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I describe the national context, research sites and the primary and secondary data that was used for the analysis presented in the dissertation in this chapter. I provide a discussion on the needs addressed by the primary data collection and how the secondary data is being utilized throughout the dissertation. These data were collected between 2010-11 and 2012-13, as mapped in Figure 4.1. My contextual focus on Nepal allowed me to utilize insider and outsider

perspectives as a Nepalese citizen who is trained in research methods in the United States7.

National Context Nepal Socioeconomic Context

Nepal is a developing country situated between India and China with a population of 26.6 million and 17% urban population (CBS, 2012a). The country is administratively divided into five development regions (far-western, mid-western, western, central, and eastern), and three ecological belts (mountains, hills, Terai). Nepal’s current administrative structure is based on the Local Self-Governance Act of 1999. Nepal has a two-tier system of local governance – there are 75 districts that are constituted of village development committees (VDCs) and municipalities (towns and cities)8. There are substantial differences in human development indicators by region, ecological belt, and rural or urban area. Adult literacy rates (15 and older) are the highest in Kathmandu valley (84%) and lowest in the far and mid-western regions (54.1%). The mountain and Terai (plains) regions have significantly higher gender disparity in adult literacy than in the

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The primary and secondary data collection was completed with funding support from the World Bank’s Nepal country office and with the approval of the Nepalese Education implementing agency, the

Department of Education (DoE). 8

Each VDC is further divided into nine wards, and each municipality is divided into a minimum on nine wards.

hilly region. For instance, two-thirds of the adult men, and only one-third of adult women are literate in the mountain region of the country (CBS, 2011).

From an economic perspective, Nepal is considered a low-income, primarily rural, agrarian economy. The country has seen a recent increase in living standards due to a growth in remittances which has offset poor domestic employment growth (IMF, 2011a). Households have become increasingly reliant on remittances – over 55% of households receive remittances and these remittances constitute over 30% of these household’s income. Over 29% of households have at least one absentee living abroad (CBS, 2012). Between 1995/96 and 2010/11, the country has experienced significant gains in adult literacy, and accessibility to major facilities such as schools, health services, banking services, and market centers (CBS, 1997; CBS, 2004; CBS, 2011). These continued improvements in living standards have resulted in a drop in poverty rates from over 40% in 1995 to 1996 to 25% of the population in 2010-11(CBS, 2011). Analysis on Nepal’s poverty indicates that the poverty incidence is highest among the agricultural laborers, less educated people, disadvantaged groups such as dalits and hill janjatis, families with larger households, and families with low land ownership (CBS, 2006, CBS 2012). For instance, households that have an illiterate household head are almost three times more likely to be poor than households with a household head with at least seven years of schooling, as shown in Table 4.1 (CBS, 2012b).

Despite improvements in living standards, Nepal’s economic competitiveness has continued to decline over the past decade due to inadequate road connectivity, poor access to power, a fragile financial system and weak institutions (World Bank, 2011; World Economic Forum, 2011; IMF, 2011a). Perhaps the most important limitation, however, is the highly unstable political environment. Important historical markers in Nepal have been the beginning of democratic rule in 1991, the disarray caused by political volatility, and the resultant decade-long violent Maoist political struggle between 1996 and 2006. The past few years have ushered in a

new era – Nepal is finally without a monarchy, but continues to operate in an extremely fragile state with frequent changes in leadership as its political leaders try to develop a new constitution while attempting to address historical injustices in the country’s nascent democracy. Some recent positive developments have included the official incorporation of over 1300 former Maoist soldiers into the Nepal army in July 2013 (Martin Chautari, 2013) and the relatively peacefully held November 2013 elections.

Education System

The systematic development of an education system with the objective of a national universal system only began about 60 years ago. Prior to the 1950s, a 100-year oligarchic regime that was in power during the colonial era supported isolation and education suppression in the country (Wood, 1959). Between 1950 and 1990, education access expanded from a low starting point. However, aggressive expansion really took off after the 1990 Education For All

international commitment – in 1951, there were 321 primary (grades 1 through 5) (8,505

students) and 11 secondary (1,680 students) schools (Bhatta, 2009). By 2012, these numbers had skyrocketed to 34,066 basic (6,595,565 students) and 7,938 secondary (848,569 students) schools (MoE, 2012)9.

