> **is.** Although adjustment has certain direct and indirect implications for education, many of the eui rent trends have their roots in preadjustment mismanagement or economic recession. A ijustment is an essential and continuous process for every country that wishes its economy to grow. Countries must continuously adapt to changing international conditions. Many countries that do not adjust quickly enough face serious difficulties, including unsustainable fiscal deficits and debt burdens. Nonadjustment results in distortior- and inefficiency at the macro and sector levels that are exacerbated over time, and is likl.y to have serious detrimental effects on education.

V. In order to understand the process through which adjustment affects education, a comparative dynamics approach is required, i.e., o;ne that incorporates the dynamics of the effects of change internal to the system on outcomes. An ideal methodology would determine how specific adiustment measures affect education supply and demand, d- in turn how the interactions between supply and demand factors translate into sector outcomes. Even when correlation is evident, analysts must delve deeper to determine what happened, why did it happen, was the outcome intended, and is the direction of change positive or negative. In addition, it is necessary to estimate likely education outcomes in the absence of adjustment programs, in order to establish causal links between indicators and adjustment programs.

vi. Evaluation studies have not rigorously followed this approach. Available data and models limit analysis to a comparative statics approach. First, the data describing the evolution of the education sector during adjustment are scarce and of poor quality. The most common indicators are aggregate financing and enrollment indicators that are difficult to interpret. Second, whether they compare figures from "before" and "after"' adjustment or establish typologies of "adjuaing" versus "nonadjusting' countries, analyses compare indicators between two static points, but say nothing about how or why the indicators changed. In particular, the effects of changes in financing on coverage, quality, and equity are by no means obvious. Because education has a long gestation period, the impacts of adjustment may not yet be evident. Long-term effects may differ in magnitude and direction from short-term effects. Finally, it is virtually impossible to isolate the effects of adjustment from those of other simultaneous influences on the sector. Given the complexity of adjustment, combined with data constraints, it may be impossible to develop a general methodology to analyze how adjustment programs affect education. In the absence of any crosscountry comparative dynamics models for adjustment and the education sector, country studies that crosstabulate a variety of indicators provide some insight into the dynamics of adjustment and education.

vii. In the literature that compares the situation in "adjusting" and "nonadjusting" countrios, th-e principal conclusion is that public education expenditures and gross primary enrollment rates are negatively associated with World Bank adjustment lending. The longterm implications for national development are serious. Education financing deteriorated in adjusting countries because recession reduced all public expenditures, debt service obligations grew, or civil service wages changed and reduced education's budget share relative to less labor-intensive public seczors. However, the question of what would happen in the absence of adjustment lending remains. Education expenditures may decline even ii