Bolivia - Educational and Vocational Training Project

RETURN TO Document of REPORTS DESK The World Bank FLOPY WITHIN FILE C ONE WEEK FOR OMCIAL USE ONLY Report No. 136 7a-BO STAFF PROJECT REPORT FIRST EDUCATION AND VOCATIONAL TRAINING PROJECT BOLIVIA March 30, 1977 Education Projects Division Latin America and Caribbean Regional Office This doeument ha a resticted drbution and m-y be used by recipients only In the performnce of their ofcil du"s. Is cetenXt may nao otherwise be disclosed witKot World Bank authoriztaon.  Currency Equivalents Currency Unit: Peso ($b.) $b. 1 = US$ 0.05 $b. 20 = US$ 1.00 $b. 20,000,000 = US$ 1,000,000.00 Measures 1 ha. 2.47 acres = 10,000 M2 1 km. = 0.62 miles Acronyms CEMA - Accelerated Secondary Education Program CONES - National School Building Council EBA - Accelerated Basic Education Program ERBOL - Bolivian Radio Schools FOMO - Na*ional Manpower Development Service IBA - Bolivian Apprenticeship Institute IDB - Inter-American Development Bank ILO - International Labor Organization PREALC - Regional Employment Program for Latin America and the Caribbean SNDC - National Community Development Service UNESCO - United Nations Education, Scientific and Cultural Organization UNICEF - United Nations Children's Fund USAID - United States Agency for International Development Fiscal Year January 1 - December 31  FOR OFFICIAL USE ONLY BOLIVIA STAFF PROJECT REPORT ON A FIRST EDUCATION AND VOCATIONAL TRAINING PROJECT TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS .............................. i-xii I. DEVELOPMENT STRATEGY AND HUMAN RESOURCE IMPLICATIONS .. 1 Socio-Economic Environment ....................... 1 Development Strategy and Prospects .... ........... 2 Human Resource Implications ...................... 3 II. ISSUES IN FORMAL EDUCATION AND STRATEGY FOR IMPROVEMENT 8 Administration ................................... 8 - Rural-Urban Dichotomy ........................ 8 - Administrative Reform ........................ 9 Planning ......................................... 9 Curricula and Teaching/Learning Materials .... .... 9 Relevance ........................................ 10 Access to Education .............................. 11 - Participation Rates .......................... 11 - Over-aged Students ........................... 12 - Retention Rates .............................. 13 - The Teacher Problem and Inefficiency .... ..... 13 - School Organization and Location .... ......... 14 Educational Finance .............................. 15 Government Strategy for Educational Development .. 18 III. NONFORMAL MANAGEMENT AND SKILL TRAINING - THE NEED FOR A SYSTEM ............................... 25 Overview .................... ..................... 25 - Agricultural Training ........................ 25 - Industrial Training .......................... 26 - Other ........................................ 26 National Manpower Development Service ............ 26 This report is based on the findings of appraisal missions which visited Bolivia in May and September 1976. The missions comprised Ms. D. Dowsett (economist) and Messrs. I. Matallana (architect), A. Kouros (general educator), R. Hemingway (technical educator), R. McGuerty (technical educator, consultant), and R. Burke (mass media specialist, consultant). Ms. L. Jallade (economist, consultant) who visited Bolivia in August/September 1976 also contributed to the staff project report. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwis be disclosed without World Dank authorization.  TABLE OF CONTENTS (Continued) Page No. IV. THE PROJECT ............................................. ...... 29 Primary and Community Education ................... 29 - Content and Objectives ........................ 29 - Project Area .... *............ ............. .... 31 - Basic Education ......... . . ............................... . 32 - Intermediate Education ........................ 33 - Warisata Rural Teacher Training College ....... 33 - Development of Curricula and Learning Materials ..................................... 0......... 34 - Bilingual Education ........................... 34 - In-service Staff Training ..................... 35 - Community Education .......... ................. 35 - Preinvestment Study ........................... 36 - Technical Assistance .......................... 36 - Evaluation .............................................. 37 Vocational Training ......... . . ............................... . 37 - Content and Objectives ................. ....... 37 - Output ................................................ 38 - Staff .......... ............................... 40 - Preinvestment Study ........................... 41 - Technical Assistance .......................... 41 - Evaluation .............................................. 42 V. COSTS AND FINANCING OF THE PROJECT ...................... 47 Cost Estimates ..................................... 47 - Primary and Community Education .. .............. 48 - Vocational Training ............................ 48 Contingency Allowances ............................. 49 Foreign Exchange Component .......... .. ............. 49 Financial Plan ..................................... 49 - Capital Costs ............................... ... 49 - Recurrent Costs ............................. ... 50 VI. PROJECT IMPLEMENTATION .................................. 54 Primary and Community Education .................... 54 - Project Administration .......... .. ............. 54 - Professional and Technical Services ..... ....... 54 - Construction ................. .................. 55 Vocational Training ................................ 56 - Project Administration .......... .. ............. 56 - Professional and Technical Services ..... ....... 56 - Construction ................. .................. 57 Implementation Schedule ........... .. ............... 57 Sites ...................... ........................ 57 Maintenance ................ ......... . .............. 57 Procurement ............ 57 Disbursements ....... ..... 58  TABLE OF CONTENTS (Continued) Page No. VII. BENEFITS, RISKS, UNCERTAINTIES AND EVALUATION ........... 62 Benefits ...................e.................. * 62 Risks, Uncertainties and Evaluation ... --.oo-oo 62 VIII. AGREEMENTS REACHED AND RECOMMENDATIONS ............. oo .... o. 64 IX. RELATED DOCUMENTS AVAILABLE IN PROJECT FILE .....o...o..... 68 ANNEXES 1.1 Population, 1970-85 I.2 Output, Employment and Productivity, 1970-85 II.1 Comparative Education Indicators 1I.2 Structure of the Education System, 1975 II.3 Proposed Structure of the Ministry of Education 11.4 Indicators of Access to Primary Education by Urban and Rural Students 11.5 Public and Private Expenditures on Education, 1970-76 IV.1 Primary and Community Education - Technical Assistance Schedule IV.2 Projected Annual Output of the FOMO System, 1981 IV.3 FOMO - Technical Assistance Schedule V.1 Summary of Total Project Costs V.2 Contingency Allowances VI.1 Administrative Structure of FOMO, 1976 VI.2 Schedule of Implementation VI.3 Disbursement Schedule MAPS   BOLIVIA FIRST EDUCATION AND VOCATIONAL TRAINING PROJECT SUMMARY AND CONCLUSIONS Education in Bolivia Formal Education 1. The Ministry of Education and Culture is responsible for administer- ing all formal public education and supervising the decentralized and private institutions in Bolivia, except for the universities. The Ministry's admin- istrative structure includes separate subsecretariats and directorates for urban 1/ and rural education, each with its own primary, secondary and teacher training divisions, a carryover from the period of 1955-71 when responsibility for rural education was in the Ministry of Rural Affairs and Agriculture. 2. Average annual enrollments grew at 5.5% in pre-basic and basic educa- tion and at 10.7% at the intermediate and secondary levels during 1970-73, but inequality between rural and urban areas has remained high. In comparison with male attendance, the number of females at the basic level has been rising slowly and accounted for 46% of total enrollments in urban areas and 41% in rural areas in 1973. At the intermediate level, only 42% of urban students and 23% of rural students were female. Only in teacher education did the percentage of females exceed males at 65% of total enrollments. 3. Average retention rates and the internal efficiency of the education system have remained low. Nationwide, it is estimated that of those entering the basic level about 41% completed grade 5; of those continuing from this level only 68% completed grade 8; and only 54% of entrants to secondary schools completed grade 12. If the very substantial number of overaged students were discounted, the aforementioned figures would be even lower. Based on past trends, it is likely that more than half of the pupils enrolling in 1976 will not reach fourth grade -- the minimum level to achieve permanent literacy. Although expenditures on education accounted for 27% of the total Central Government recurrent budget, primary schools were able to accommodate only 56% of school age children in rural areas in 1976, as against sufficient places for children in urban areas. 