Big Spending, Small Returns: The Paradox of Human Resource Development in the Middle East

Author(s): Nemat Shafik, Economist, World Bank’s Middle East and North Africa Region department
Publication Number: ECES-WP2-E


The Arab countries spend more public resources on education than any region in the world, but the outcome in terms of human resource development is one of the poorest, especial ly relative to their income level. This paper explores four possible hypotheses to explain this paradox: (i) social indicators in the oil exporters are catching up with sharp increases in wealth; (ii) spending in the social sectors is inefficient; (iii) market distortions do not reward appropriate human capital accumulation; and (iv) underinvestment in females has lowered returns to social expenditures.