This paper explores the effectiveness of education and training programs in providing the human capital needed for economic development in Arab countries. It reviews educational attainment and the pattern of expenditures on education in these countries. Further, it assesses the rate of return on investment in education as well as the impact of education on enhancing technological capacity and reducing unemployment. On the basis of the analysis, the paper proposes a reform strategy that aims to improve the effectiveness of the education system. The components of this strategy include developing monitoring indicators, expanding private sector participation in the provision of educational services, improving internal efficiency, and increasing the flow of information about the educational system.