4. In 1976 recurrent expenditures accounted for 92% of the Ministry of Education's budget and 99.6% of that was absorbed by personnel salaries. The relatively high recurrent costs per student of some US$65 and US$139 at the basic and secondary levels, respectively, are due to pupil:teacher ratios, inadequate workloads and teachers' salaries averaging about US$1,500 per year at the lower levels of education or almost five times the average per capita income in Bolivia. The situation is caused partly by an overproduction 1/ Urban schools are defined as those located in towns of more than 2,000 inhabitants.  - ii - of teachers who are guaranteed employment in public schools which, in turn has contributed to the proliferation of small, uneconomic colleges offering inadequate training for new teachers. In 1973, the pupil:teacher ratios ranged from 24:1 in the basic level to a low of 4:1 in industrial secondary schools. Bolivia thus has the lowest average pupil:teacher ratios in Latin America and this results in very high recurrent costs per student. 5. The present education system has an overly academic orientation, which bears little relation to the students' environment and work prospects. The typical Bolivian primary school continues to function as an isolated institution, particularly in rural areas where the relationship between the school and the community is in most cases not mutually supportive. Some rural communities view the school as directed against their cultural tradi- tions and irrelevant to their world of work. Attendance is often motivated only by a hope that the school may provide some means of survival in dealings outside the community. This isolation is aggravated by the rural students' difficulties in speaking Spanish--the official language of instruction despite the fact that about 60% of the population speak Aymara, Quechua and Guarani. Vocational Training 6. Until the last few years, Bolivia did not have an organized system of vocational training to prepare skilled and semiskilled manpower. Neither the public nor the private sector has assigned much importance to training per se as a means of raising productivity and facilitating adaptation to changing technology. Trained workers are not generally rewarded by higher salaries or more rapid advancement on the job in comparison with other employees. Indeed, training has sometimes been a deterrent to getting a job, precisely because employers fear pressures for higher salaries. Promotion within firms is based on various factors, most notably longevity, and there are no widely recognized standards to use in categorizing skill levels. There has been a similar lack of attention to managerial training, even on the part of the largest enter- prises. 7. The main organizations which have offered vocational training pro- grams are the National Manpower Development Service (FOMO), established in 1972 as a decentralized agency of the- Ministry of Labor, and Bolivian Appren- ticeship Institute (IBA), which started in 1968 under the Ministry of Education. IBA, though poorly equipped, enrolls 5,000 persons annually. Nevertheless, 80 percent of these are women studying mainly language, mathematics, homemaking and childcare, rather than courses which would conventionally be classified as skill training. In contrast, FOMO offered 85 courses in metal-mechanics, construction and woodworking, electricity, agriculture and services, with a total output of some 1,200 in 1975. About 45 percent of these were new entrants to the labor market; the remainder were already employed persons seeking to upgrade their skills.  - iii - 8. Until recently, FOMO has focussed its activities on rapid quantita- tive expansion. As a result, it borrowed rather than designed most course material, which was not always directly relevant to the needs of Bolivian enterprises or to the educational and skill levels of Bolivian workers. Given the prevailing literacy levels of the work force and the job entry requirements of most occupations, a shift to shorter and simpler courses requiring less formal education is indicated. As yet FOMO has not established a placement or follow-up service for its trainees, neither does it evaluate its activities. Some instructor training has been carried out by a Spanish technical assistance team, but further strengthening of this activity is required. Government Strategy for Educational Development 9. Following the recommendations of a sector assessment undertaken in 1973 in cooperation with UNESCO, the Ministry of Education has established various long-term objectives for educational development which intlude: (a) administrative decentralization and merging of rural and urban education; (b) developing more relevant curricula in terms of the environment and future employment prospects of students; (c) providing adequate school places at the primary and secondary levels, and channelling more resources into rural education; (d) improving the internal efficiency and effectiveness of the formal education system by increasing student:teacher ratios, reducing the supply and improving the quality of primary teachers, rationalizing school location planning and raising student retention rates; and (e) experimenting with the use of bilingual instruction. In the area of employment-related education and training, in 1975 the Ministry of Labor commissioned and the Regional Employment Program for Latin America and the Caribbean (PREALC) executed a National Manpower Study for Bolivia. This study, together with an appraisal of the draft Five Year Development Plan indicates that, in addition to improving the management and quality of present training programs, there is an urgent need to increase the annual output of skilled and semiskilled workers and upgrade a large proportion of the presently employed workers and managers. 10. Due to its limited capacity to undertake simultaneously major educational reform and/or expansion programs, the Bolivian Government has opted to focus attention on the development of a relevant and cost-effective primary education system and on the provision of vocational training for the adult population. In support of this strategy, USAID has provided assistance to help the Government in educational administration and has recently signed a loan for a rural education project in the Quechua-speaking valleys of the Cochabamba Department. In addition, a similar small-scale project is being implemented in the Tarija Department with local resources and UNICEF technical assistance. A USAID education project for teacher training is in the pre- liminary stages of preparation, and the IDB has provided grant assistance to examine alternatives for the future development of technical education nation- wide. The proposed Bank project will complement these efforts by financing a scheme to improve and expand rural primary education and teacher training in the Aymara-speaking highland region of the La Paz Department and to expand a national system for vocational training in Bolivia.  - iv - The Project 11. The project was prepared by the Government with assistance from UNESCO in January/February and the Bank in March, April/May and August, and was appraised by the Bank in September 1976. To expedite preparation, the Bank agreed on May 27, 1976 to advance US$366,750 from the Project Prepa- ration Facility to help finance the establishment of a project unit, pre- liminary architectural design work and elaboration of core furniture and equipment lists. To date about US$267,548 have been withdrawn and most of the balance should be disbursed by the closing date of April 30, 1977. Negotia- tions were held in Washington on February 3-4, 1976. The Bolivian delegation was led by Ing. Fernando Anker. Objectives and Composition 12. The proposed project, which would be the first Bank operation in the education sector in Bolivia, presents a two-pronged approach to the complex problems discussed above by assisting (a) primary and community education and (b) vocational training. Moreover, the project will reinforce Bank activities in its ongoing and future rural and urban development projects in the La Paz Department and its-prospective railways operation. The project has the following two components. 