieces of rigorous evidence of learning losses—we know that kids are now learning again, but not fast enough to make up for what they lost.
  • Overall, in Brazil, before the pandemic, almost 16% of students had literacy levels below what’s expected for their age, according to research by IEDE. Sadly, that figure had more than doubled by last year to almost 34%.

This means that today, three out of ten children in Brazil do not know how to read or write simple words like “casa” (house) and “pipoca” (popcorn).

Returning to Normal Isn’t Enough

To change this reality, we can’t just return to “normal.” Normal is not good enough for these kids and shouldn’t be good enough for us. So, we must accelerate progress in learning.

And today, I’m here to tell you—it can be done. And we do it by starting with the basics—reading and writing.

Let me talk about why this is so important. To do that, I will talk about the so-called “Matthew Effect” and how it impacts these key skills.

As educators know, this term refers to the phenomenon where students who have a good start with literacy education continue to do well later in school—while those who begin poorly do worse.

The effect’s name comes from a famous Bible verse—Matthew 25:29: “Those who have much will receive more, and they will have more than they need. But as for those who don’t have much, even the little bit they have will be taken away from them.”

It’s kind of a depressing quote, right? But reading specialists are very familiar with this. And the reality itself is depressing. Why? Because the data shows that reading gaps increase in school. Kids who struggle to read and write at the beginning of school tend to get worse over time.

We have to change that.

It’s not easy. Learning to read is not a natural process. It doesn’t just happen. You need schools, teachers. It takes practice and requires a structured, systemic approach.

Children must process sounds, decode their first letters, and then words. They need to learn vocabulary so they can connect words with meaning. Then, they have to process different words in sentences and paragraphs to comprehend and read with a purpose.

First, kids must learn to read, then they can read to learn.

There have been many efforts to improve reading and writing for younger kids, but many have failed, mainly due to poor design and implementation.

But today, I want to share two success stories.

The Challenge of Expanding Literacy: Two Successful Stories

I’ll start with Brazil and a case from Sobral in Ceará, where we’ve seen one of the biggest improvements in the educational quality index in approximately 20 years.

In 2000, 48% of second graders in Sobral couldn’t read. In 2005, Brazil’s first Basic Education Development Index calculated that 1,365 municipalities in Brazil had better primary education scores than Sobral. But by 2017, Sobral made national news by ranking number one in the entire country in both primary and lower-secondary education scores.

The Sobral case has been thoroughly studied and has shed light on the ingredients needed to improve literacy – which include having these clear goals:

  • Every student should finish primary school at the corresponding age and appropriate learning.
  • All students should be literate by the end of 2nd grade.
  • We must effectively use student assessments.
  • We must have a focused curriculum.
  • We must have prepared and motivated teachers.
  • We must have an independent, responsible school management.
  • Finally, we need sustained and committed political leadership.

The second case involves the IDB and is backed by neuroscience, which shows how the reading brain works. We worked with early literacy experts to translate research from neuroscience into programs across the region to ensure that students learn to read by third grade.

Niño en clase aplicando el método ATAL

In Colombia, we worked with Fundación Luker to develop the “Let’s All Learn to Read” program—Aprendamos Todos a Leer—and its Brazilian cousin, Vamos Todos Aprender a Ler. The program promotes the acquisition, development and consolidation of reading and writing skills in early grades.

We teamed up with Harvard University to assess the program using three experimental evaluations. We learned that properly implementing the program for 5 years increases reading performance on standardized tests by 30%.

The program is now a public policy in Colombia and Panamá—benefiting over 700,000 children and teachers.

This program is a public good any country can use and includes a teachers’ guide, teacher training, student workbooks, books, and other materials that help ensure successful implementation.

The program has received several international recognitions and awards, including:

  • from the Jacobs Foundation in 2022
  • and the WISE (World Innovation Summit for Education) Award from the Qatar Foundation in 2021

The cases of Ceará and “Let’s All Learn to Read” are examples of public policies and programs that we can standardize and replicate not just in one or two countries but throughout Latin America and the Caribbean—transforming education for everyone. That’s exactly what we need to do to increase the scale and impact of our work.

Digital Transformation and Education

Now, I’d like to talk about another opportunity, and, as I mentioned at the beginning, it truly is an enormous one because it is such an untapped resource.

It’s a resource that allows us to scale up impact across communities and countries, reaching more children than was ever possible before. I’m talking about digitalization and digital transformation. And this is the reason why we’ve teamed up with partners like the Lemman Foundation and the World Bank.

Today, we are working with the Lemann Foundation and Imaginable Futures on a pilot project in Brazil called Impulsionar. The goal is to improve learning through innovation by strengthening the ecosystem for edtech—or educational technology.

In any conversation about digitalizing public services, we must bring together the public and the private sectors. We work with policymakers and edtech founders and provide training for both policymakers on how to purchase and implement services provided by edtechs; and to edtechs on how to adapt and implement solutions for and with the public sector.

A preliminary study from Impulsionar showed that students learned an average of almost 38% more than previously. These results came mostly from small, poor municipalities (Domingos Mourão-PB; Guaramiranga-CE; Igarassu-PE; Bonito-PE; Cabrobró-PE; Volta Redonda-RJ; Santa Maria-RS).