The Nepal K-12 education system is still going through substantial transitions. The education system used to be divided into primary (grades 1 through 5), lower secondary (grades 6 through 8), secondary (grades 9 through 10) and higher secondary (grades 11 through 12) levels. There are efforts under way to build a pre-primary system and to transition the 1-12 system to basic (grades 1 through 8) and secondary (grades 9 through 12), with separate vocational and academic tracks. Politically, it has been difficult to close down the intermediate levels (grades 11 through 12) in campuses throughout the nation due to student and other

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For a recent detailed discussion on Nepal’s education development, please see Thapa (2011) and Sharma (2012).

protests. Simultaneously, the Department of Education is working to mainstream religious (Hindu, Buddhist and Muslim) primary schools and to ensure that the schools stay “basic level” or “secondary level” schools and stop adding grades to transition from basic to secondary level schools. While there are nationally administered examinations in the 5th grade and 8th grade, the most important high-stakes examination taken by all students is the end of high school 10th grade School-Leaving Certificate (SLC) examination as it directly determines student placement in higher education and career opportunities.

In the early years of education access, that is, in the 1950s and 1960s, Nepal’s schooling system used to be entirely community funded and operated. In the inception phase, there were strong recommendations for the development of a tax system, but there was significant resistance from the small and elite minority of professionals and industrialists who claimed that taxation was an affront to private investors (Upraity, 1962). There were brief forays into voluntary taxation in the mid-1960s which yielded some success in increasing enrollment in a few districts (Padhye, 1976). Any mention of attempting a local taxation based financing model has

disappeared since then.

The first major policy reform in Nepal was the National Education Sector Plan (NESP) of 1971 that was financed by USAID and sought to create a unified system of public education, with district level education offices empowered to administer schools. The policy emphasis was on central planning and there was a shift of the locus of control to the capital Kathmandu. The quest to increase central government responsibility was particularly significant in terms of teacher provisions and also led to a loss of influence of local interest groups in schooling. The nationalization movement did not last long – starting with the Decentralization Act of 1982, Nepal has undergone a three-decade long emphasis on decentralization, bolstered by increasingly important donor support. Private schools were re-allowed to operate starting in the early 1980s, and have since expanded significantly.

While there has been substantial growth in education access, there remain pervasive problems with poor education quality in Nepal’s education system. The significant growth in education access since the 1980s have led to substantial progress in out-of-school rates in Nepal – as shown in Table 4.2, while over 36% of 6 to 24-year olds never attended school in 1995-96, the number had decreased to 8.7% by 2010-11. Of the students who did not attend schooling, schooling costs are not as prohibitive as they used to be in the 1990s. However, parents desire not to send their children to school and the need to help around the home continue to be the key reasons for lack of schooling access. Self-reports from 6 to 24-year olds, detailed in Table 4.3, suggests that poor academic progress at the school, potentially due to high repetition or lack of learning, is a dominant reason for student dropout. Nepal has very high repetition rates, particularly in early grades and there still are problems with education completion. In

conjunction, these statistics point to issues caused by low schooling quality, alongside economic and sociocultural barriers.

A main policy reform initiated in the past decade to improve education quality was the Community School Support Program (CSSP), modeled after the community-focused

decentralization programs in Latin America. The CSSP sought to shift management control and financing to the community level and reduce government responsibility to a facilitator role (World Bank, 2003). The main rationale for the decentralization push was the notion that pre- 1971 community initiated and operated model for schooling provision was more successful than the centrally governed Nepal education system. While the program was initiated and promoted with much fanfare, there has been significant opposition to the program, particularly from teachers (World Bank 2011; GSDRC, 2011). Another important recent policy was the

establishment of the per-child fund (PCF) accountability mechanism, which was initiated in 2008 with the goal of tying funding more directly to enrollment.