13. A. Primary and Community Education. This component is confined to five zones in the densely populated Aymara-speaking highland region of the La Paz Department and has been designed to assist the Government in finding cost-effective ways of (a) increasing access to primary education through expansion and improvement of basic and intermediate schools, more efficient use of primary facilities and teachers, and reorganization of primary school administration and supervision; (b) developing more appropriate curricula, learning materials and teacher training programs for primary education; and (c) designing a community education program for the non-school age population. With a view towards raising the efficiency of the system, the project will aim at gradually increasing primary student:teacher ratios to 35:1, improving average retention rates to 70% and reducing overaged students from the present 40% to 20% of total enrollments by 1985. The project will introduce more rational school location planning and teacher assignment, extensive use of multigrade teaching, expansion of accelerated programs for overage students, automatic promotion, bilingual education, revision of school calendars to take account of agricultural cycles and a campaign to encourage rural families to leave female children in schools for longer periods. If successful in meeting qualitative and efficiency objectives, the project will serve as a model for a national primary education program in several years' time. Specifically, this component will finance: (a) construction, furnishing and/or equipping of 955 basic classrooms, ten intermediate schools, one teacher training college and 287 houses for basic teachers; (b) development of curricula and learning materials for all project institutions;  - v - (c) in-service training for about 1,300 teachers, teacher trainers, directors and supervisors of project institutions; (d) introduction of bilingual education (Spanish and Aymara) in the first three grades of all project basic schools, supported by radio; (e) community education and training activities, supported mainly by radio and mobile action programs; (f) a preinvestment study on the education and training needs of the low income migrant population of La Paz City; and (g) related technical assistance, comprising 8-1/2 man-years of specialist services and 54-1/2 man-years of fellowships for local staff. 14. Basic and Intermediate Education. The project provides for the necessary facilities to permit most children in the five project zones to have access to a five year basic education within about a 5 km walking distance of their homes. It will provide new and/or upgraded schools required to accommodate some 37,820 children annually by 1985, and housing for about 25% of primary teachers in rural areas of the project zones where alternative accommodations are not available. In addition, ten intermediate schools will be constructed, replacing and extending inadequate facilities. When full enrollment capacity is reached in 1985, about 4,590 students annually will be accommodated in these ten intermediate schools. 15. Administrative efficiency will be improved by merging of the rural and urban subsystems into a unitary restructured nucleus system of school administration and supervision within the project area. Legislation estab- lishing the unified system has been approved. The furnishing to the Bank of satisfactory legal evidence that the two subsystems have been merged will be a condition of disbursement of loan funds for the primary and community educa- tion component of the project (Schedule 1, paragraph 4(ii) of Loan Agreement). Also, plans for revising school calendars in accordance with agricultural cycles and for the expansion of the existing national accelerated basic education program for overaged children will be submitted for the Bank's comments within six months of loan signing, and these programs will commence in calendar year 1978 (Section 3.06 of Loan Agreement). 16. The project will provide for the replacement of inadequate physical facilities at the Warisata Rural Teacher Training College, as well as for staff training and the preparation of new curricula in order to ensure an ade- quate supply of well-trained teachers for the project schools. Participants  - vi - will specialize in language and social sciences, natural sciences or agricul- ture, and will receive training as well in handicrafts, health and nutrition and community development, subjects which they will be required to teach in the project schools. For admission to Warisata preference will be given to candidates having a working knowledge of both Aymara and Spanish and that efforts will be made to increase recruitment of competent women students and staff (Section 4.06 of Loan Agreement). 17. Curriculum Development. Based on a study of needs in 1977, new curricula will be formulated during 1978 and experimentally implemented in all project schools during the academic years 1979-81. These curricula will place greater emphasis on practical activities and experimentation in agriculture, health, home skills and rural crafts. They will rely on more modern teaching techniques, including the use of radio in language instruction and of the vernacular in the first three grades of basic schools. Learning materials and teachers' guides supporting the new curricula will be prepared and implemented on an experimental basis at the same time. These experimental curricula and learning/teachers' materials will be introduced in the project institutions and at Warisata starting during the 1979 academic year, after review by the Bank (Section 3.07 of Loan Agreement). 18. In-Service Training. The project will support a comprehensive in-service training program for about 1,200 basic and intermediate teachers and about 100 school directors, supervisors and teacher trainers. A tentative training schedule was developed during project appraisal; a satisfactory, more fully elaborated training program will be prepared within six months of loan signing (Section 3.09 of Loan Agreement). 19. Bilingual Radio Education. The Government will initiate bilingual radio programs in the first three grades to help Aymara-speaking children learn Spanish. Pupils and teachers will receive in advance printed material related to the weekly transmissions. The language programs will be introduced in the 1978 academic year (Section 3.08 of Loan Agreement). 20. Community Education. Under the pi~oposed project the Ministry of Education will establish a community education program relying primarily on the formation of rural radio listening groups, supported by simple printed materials and live demonstration and follow-up activities by mobile action teams. Beneficiaries will be encouraged to adopt new and useful practices in agriculture, health, nutrition and education. The Government will use its best efforts to contract a satisfactory local radio station on terms and conditions satisfactory to the Bank to implement this program (Section 3.10 of Loan Agreement). 21. Preinvestment Study. The preinvestment study will help to identify and propose solutions to the s)cial and employment problems and related education and training needs of the low-income migrants to La Paz City from the surrounding Altiplano. The final report and recommendations will be made available to the Bank within eighteen months of loan signing (Section 3.11 of Loan Agreement).  - vii - 22. Technical Assistance. The loan will finance 8-1/2 man-years of specialist services and 54-1/2 man-years of fellowships in curriculum devel- opment, learning/teaching materials production, teacher training, school radio broadcasting, bilingual instruction, community development, school organiza- tion and supervision, and evaluation techniques. The cost of technical assistance is estimated at US$55,000 per man-year of specialist services and US$12,000 per man-year of fellowship. Specialists will be employed on terms and conditions satisfactory to the Bank, suitable counterparts for the specialists will be provided, and all fellowship recipients will be selected and placed in consultation with the Bank (Sections 3.02(a) and 3.12 of Loan Agreement). 23. B. Vocational Training. Under this component FOMO will expand its operations to train new workers and contribute to raising productivity levels by upgrading the skills of those presently employed. The project will also help FOMO to develop training in the mining and rural sectors through mobile action programs and to establish management consulting and training services for small and medium-scale enterprises. Specifically, this component will consist of: (a) construction, furnishing and/or equipping of six vocational training centers; (b) two mobile training workshops for the mining trades and fifteen sets of equipment and transport for training in agricultural and rural artisan occupations; (c) preinvestment study on the socio-economic conditions in the major highland mining areas to identify employment generation possibilities and related training needs and recommend action programs; and (d) technical assistance including 9-1/2 man-years of specialist services and 8-1/4 man-years of fellowships. 