# **Conclusions**

Education is central to the long-term development of human capital and to economic growth. Schooling empowers people and strengthens nations. It affirms human dignity and provides individuals with capabilities to compete in the global economy. Good-quality education is among the most powerful instruments known to reduce poverty and inequality and to foster dynamic and competitive economies over the long term. In today’s global economy, a high-quality education is critically important for creating, applying and disseminating knowledge.

Globally, the social rate of return to education is 10 percent in low-income and 7 percent in middleincome economies. These returns to education are well above average returns to investment in stocks (4.6 percent), bank deposits (4.6 percent), housing (2.8 percent), and long-term bonds (2.7 percent). Evidence from advanced economies also shows that improving quality and learning outcomes, in addition to years of schooling, delivers even greater benefits than improving enrollment alone.

The private rate of return to schooling in Vietnam is at the global average. It is higher than in most countries in the region, demonstrating that further investment in education is a sound priority. The returns to primary schooling have decreased over time, which is not surprising given the level of achievement and universal access in Vietnam. The returns to primary schooling are lower than the regional average. The returns to secondary are low, but not much lower than the regional average. The returns to tertiary education are high, significantly higher that the regional average, and on par with China, the Philippines and Thailand. In fact, the returns to tertiary education in Vietnam are among the highest in the world. This reflects economic policy outcomes and the longstanding tradition of valuing education in Vietnam.

Vietnam can continue to expand upper secondary and post-secondary education given the high returns to tertiary education. Given the relatively high private and social returns to higher education, some level of cost-recovery is warranted. Care should be taken to expand higher education equitably and sustainably, and to improving quality. Given the rising returns despite rapid increases in schooling levels suggests the demand for skills is rising. Investment should rapidly expand quality secondary and higher education. The high quality of basic education and the universal coverage at this level suggests more resources should go into post basic education. This includes higher education but also universal coverage of upper secondary schooling to make it possible for more students to enter university. Given the high returns to education in Vietnam and globally, which surpass the returns to other viable investments, then expanding education spending – by family and society – makes economic sense.

Most of the data reviewed here go to 2012. More recent data and analysis are needed. The returns to schooling should be analyzed with controls for endogeneity. One idea would be to use the introduction of compulsory schooling in 1991 as an instrument (Dang 2017).

Since most of the research thus far in Vietnam has produced estimates of private returns to schooling, then it would make sense to estimate social returns. This could be done in combination with work on appropriate levels of cost-recovery and financing mechanisms. Future research should also look at the impact of raising the level of cost-recovery at the university level. More 8