Furthermore, the public education system has been plagued by issues of overt politicization10. Some of the key instances of political dysfunction are found in the teaching profession. An Education Service Commission was established for the purpose of independently hiring and certifying teachers in 2001. However, the commission remained defunct for the greater part of the last decade, and has only started the process of hiring teachers in a transparent manner for the 2013-14 academic year11. The country addressed the need for teachers to

accompany the education expansion efforts of the 1990s by appointing temporary teachers through “rahat” (relief) quotas from the development (donor funded) budget. Local school experts frequently remarked on the questionable, subjective teacher hiring practices in the period, and suggested that the legacy of loose teacher hiring had endured and exacerbated in the present political climate. Specifically, experts suggest that these systemic problems have allowed the teaching profession to be held hostage to political interests. In such a context, private schools have thrived since they provide a relatively politics-free education environment, teach in the valued English medium of instruction, and have routinely produced better student test scores than public schools.

Financing the education system has become increasingly reliant on foreign assistance. The lack of domestic revenues12 to support expenditures coupled with massive education expansion has contributed to the country’s increased dependence on foreign assistance13 in education spending.

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The extent and dimensions of political interference in Nepal’s education system are discussed in more detail as one of the reasons for their inability to compete with private schools in Chapter 7.

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Source: http://www.tsc.gov.np/ 12

One of Nepal’s key financial issues is low domestic revenues. Even in comparison to other low-income countries, Nepal has a disproportionate and unsustainable reliance on import based taxation and low tax yields (IMF, 2011b).

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The growing role of donor funds can be seen in the foreign role in budgetary allocations that have been made for district level expenditures, which are separately accounted for from expenditures that are made

Thus, Nepal’s experience has unique context specific characteristics. Still, Nepal is a good choice for the analysis on competition since its experiences are likely to be significant in a comparative sense for a range of developing countries. Firstly, Nepal’s experience is relevant for other South Asian countries, as there has been diversified private sector growth in India

(Muralidharan and Kremer, 2009) and Pakistan (Andrabi, Das and Khwaja, 2008). Secondly, Nepal’s experience provides insights for other developing countries with which it shares structural similarities, such as land-locked countries or countries in conflict situations that have robust private sector engagement in education. It is important to thoroughly analyze how public schools in countries like Nepal are being impacted by privatization growth so that more rigorous evidence can be used for policymaking.

Needs addressed by the Primary and School-level Secondary Data Collection

I decided to collect primary data and school-level secondary data after a careful exploration of the available datasets on education and an assessment of their limitations for the research study. Some of the comprehensive datasets were not focused on education but provided important descriptive and methodological insights. For instance, the main living standard survey that has been conducted in Nepal three times (1995/96, 2003/04, and 2010/11) was primarily useful for providing some of the key descriptive statistics on household burden of schooling expenditures and adult and child enrollment and literacy. The School-Leaving Certificate (SLC) study of 2004 is a comprehensive cross-sectional study that surveyed school principals, teachers and students, and also collected performance data. The 2004 dataset has been utilized for policymaking at the secondary school level, and a variety of interesting research studies on private tutoring, public-private differences, and competitive effects in Nepal (Bhatta, 2004; Jayachandran, 2008; Sharma, 2012; Thapa, 2011). However, the dataset suffers from three key

from the central government. In the five-year period between 2004-05 and 2009-10, district level spending quadrupled (in nominal terms) while central spending doubled. In the period, foreign grants and loans constituted over 90% of the funding for district-level expenditures (Ministry of Finance, 2009).

limitations for this dissertation. Firstly, the data come from the 2004 academic year, which makes it outdated for studying whether public schools have been impacted by the significant recent expansion of private schooling in Nepal. Secondly, since the dataset was not focused on competition, it does not capture data on school policies and perception questions that relate to public-private differences and competition. Thirdly, since the sampling strategy was focused on national representativeness, the dataset could not have captured the diversity of competitive experiences within each locality. These are important shortcomings for my dissertation approach, which is based on the argument that we need a better understanding of how competition is experienced locally (Betts, 2009; Lubienski and Weitzel, 2010; Miron, 2010).