24. Training and In-Plant Services. The six training centers and seventeen mobile training units will enable FOMO to offer job entry and skill upgrading courses in 38 occupations, with a direct annual output of about 7,700 workers. Mobile training will focus on the mining and rural sectors and submission to the Bank of a satisfactory detailed training plan will be a condition of loan disbursement for all equipment and vehicles required (Schedule I, paragraph 4 (iv) of Loan Agreement). Also, within two years of loan signing an in-plant training unit will be established to help enterprises diagnose training needs and implement on-the-job training programs for em- ployees requiring skill upgrading (Section 2.08 of Project Agreement). 25. All training will be based on occupational analysis and flexibility will be ensured through the use of short self-contained training modules. In addition, FOMO will establish national standards for specific skills, conduct trade testing and award certificates to successful graduates. FOMO will  - viii - introduce the aforementioned techniques, beginning with the mining sector, within one year of loan signing (Section 2.09 of Project Agreement). To cater to the large numbers of FOMO participants having minimal education, FOMO will design audiovisual training materials which do not rely so heavily on reading and writing and these materials will be put into use within two years of loan signing (Section 2.10 of Project Agreement). In order to help graduates of the training courses to find jobs, within one year of loan signing FOMO will establish a guidance and placement service, which will work closely with the employment service of the Ministry of Labor (Section 2.11 of Project Agreement). 26. A management consulting and training unit will be established as a separate division of FOMO, reporting to the Board through the Executive Director. The unit will focus on raising productivity in enterprises in the urban and rural sectors through management training, consultancy, organization of local research, establishment of an information service and in-plant career development schemes. About 360 middle- and upper-level managers will be trained annually. The management consulting and training unit will be established within two years of loan signing and the program will be evaluated annually thereafter in consultation with the employers' associations (Sections 2.12 and 3.06 of Project Agreement). 27. Preinvestment Study. A preinvestment study will explore the possi- bilities of employment generation and relevant training needs of the popula- tion living in the major highland mining areas. The final report and recom- mendations for action programs will be made available to the Bank within 18 months of loan signing (Section 2.13 of Project Agreement). 28. Technical Assistance. The project will supplement technical assis- tance already being provided by other bilateral and multilateral agencies with 9-1/2 man-years of specialist services and 8-1/4 man-years of fellowships to assist FOMO in in-plant training, training organization, rural training, instructor and management training, reorganization of FOMO's management system, procurement, design of buildings and preparation of audio-visual instructional aids. The cost of technical assistance is estimated at US$55,000 per man-year of specialist services and US$12,000 per man-year of fellowships. Specialists will be employed on terms and conditions satisfactory to the Bank, suitable counterparts for the specialists will be provided, and all fellowship recipients will be selected and placed in consultation with the Bank (Sections 2.02(a) and 2.07 of Project Agreement). Project Cost and Financing 29. The total project cost, net of identifiable taxes, is estimated at US$21.4 million, including physical contingencies of US$1.8 million and price contingencies of US$4.0 million. The proposed Bank loan of US$15.0 million, equivalent to 70% of the total project cost, will finance the full  - ix - foreign exchange component of US$9.5 million and US$5.5 million of local currency costs. Local cost financing is justified in Bolivia in light of the country's poverty and its intensive efforts to mobilize domestic savings, and will enable the Bank to make an adequate contribution to meeting the country's external capital requirements. The Government will make sufficient and timely allocations to meet the annual counterpart fund requirements for implementing the project (Section 3.01(a) and (b) of Loan Agreement). 30. The recurrent costs generated by the primary and community education component of the project will be well within the capacity of the Ministry of Education and FOMO to finance. Legislation has recently been adopted to establish a one percent payroll levy on profit-oriented public and private enterprises to secure a regular flow of revenue to finance FOMO's recurrent costs. Furnishing to the Bank of satisfactory legal evidence to this effect will be a condition of disbursement of loan funds for the vocational training component of the project (Schedule 1, paragraph 4(iii) of Loan Agreement). The Government gave assurances that it will establish an effective system and begin collection of the 1% levy not later than 9 months after the enactment of the legislation (Section 4.09 of Loan Agreement). The Government will also take the necessary steps to make funds available in the event of any shortfall in revenues needed to cover FOMO's operating expenditures (Section 3.01(c) of Loan Agreement). Finally, in the interests of reducing the unit recurrent costs of basic education nationwide, the Ministry of Education will review and adjust the supply of teachers in line with demand, on the basis of more efficent student:teacher ratios and teacher workloads (Section 4.07 of Loan Agreement). Project Implementation 31. The two main components of the project will be administered sepa- rately, as follows: A. Primary and Community Education. This component will be adminis- tered by a special project unit which has already been established within the Ministry of Education. The unit includes separate divisions for administra- tion, infrastructure and educational activities, with a total full-time permanent staff of 23 persons. A suitable director and two division chiefs have already been appointed on terms and conditions satisfactory to the Bank. The Bank will be consulted on appointment of the third division chief and on any future replacement of these key project unit staff and on the appointment of the director of the Warisata Rural Teacher Training College (Section 4.04 of Loan Agreement). B. Vocational Training. FOMO will be responsible for implementa- tion of the vocational training component of the project, through its Exe- cutive Director, assisted by a full time architect and vocational training specialist already appointed and working exclusively on the project. FOMO will consult the Bank on any future replacements of the aforementioned staff (Section 3.05 of Project Agreement).  -x- 32. Prototype designs for basic classrooms and teachers' housing for the primary education component of the project were discussed and agreed upon during appraisal. Design of remaining project institttions will be executed by consultant firms, contracted on terms and conditions satisfactory to the Bank, and by staff of the Ministry of Education project unit. The Government and FOMO will establish within six months of loan signing special technical committees to review all architectural designs and equipment and furniture lists and specifications before submitting them to the Bank and they will acquire the necessary sites for the project (Sections 3.02(c) and 3.05 of Loan Agreement and Section 2.02(b) of Project Agreements). 