_Page 12_ By one estimate, developing countries could achieve a 5% higher long-run GDP if they were<sup>to have a fully reformed</sup> educational system based on merit.15 By another estimate, tho economic pay-off of educational reforms to developing countries would be three times more than the pay-off obtained<sup>if OECD countries reduced restrictions</sup> on third world 1 exports. e Although the magnitude of those effects may be uncertain, the argument appears plausible.

The theory holds that certain, but not all, elements<sup>of social selection are amenable</sup> to policy manipulation. Within the education sector, there are basically three ways to increase the merit factor in the development of a country's human resources: () assuring that as broad a group of citizens as possible enters school;<sup>(ii) determining</sup> whether they stay in school as much as possible on merit grounds; and (iii)<sup>using objective tests to determine</sup> how the few of them chosen to attend university education are selected.

The use of standardized selection tests reduces both the inequity costs and inefficiencies accruing from the misallocation ofresources within education. These tests--by drawing attention at one specific time<sup>to a single, widely-</sup> understood indicator--tend to produce relatively tangible results by which to Judge quality. Selection testing thereby holds the school system accountable for those results; provides an open and continuing forum on the school system's abillty to deiiver results parallel to the public's expectations; and exerts pressure on the educational system for reassessment and reform.

- The general principles and policy options of standardized testing are summarized as follows:1 7 * The desiqn of testing systems. No system of examinations is designed on technical grounds alone and in isolation from the political environment. For example, aptitude<sup>testing In the United States exists</sup> because of the complex political prerogatives for communities to control their own curriculum. Schoolbased assessments can function in Sweden because of the modest logistical prerequisites and consensus on criteria achievable in a homogeneous society. Non-multiple choice formats ce; exist in Brftain because the number of test-take **r** s emains manageable and the definition of academic excellence has modest variation from one university to another. Multiple testing by Individual colleges can function In Japan because of the level of sophistication and motivation of the test-taking population. No model exists which can be transferred to developing countries without forethought and adaptation.

- The selection mechanism. The mechanism adopted in this context will affect the quality of universities and therefore a nation's future. Since universities are expected to increase levels of self-financing and to be competitive internationally, they should be assigned the responsibility of selecting their own students. Further, they should have access to school-based records of student accomplishments to assis **t** hem In their choice.

- * The testing agencies. The quality of tests rest to a large<sup>extent on the ability of the testing agency to</sup> reduce Its susceptibility to political interference and to pursue its professional ends autonomously. Agencies should therefore have their own source of finance<sup>from test fees. In the larger countries,</sup> competition among agencies might be healthy. On the other<sup>hand, test agencies subsidized</sup> by the public sector should be expected to fulfil public functions. These function **s** hould include<sup>establishment</sup> of a strong system of analyzing test results and the feeding of<sup>this information back Into the school</sup>

- Pifiera and Selowsky, **OD.** cit. In th6ir study the authors derive orders of magnitude<sup>for the gains in value</sup> added due to a series of educational reforms. Such<sup>reforms are ranked according to the number of</sup> educational levels whose new selection criteria becomes<sup>the level of preschool ability. Throughout this</sup> evaluation the size or capacity of each educational level is held constant so as to Isolate the pure qualitative effects of such reforms.

- 6 Klrmani, Malajoni and Meyer (1984), pp. 661-84.

- **17** For detaile **d** escriptions of testing systems in selected OECD countries, see: Heyneman and Fagerlind (1988).