Also, just a few weeks ago, the IDB announced a historic alliance with the World Bank to work on digital education. Through our Connected Schools for All program, we will support efforts to close the digital gap in schools by improving connectivity and teachers’ digital competencies through innovative pedagogical practices and hybrid training. We will also identify and map disconnected schools and teachers’ skills gaps, which will help us develop better investment plans to close gaps.

The partnership will also help us produce regional public goods, such as guidelines that optimize investments in schools’ digital infrastructure and tools to update procurement processes. It will also generate digital educational resources to boost teacher training in digital competencies.

Separately, in Nicaragua and Belize, the IDB is launching tailored instruction projects to foster foundational skills in language with the support of digital technology.

In both cases, we support using AI-based software to create an individualized learning path for each student based on continuous assessment of his or her skill level.

For example, if students struggle with reading comprehension, the software will provide targeted tasks to help them improve specific skills and understand concepts. The software also provides immediate feedback to the teacher on student progress.

We are also working with Augusto Buchweitz, a Brazilian neuroscientist at the University of Connecticut and Haskins Laboratories, as well as with Insituto Edube’s researchers (Renan Sargiani and Ana Luiza Navas) to develop a fluency assessment platform.

The platform will let educators record early-grade students as they read a set of words and, using AI, return the results to teachers so they can design rapid-response actions.

Partnerships And Investing Smarter

These are just a few examples of the programs and approaches that improve educational outcomes and boost human capital.

These evidence-based programs deliver results—like the hundreds of thousands of students getting better education today in Colombia and Panama.

And it’s programs like these that we must expand throughout the region. Because just as learning how to read doesn’t happen on its own, an educational transformation won’t happen unless we make it happen in every country.

To do that, we must work closer as partners and expand our partnerships with both public- and private-sector stakeholders. Of course, we must invest more.

But we must also invest smarter. That begins with making careful choices.

We know that the returns on education are high. Proactively investing in education doesn’t just nurture academic success; it drives substantial long-term societal gains and savings.

I’ll give you one final example. According to Instituto Raiar, one of our partners in Brazil, investing in the foundational years costs about $100 per child per year during four years—from kindergarten to third grade.

This covers costs related to teacher training, monitoring, assessments, and basic materials for students and educators.

In contrast, it costs society a staggering $18,000 per year to support an incarcerated youth. Evidence from in and outside Latin America indicates that participating in higher education tends to decrease crime and incarceration rates.

Conclusion

Let me close by saying that the examples I’ve shared today show that success isn’t just possible but highly likely—if we take the right actions at the right time in the right places. We just need to do it.

Today, in Latin America, the percentage of young adults enrolled in higher education programs is double what it was in 1990. That type of progress has not been replicated by any other region in the world.

That’s a tremendous achievement. Let’s be inspired by it. And let’s work together to seize the opportunity before us to deliver even better results for the region and the millions of children whose futures are at stake.


Filed Under: Educational systems Tagged With: brazil, Education, eradicating illiteracy, Ilan Goldfajn, Inter-American Development Bank, investment in human capital, latin america and the caribbean, learn to read and write

Ilan Goldfajn

Ilan Goldfajn was elected IDB president on November 20, 2022. Mr. Goldfajn served as Director of the Western Hemisphere Department at the International Monetary Fund in 2022, where he helped countries implement IMF-supported programs to address an unprecedented array of challenges. He also contributed to the region’s policy dialogue on climate change with the IMF and oversaw the first Resilience and Sustainability Facility of the institution. Earlier in his career, he worked as an economist at the IMF, 1996-1999. Mr. Goldfajn previously served as Governor of the Banco Central do Brasil (BCB) 2016-2019 and Deputy Governor 2000-2003. He led the BCB in a period of unprecedented decline in inflation and interest rates in Brazil. He championed the structural “BC+“ agenda and oversaw the changes that opened the door to new players in the financial services industry, spurred innovation, digitalization, and started developing widespread fast payment system, all of which bolstered efficiency and more inclusion in Brazil’s financial sector. In 2017, he was elected Central Banker of the Year by The Banker magazine. The year after, Global Finance magazine him named the Best Central Banker. Mr. Goldfajn’s private sector experience includes key positions at Brazil’s financial institutions: Chief Economist and Partner of Itaú Unibanco, founding Partner of Ciano Investimentos, Partner and Economist at Gávea Investimentos and Chairman of Credit Suisse Brazil’s Advisory Board. He has also had several roles as a consultant at top public sector institutions including the World Bank, the United Nations and the IMF. He has an extensive academic career. He taught graduate and undergraduate economics at universities in Brazil and the United States. He has worked as an editor of various publications, as well as written and published numerous articles and books. Mr. Goldfajn holds a PhD in Economics from the Massachusetts Institute of Technology (MIT), a master’s degree in Economics from the Pontificia Universidade Católica and a bachelor’s degree in Economics from the Universidade Federal, both in Rio de Janeiro, Brazil.

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Education In Focus

"Education In Focus" is the Education Division's blog, a space where our specialists and guest authors share their reflections, experiences and knowledge to promote informed discussions on educational issues among policy makers, experts, teachers, parents, and other stakeholders. Our goal: to provide insights to public policies that guarantee effective and quality education for all children and young people in Latin America and the Caribbean.

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