33. The basic and intermediate schools and teachers' housing located in rural areas will be constructed by the National Community Development Service (SNDC), with participation of local communities and supervised by the Ministry of Education project unit. SNDC is a decentralized agency of the Ministry of Agriculture, with broad experience in managing rural self-help construc- tion projects. The Ministry of Education will contract the services of SNDC for the project on terms and conditions satisfactory to the Bank and all SNDC activities under the contract will be supervised and audited by the project unit (Schedule 4, paragraph B.1 of Loan Agreement). Construction of the basic and intermediate schools located in urban areas and the teacher training college will be by private contractor. The National School Building Council (CONES), a decentralized agency of the Ministry of Education with relevant experience, will be responsible for the bidding and construction supervision of these project institutions. The Ministry of Education will contract the services of CONES on terms and conditions satisfactory to the Bank for the purpose of this project (Section 3.02(b) of Loan Agreement). Construction of the vocational training centers will be by private contractors and FOMO will be directly responsible for bidding and construction supervision. The Govern- ment and FOMO will make adequate budgetary allocations for the maintenance of all buildings, furniture and equipment provided under the project (Section 4.05 of Loan Agreement and Section 3.02 of the Project Agreement). Procurement 34. Except for the rural schools and teachers' housing construction through SNDC, all contracts for civil works will be awarded to foreign or registered local bidders on the basis of competitive bidding advertised locally and in accordance with procedures satisfactory to the Bank. Civil works are of small size (averaging US$60,000 for the intermediate schools and US$280,000 for the vocational training centers) and located throughout the country, and Bolivia has a competitive local construction industry. Therefore, although foreign contractors will not be precluded from partici- pating in the bidding, it is unlikely that they will do so or that any civil works contracts will be awarded to foreign firms. Contracts for furniture and equipment will be awarded on the basis of international competitive bidding in accordance with the Bank's guidelines. To the extent practicable, public and private industrial secondary and post-secondary schools and FOMO  - xi - will be encouraged to bid for production of furniture for the basic education schools. The Government has agreed to permit importation on equal terms to all bidders for the furniture included in the project to ensure timely implementation (Section 4.10 of Loan Agreement). Local manufacturers will receive a margin of preference of 15% of the cif price or the actual tariff, whichever is lower. Furniture and equipment which cannot be grouped into packages for bulk procurement of at least US$50,000, not exceeding in the aggregate US$750,000 (equivalent to about 15% of the estimated total cost of furniture and equipment) will be procured in accordance with local procedures acceptable to the Bank. Disbursements 35. The loan will be disbursed over a five year period, with the project completed by June 30, 1981. Disbursements will finance an estimated 50% of contruction expenditures for the primary and community education component and 30% for the vocational training component; 100% of foreign expenditures or 85% of expenditures for locally procured equipment and furniture; and 100% of expenditures for technical assistance, project administration, preinvestment studies, community education activities, curriculum development and learning materials production, and in-service training. Expenditures on civil works incurred by the Ministry of Education after November 1, 1976 and before loan signing will be financed retroactively up to a total of US$150,000 equivalent (Schedule 1, paragraph 4(i) of Loan Agreement). Conclusions 36. The proposed project will assist the Government in developing a cost-effective primary and related teacher training and community education project, which will incorporate various innovative features (from both the qualitative/educational and organizational/efficiency standpoints) that, if successful, will later be expanded on a national scale. The project will also help to redress imbalances in educational opportunities in the Altiplano area of the La Paz Department by providing new basic school places for about 6,900 students annually, replacing, extending and upgrading places for an additional 21,850 students, and furnishing and equipping school places for all 37,820 children in the project area. In addition, 4,590 intermediate and 425 preservice teacher training students annually would be accommodated in facili- ties to be replaced and extended under the project and 1,200 teachers and 100 school supervisors and directors will receive in-service training under the project. Finally the project will aim to increase primary student:teacher ratios to 35:1 from the 19:1 prevailing today in the project area, increase retention rates to 70% and reduce overage students from 40% to 20% of total enrollments by 1985. It is estimated that these improvements could reduce recurrent costs per student by as much as 30%. 37. Regarding vocational training, the capacity of FOMO would be extended sevenfold to meet urgent requirements for trained manpower at the managerial, skilled and semiskilled levels, and to initiate new activities in the rural  - xii - and mining sectors. FOMO's training programs would be upgraded through the modernization of its course design, instructional techniques and learning materials production. The introduction of trade tests and the certification system would lay the basis for creating wage differentials among skilled workers and thereby leading in due course to a better earnings profile. 38. With respect to the primary and community education component, various of the educational and organizational measures are by definition experimental and therefore the extent to which they will meet stated objec- tives can only be evaluated as they are implemented within the project area. Accordingly, a strong evaluation team and adequate financing are provided in the project to ensure timely preparation of annual evaluation reports during 1977-81 in order to enable the Government and FOMO to take correc- tive action, if needed, to ensure satisfactory completion of the project (Section 4.03 of the Loan Agreement and Section 3.06 of Project Agreement). The Government and FOMO would also prepare a report providing a preliminary assessment of the project, its results and experience gained during imple- mentation within three months of the Closing Date of the loan account (Section 4.08 of Loan Agreement and Section 3.07 of Project Agreement). Recommendation 39. The proposed project constitutes a suitable basis for a Bank loan of US$15.0 million to the Republic of Bolivia for a term of 20 years including a 4-1/2 year period of grace. March 30, 1977  I. DEVELOPMENT STRATEGY AND HUMAN RESOURCE IMPLICATIONS Socio-Economic Environment 1.01 Bolivia can be characterized generally as a rural, low-income country whose development prospects are limited by very strong cultural and geographic barriers to domestic integration and pronounced imbalances in the distribution of population and natural resources. About 70 percent of the 5.6 million (1975) inhabitants reside in rural areas (Annex I.1), and 85 percent of these are concentrated in the semi-arid northwestern highlands (altiplano, 55 per- cent) and the temperate central valleys (30 percent), where they engage in small-scale subsistence agriculture using very primitive technology. Most are Indians and many neither speak nor understand Spanish. Their productivity is low and their output has stagnated for decades, if not centuries. Neverthe- less, efforts to resettle the altiplano population to the valleys and lowlands have failed. The extreme harshness of life is reflected not only in low per capita income figures, which reached only US$315 for the country as a whole in 1975, but also in indicators such as an average life expectancy of just 44 years, high infant mortality rates of 157 per 1,000 live births, and an adult literacy rate of 38 percent. 1.02 Although Bolivia is at present poor, its ample resources could support substantially higher levels of material welfare in time. Development and exploitation of these resources will, however, require heavy capital investment and inputs of managerial and technical expertise. Mineral deposits are numerous but require major investments to upgrade existing operations and develop new reserves. Agricultural potential has hardly been tapped, and with considerable availability of arable land at different altitudes, a larger variety of crops can be grown and possibilities of raising all kinds of livestock are excellent. The situation is similar for Bolivia's ample forest resources and its potential inland fisheries. Nevertheless, further development of commercial export agriculture requires substantial investment both on farms and in supporting infrastructure. In many respects, Bolivia faces the small country problem - economy of scale contraints severely limit the scope for expanding output on the basis of domestic demand alone. At the same time, with an area of over one million square kms, Bolivia is quite a large country for which the high costs of providing adequate transport, communications'and social services are further increased by extremely rugged topography. More- over, Bolivia is landlocked with long and difficult access to potential export markets. 