The primary data collection addresses these issues in the following ways. Firstly, I administered a principal survey which collected relevant information on competition measures, school policies, and perception questions. The principal survey allowed me to investigate the questions raised in the conceptual framework more thoroughly from the school principal’s perspective. Survey data was collected from every public secondary school that had students who participated in the School-Leaving Certificate (SLC) exam in 2008 in the two districts of study. Secondly, I conducted a variety of interviews with national, district and school-level officials in the two districts of study, and in a set of other diverse districts. The extensive qualitative data collection allowed me to gain multi-level stakeholder insights. Even though the questions were focused on how public schools were experiencing and responding to competition, the answers also come from adequate investigation of private schools, government officials, and parent perspectives on the issue.

Besides the primary data collection, I also gained access to the Nepal school-level national records in education, and detailed district level records on private school fees and establishment histories in the two main districts of study. The annual national records were essential to be able to understand the extent of private market share, and the trends in enrollment

and demographic characteristics of public and private schools. The district level records were needed to capture the historical evolution of privatization and the diversity of private schooling. These extensive datasets on schooling characteristics have not previously been made available outside the district education offices for analytical purposes.

Research Sites Selected Districts

Within Nepal, the in-depth data collection for the research study was completed in the two districts of Kathmandu and Chitwan. These districts were chosen because they represent contrasting but fairly high privatization contexts in the nation. As shown in Figure 4.2 and Table 4.4, the five other districts (Dadeldhura, Jhapa, Kavrepalanchowk, Mustang, Sarlahi) that were selected for supplemental analysis come from diverse ecological belts and have varied

population characteristics (CBS, 2008). As displayed in Figure 4.3, these districts vary substantially in schooling performance and the extent of education privatization. That is, in contrast to national discussions, there are districts with few private schools that are also performing quite well in meeting the minimum proficiency quality measure.

Kathmandu district contains the capital city, the highest population density, and the most urbanization in the country. The district also has the longest history of privatization and the highest private market share in total enrollment. Thus, Kathmandu exemplifies the extreme privatization scenario in the Nepal context. Its experience may be especially relevant for other districts with major cities such as the other districts in Kathmandu Valley (Lalitpur and

Bhaktapur), and Kaski district (Pokhara). Chitwan district includes the largest municipality in the country, Bhaktapur, and is an important economic, social and tourism hub located in the Terai (plains) region of the nation. Most of Chitwan is uninhabited as it contains forests and major wildlife reservations. Compared to Kathmandu, Chitwan is much smaller, it is still urbanizing, and its population density is significantly lower. However, it is a region that has experienced

substantial, more recent privatization. Chitwan may be representative of about ten other districts that have medium-sized and growing urban regions and relatively large rural areas.

Chitwan and Kathmandu share similarities in terms of demographic composition. While it used to be a historically Newar (Tibeto-Buddhist ethnic group) region, the capital city of Kathmandu has routinely experienced significant migration from throughout the country, making it a true sociocultural melting pot (CBS, 2011). In the 1950s and 1960s, Chitwan districts

underwent substantial deforestation and malaria eradication, and the government encouraged habitation in the region. The initial settlers came from throughout the country and thus Chitwan is also populated with significant linguistic and ethnic diversity. Chitwan and Kathmandu are the two most socially and politically aware districts in the country. The in-depth investigation of these two districts provided me with an understanding of how public schools are likely to respond in regions that experience high and growing exposure to private schools. Moreover, the fact that all public schools in the districts have been surveyed meant that I was able to gain insights from rural regions in the two districts, which makes the analysis relevant for the remaining districts that have primarily rural populations.

Of the other five study districts, Mustang is a sparsely populated, relatively inaccessible mountain district but is relatively wealthy due to adventure and religious tourism. Jhapa and Sarlahi are populous regions in the plains (Terai) of the country. While Jhapa has relatively progressive indicators, Sarlahi in the central plains has one of the lowest official percentages of private schools, and suffers from one of the highest gender disparities in the country.

Kavrepalanchowk and Dadeldhura represent hilly districts of the country. Kavrepalanchowk benefits from being located right next to the Kathmandu valley and thus has significantly