1.03 Overall, agriculture accounts for about one-fourth of GDP and 53 percent of employment, and this situation will not change rapidly (Annex I.2). Manufacturing accounts for only 10 percent of GDP and 8 percent of employment, with perhaps 80 percent of the latter in traditional, low-productivity handi- crafts and cottage industries. The balance of output is derived from the services sector (43 percent of GDP), construction (4 percent), and mining and hydrocarbons (which together account for some 18 percent). Although by international standards Bolivia is a very small producer of petroleum and natural gas, the increase in prices since late 1973 has dramatically improved  - 2 - the country's development prospects. If estimates of natural gas reserves are confirmed by exploration presently underway, hydrocarbons would become the major growth sector of the economy. This would not, however, have much impact on employment, with less than one percent of the labor force engaged in hydrocarbons and related activities. 1.04 The present economic "scenario" in Bolivia is thus one of a very small modern sector, super-imposed on a large low productivity traditional sector with weak infrastructure. However, the modern sector also suffers from low productivity, as there is a serious shortage of qualified manpower on all levels in both the public and the private sectors and in almost all fields of economic activity. Average value added per worker in agriculture, industry and services in Bolivia in 1975 was consistently less than that of other countries at comparable levels of development, if one excludes mining and hydrocarbons. While the differences in productivity among the countries certainly reflect in part the particular structure and capital intensity of activities within the main economic sectors, they are also closely related to the very low educational level of the Bolivian labor force, as set forth below. Educational Attainments of the Bolivian Labor Force, 1975 % of Labor Force No Education/ Complete Incomplete Incomplete Secondary Occupational Category Primary Primary Secondary and Above Total Professionals 3.4 4.6 14.6 77.3 100.0 Managers and Administrators 5.5 5.0 12.0 77.5 100.0 Officer Workers 6.9 9.5 35.5 48.0 100.0 Commercial and Sales Workers 5.8 10.1 38.9 45.2 100.0 Skilled and Semi-skilled Workers 56.6 21.3 11.4 10.7 100.0 Others 87.8 6.3 5.1 0.8 100.0 Total 71.8 8.3 9.1 10.8 100.0 Development Strategy and Prospects 1.05 Bolivia has been experiencing a relatively high level of growth during the first half of this decade, accompanied, since 1971, by an unpre- cedented degree of political stability which has helped to restore confidence of the domestic private sector and improve the climate for external investment. Real GDP growth exceeded 5 percent annually during 1970-75, despite poor per- formance in the important mining sector. Today Bolivia may well be at a crossroads in its long-term development path. More favorable prices for some of its main export commodities combined with good prospects for expansion in the volume of oil, gas and agricultural exports could break two major const- raints on the country's development effort -- the perennial balance of pay- ments problem and the fiscal deficits which in the past have hampered the mounting of a large scale, sustained development program. However, even with  - 3 - these bright prospects difficult fundamental problems remain to be solved, most notably in the traditional agricultural sector on the altiplano. In view of the many economic, technical and sociological factors involved, eventual development of the altiplano is more likely to result from experi- ences gathered through specific experimental projects than from any gene- ralized solutions. A large scale development effort will also require strengthening of planning, project identification and preparation, and probably some decentralization of economic decision making and management from the central government to autonomous agencies and/or regional bodies. 1.06 Looking towards the medium-term, the government has just completed preparation of a five-year economic and social development plan (1976-80) which emphasizes expansion of the main export sectors of hydrocarbons and minerals, agriculture and agro-industries. The plan recognizes that addi- tional transport, communications, power and water supply infrastructure is basic to Bolivia's development and also that to achieve stated objectives within a stable financial environment will depend largely on: (a) the success of oil and gas exploration; (b) the evolution of world prices for Bolivia's main exports; (c) controlling aggregate demand to curtail the growth of consumption in favor of productive investment; (d) the success of efforts to expand output and raise agricultural productivity to increase exports and lower dependence on imported foodstuffs, while reducing rural poverty and underemployment; and (e) the continued availability of external economic assistance. Human Resource Implications 1.07 Although the draft plan does discuss employment and related social sector issues, there is a definite emphasis on Bolivia's physical and natural resource base, at the expense of attention to the urgency of mobilizing its human resources. Expansion of the education and training system is proposed, but the financial implications are not carefully examined in light of the already high share of resources devoted to that sector (27 percent of central government recurrent expenditures in 1976) and the need, therefore, to estab- lish a feasible set of investment priorities and to develop more cost- effective delivery systems. One major exception to this is the decision to develop a strong vocational training system within the framework already established by the National Manpower Development Service (FOMO). FOMO will perform an essential function in training skilled and semi-skilled manpower, particularly for the urban manufacturing and mining sectors and it will begin to develop a capacity to provide agricultural and rural non-farm training. 1.08 The appraisal mission explored the main quantitative implications of the draft five-year plan with the Ministries of Labor and Planning. In summary, assuming an average annual growth of GDP of 5.9 percent during  1975-80 and 6.6 percent during 1980-85, 1/ with agriculture, manufacturing and services growing at a slightly lower rate and construction and hydro- carbons more rapidly, average annual manpower requirements would total 159,300 workers during the next decade. These would include 83,000 new and 76,300 replacement workers (to compensate for attrition, which is slightly higher at 3 percent per year in Bolivia than elsewhere because of the unusually low life expectancy). 1/ Provided hydrocarbon exploration is successful and substantial foreign investment can be obtained for development of the natural gas and petro- leum industries. Should this not materialize, the economy is more likely to grow at around 5.2-5.5 percent for the entire period, which would not substantially change the manpower analysis, in the sense that the demand for trained manpower would still far exceed the projected output of the education and training system.  Manpower Requirements by Economic Activity and Occupational Group, 1975-85 1975 1980 1985 I. Total Workers Required by Economic Activity 2,544.1 2,939.6 3,374.5 Agriculture 1,504.2 1,718.5 1,944.3 Mining 87.6 90.0 99.5 Hydrocarbons 8.3 11.8 18.8 Manufacturing 227.4 266.5 300.2 Construction 65.7 82.3 99.6 Services 650.9 770.5 912.1 II. Total Workers Required by Occupational Group 2,544.1 2,939.6 3,374.5 Professionals, Managers and Administrators 66.1 85.2 111.3 Office Workers 81.4 108.8 145.1 Commercial and Sales Workers 142.5 167.6 199.1 Skilled and Semi-Skilled 325.6 405.7 499.4 Other / 1,928.4 2,172.4 2,419.5 III. New and Replacement Workers Total Annual Required by Occupational New Replacement Total Requirements Group, 1975-85 830.4 763.2 1,593.6 159.4 Professionals, Managers and Administrators 45.2 19.8 65.0 6.5 Office Workers 63.7 24.4 88.1 8.8 Commercial and Sales Workers 56.6 42.7 99.3 9.9 Skilled and Semi-Skilled 173.8 97.7 271.5 27.1 Others /1 491.1 578.5 1,069.6 107.0 /1 Including agricultural workers. Of particular interest is the annual demand for skilled and semi-skilled workers (27,100), which will be about four times the output of the FOMfO voca- tional training system after it is fully operational in 1981. The deficit will be met to some extent by graduates of the technical streams of diver- sified secondary schools, but in the main through informal on-the-job training. To these demand figures for training of new entrants to the labor force must be added the need to upgrade a large proportion of the presently employed workers, whose low productivity and educational attainments were described above. This is true not only for the modern sector and export agriculture occupations, but also for traditional handicrafts and small-scale agriculture which will remain the principal source of employment and income for much of the population over the forseeable future.  BOLIVIA FIRST EDUCATION AND VOCATIONAL TRAINING PROJECT Population, 1970-85 1970 1975 1980 1985 1975/70 1980/75 1985/80 1985/70 TOTAL ('0OOs) 4931.2 5633.8 6455.7 7375.5 2.7 2.8 2.7 2.7 Rural (%) 70.7 69.4 68.0 66.5 2.3 2.3 2.2 2.3 Age Distribution: 0-5 821.7 939.0 1072.6 1227.3 6-13 1069.3 1220.5 1398.0 1595.8 14-17 517.8 591.5 678.1 773.6 18-25 803.7 916.3 1048.8 1196.3 26 and over 1718.7 1966.5 2258.2 2582.5 Labor Force 2479.4 2829.1 3216.5 3657.0 2.6 Geographic Distribution: Altiplano 2719.5 3102.1 3549.0 4047.9 2.7 La Paz 1590.6 1821.5 2092.1 2395.5 2.8 Oruro 332.8 379.1 433.1 493.2 2.7 Potosi 796.1 901.5 1023.8 1159.2 2.5 Valles 1487.1 1699.0 1946.8 2224.2 2.7 Chuquisaca 448.3 510.6 583.3 664.3 2.7 Cochabamba 798.1 911.5 1044.1 1192.4 2.7 Tarija 240.7 276.9 319.4 367.5 2.9 Lianos 724.6 832.7 959.9 1103.4 2.8 Santa Cruz 502.7 579.9 671.1 774.3 2.9 Beni 190.5 217.0 247.9 282.5 2.7 Pando 31.4 35.8 40.9 46.6 2.7 Sources: Ministry of Coordination and Planning; National Institute of Statistics; Ministry of Labor; IBRD Staff Estimates.  BOLIVIA FIRST EDUCATION AND VOCATIONAL TRAINING PROJECT Output, Employment and Productivity. 1970-85 1970 1975 1980 1985 1970 1975 1985 1985 1975/70 1980/75 1985/80 1985/70 (Constant 1974 US$ Millions) --- --------- (% of Total GDP) -------- --------- (% Annual Change) --------- I. TOTAL OUTPUT (GDP) 1,339.0 1.773,2 2,358.3 3,245.1 100.0 100.0 100.0 100.0 5.8 5.9 6.6 6.1 Agriculture 346.1 453.8 607.9 813.6 25.8 25.6 25.8 25.1 5.6 6.0 6.0 5.9 Mining 216.9 207.1 227.5 268.9 16.2 11.7 9.6 8.3 -0.9 1.9 3.4 1.4 Hydrocarbons 59.3 118.3 214.9 436.4 4.4 6.7 9.1 13.4 14.8 12.7 15.2 14.2 Manufacturing 118.8 156.5 207.5 277.6 8.9 8.8 8.8 8.6 5.7 5.8 6.0 5.8 Construction 56.2 77.8 107.6 150.9 4.2 4.4 4.6 4.6 6.7 6.7 7.0 6.8 Services 541.7 759.7 992.9 1,297.7 40.5 42.8 42.1 40.0 7.0 5.5 5.5 6.0 (Constant 1974 US$ Millions) (% of Total Labor Force) (% Annual Change) II. TOTAL LABOR FORCE 2,479.4 2,829.1 3,216.5 3,656.9 100.0 100.0 100.0 100.0 2.7 2.6 2.6 2.6 Employment 2,029.0 2,544.1 2,939.6 3,374.5 81.8 89.9 91.4 92.3 4.6 2.9 2.8 3.4 Agriculture 1,307.0 1,504.2 1,718.5 1,944.3 52.7 53.2 53.4 53.2 2.9 2.7 2.5 2.7 Mining 52.0 87.6 90.0 99.5 2.1 3.1 2.8 2.7 11.0 0.5 2.0 4.4 Hydrocarbons 5.0 8.3 11.8 18.8 0.2 0.3 0.4 0.5 10.7 7.3 9.8 9.2 Manufacturing 171.0 227.4 266.5 300.2 6.9 8.0 8.3 8.2 5.9 3.2 2.4 3.8 Construction 48.0 65.7 82.3 99.6 1.9 2.3 2.5 2.7 6.5 4.6 3.9 5.0 Services 446.0 650.9 770.5 912.1 18.0 23.0 24.0 25.0 7.9 3.4 3.4 4.9 Unemployment 450.4 285.0 276.9 282.4 18.2 10.1 8.6 7.7 -9.6 -0.6 0.4 -3.2 (Constant 1974 US$ Millions) (% of Average Productivity) (% Annual Change) III. PRODUCTIVITY PER WORKER 659.9 697.0 802.3 961.7 100.0 100.0 100.0 100.0 1.1 2.9 3.7 2.6 Agriculture 264.8 301.7 353.7 418.5 40.1 43.3 44.1 43.5 2.6 3.2 3.4 3.1 Mining 4,171.2 2,364.2 2,527.8 2,702.5 632.1 339.2 315.1 281.0 -12.0 1.4 1.3 -2.9 Hydrocarbons 11,860.0 14,253.0 18,211.9 23,212.8 1,797.2 2,044.9 2,270.0 2,413.7 3.7 5.0 5.0 4.6 Manufacturing 694.7 688.2 778.6 924.7 105.3 98.7 97.0 96.2 -0.2 2.5 3.5 1.9 Construction 1,170.8 1,184.2 1,307.4 1,515.1 177.4 169.9 163.0 157.5 0.2 2.0 3.0 1.7 Services 1,214.6 1,167.2 1,288.6 1,422.8 184.1 167.5 160.6 147.9 -0.8 2.0 2.0 1.1 Source: Ministry of Coordination and Planning; Central Bank; IBRD Staff Estimates.  II. ISSUES IN FORMAL EDUCATION AND STRATEGY FOR IMPROVEMENT 2.01 The following number among the main deficiencies of the formal edu- cation system identified in recent sector assessments undertaken both by the Bolivian government and external agencies: (a) over-centralization of admin- istrative control in La Paz and administrative division of rural and urban education into virtually independent subsystems; (b) not fully relevant curricula in terms of the environment and future employment prospects of students; (c) a major shortage of school places at the primary and secondary levels, exacerbated by the disproportionate concentration of public education expenditures in urban areas, which account for only 30 percent of the total population; and (d) serious internal inefficiencies, reflected in average primary retention rates of 35 percent (dropping to 15 percent in many rural areas) and comparatively low student:teacher ratios ranging from 24:1 for primary education to 4:1 for industrial secondary schools. These and related issues in formal education in Bolivia, and the government's strategy for improvement are discussed below. Administration 2.02 Formal education in Bolivia comprises four levels: pre-primary (2 years), primary (five years "basic" and 3 years "intermediate"), diversified secondary (4 years) higher education (2-6 years) including technician courses, teacher training and university education (Annex II.2). This structure was introduced in 1969 and modified in 1973, replacing a 6-year primary and 6-year secondary system, which had not included a pre-primary level. 2.03 Bolivia has three types of formal education institutions--public, private and "decentralized". Private institutions, mostly affiliated with church organizations, exist at all levels, and their recurrent expenditures are subsidized by the government. "Decentralized" authorities, principally government-owned mining and petroleum corporations, run and finance their own schools. The one private and 8 public universities are independent, although subsidized by the government. The Ministry of Education and Culture adminis- ters all the public and supervises the decentralized and private institutions, except for the universities. Other Ministries (Labor, Health, Rural Affairs and Agriculture, Industry, Commerce and Tourism, Planning) and decentralized and private agencies offer nonformal education and training courses at differ- ent levels of specialization, as set out in Chapter III below. 2.04 Rural-Urban Dichotomy. Until 1971, rural formal education had been the responsibility of the Ministry of Rural Affairs and Agriculture, whereas the Ministry of Education was confined to urban areas. Thereafter, the two systems were merged under the Ministry of Education. Because of perceived differences, particularly in the field of teacher training, the administrative machinery of the Ministry of Education was restructured to accommodate the two systems under separate Sub-Secretariats. To assist in their eventual integra- tion, there is only one Director-General of Education reporting to the two Sub-Secretaries. In practice, however, these remain two quite separate  - 9 - systems and the barriers to movement from one to the other by students, teachers and administrators are great. 2.05 Administrative Reform. To promote efficiency in the education system, the Ministry of Education is implementing an administrative reform with USAID assistance. The reform, which is to be fully operational by 1980, aims at restructuring and largely decentralizing all administrative and educa- tional services at the national and regional levels and unifying the urban and rural subsystems (Annex II.3). Although the decentralization concept is theoretically sound, its full implementation will be difficult and will undoubtedly take considerable time because of the very limited trained man- power and financial resources of the Ministry of Education, not to mention the political implications of any major shift in responsibilities and authority within the system. Despite these limitations, viewed from the long-run, the change is in a positive direction and is deserving of support. Planning 2.06 Educational planning, both in its quantitative and qualitative dimen- sions, has not yet been used as an effective operational tool in Bolivia. In 1973, with UNESCO assistance, the Ministry of Education undertook a comprehen- sive study of the education system, which resulted in the publication of a 16-volume document: "Diagnostico Integral de la Educacion Boliviana" in 1974. This was subsequently converted into a Five-Year Educational Development Plan for the 1976-80 period. The Plan emphasizes expansion of basic and interme- diate education, particularly in rural areas as a step towards equalizing educational opportunities; the directing of more students towards the techni- cal streams of recently (1973) diversified secondary school; and the need for curricula revision. As with most earlier planning efforts, these proposals were not well supported by quantitative data and targets, nor were their financial, human or administrative implications thoroughly assessed. 2.07 The USAID-sponsored administrative reform (para. 2.05) would replace the old Planning Office with a new Directorate of Educational Planning, includ- ing a General Services Division of four Departments: Research, Programming, Evaluation and Statistics. The Director would have increased authority, but to be fully effective the restructuring of planning services must be accom- panied by the recruitment (or re-training) of staff competent to run an efficient planning mechanism, initiate experimentation and follow up action. Curricula and Teaching/Learning Materials 2.08 A National Directorate for Curricula was first established in the Ministry of Education in 1967, with USAID assistance. Although the recent administrative reform would shift the locus of curriculum development services from the national to the regional level, the Ministry has recently expressed some reservations on the matter. The ambiguity as to whether curriculum devel- opment will be centralized or decentralized will soon be clarified. Of greater urgency is the fact that the service will not function well at any level unless qualified personnel become available through new recruitment or re-training.  - 10 - Of equal importance, if curricula changes are to be reflected in educational practice, is the development and production of teaching and learning materials (textbooks, library books, teachers guides and such other audio-visual aids which are educationally relevant and financially viable). A materials devel- opment unit should be an integral part of any curriculum office and trained personnel, now lacking, should be provided in this indispensible area. 2.09 In terms of orientation, the present education system is geared mostly towards academic studies which bear little relation to the students' environment and work prospects. At first glance this might not appear to be the case given a recent revision of curricula and timetables, with more emphasis on practical activities in the basic and intermediate schools, and diversified streams for pre-technician training at the secondary level. How- ever, the introduction of such activities in the basic and intermediate schools has been done in a spirit of complete separation between academic studies and practical pursuits, rather than as a reinforcement of all subject areas through the "learning by doing" approach. There is, of course, the additional problem that most schools lack the human and material resources to implement such programs. 2.10 At the secondary level, nearly 95 percent of all students were in academic programs in 1973, with the small remainder studying home economics, commercial and industrial courses. The response to this situation, however, ought not to be an over-emphasis on highly technical education. Despite the soundness of the diversified school principle, the lack of reliable labor market data calls at this stage for a broad kind of polyvalent education, leaving narrow specialization to on-the-job training. 2.11 In higher education, most enrollments in 1974 were in the social sciences (39.7 percent), health sciences (26.9 percent) and technology (18.2 percent). A comprehensive development plan, based on high-level manpower requirements, should be a matter of urgent concern for the socio-economic development of the country. Nevertheless, university autonomy and the important political role of students and professors stand in the way of such efforts. Relevance 2.12 The question of "relevance" is not, of course, simply a matter of whether or not there are practical subjects in the curriculum, but of the impact of the schools on the life of the community and the wider socio- economic environment. The Bolivian school is still an isolated institution largely out of touch with the society, particularly in rural areas where the relationship between the primary school and the community is in most cases not mutually supportive. Some rural communities view the school as directed against their cultural traditions or as simply quite irrelevant to their world of work; that children are sent often reflects a fragile conviction that the school may provide some means of survival in dealings outside the community. The traditional attitudes of the teachers and their complete lack of training in community development work reinforces the school's isolation.  - 11 - 2.13 In Bolivia, language is a major contributory factor to the problem. Although about 60% of the population speak Aymara, Quechua and Guarani, the language of instruction in all schools is Spanish. The government has pursued a strict policy on this matter, with the result that teachers' training did not include learning or using the above languages. At present, the government is planning to introduce teaching in both the spoken vernacular and Spanish in the first grades of primary school on an experimental basis through the pro- posed project, but is resisting full implementation of a bilingual teaching program on the grounds that such activities might encourage political sepa- ratism. Nevertheless, if supported by appropriate pre-service and in-service teacher training, the government's new policy to at least begin to introduce the use of the vernacular is an important step in the right direction. 2.14 For years-various private organizations in Bolivia have used radio for non-formal adult education. In future, the government intends to use radio as a bilingual teaching aid in the first grades of primary school and for other activities, such as in-service teacher training. This will call for a close assessment of the best ways of establishing appropriate services to guarantee efficient and effective development, production and evaluation of radio education programs. The structure of the radio education service must be defined, in the light of its function as a supporting teaching aid for the implementation of curricula and for other educational activities. Assistance in the form of studio equipment and personnel training for technical, educa- tional and program evaluation activities has to be secured on a phased basis which will provide an opportunity for continuous feedback and evaluation of results. Access to Education 2.15 The discussion to this point has emphasized the qualitative aspects of the Bolivian education system and its external efficiency or "relevance". However, the single-most overwhelming problem facing the government today relates to the low level of participation and internal efficiency of the system: in 1976 expenditures on education reached 27 percent of the total central government recurrent budget, with only 56 percent of rural children (who constitute 70 percent of the relevant population) in primary school and more than half of these lost from the system by the end of the third grade. If the very substantial numbers of over-age students were discounted, these figures would be even lower. With budgetary allocations to the sector already so high, the government cannot go much further in providing even a minimum basic education to most of the population unless it increases its overall revenue base and takes decisive action to improve the internal effi- ciency of the education system, for which there is considerable scope. At the primary level, which is the focus of most of the following discussion, this implies, in addition to education and administrative reforms, changes in the (a) production, placement and conditions of service of teachers and (b) organization and location of schools. 2.16 Participation Rates. An analysis of the data shows an annual aver- age enrollment growth rate of 5.5 percent at the pre-basic and basic levels and 10.7 percent at the intermediate and secondary levels during 1970-73  - 12 - (Annexes II.4), but also reveals serious inequalities in educational oppor- tunities between rural and urban areas, among geographic regions and between the sexes. BOLIVIA - Primary Education Representation Indices, 1973 /1 Basic (Grades 1-5) Intermediate (Grades 7-9) Department Urban Rural Urban Rural Chuquisaca 1.444 0.528 9.579 0.050 La Paz 1.583 0.640 2.164 0.126 Cochabamba 2.095 0.571 3.240 0.112 Oruro 1.767 0.677 2.965 0.208 Potosi 1.741 0.453 2.298 0.083 Santa Cruz 2.549 1.182 4.266 0.319 Tarija 2.082 0.730 3.806 0.084 Beni 2.532 0.846 3.401 0.123 Pando 1.862 0.735 3.352 0.074 Total (Average) ---- 1.000 ----