Education is an economically and socially productive investment. Therefore, the educational systems in developing countries must continue to improve in quality, in efficiency, and in equality of opportunity if they are to continue serving as important instruments for improving the national economy. Yet, budgetary austerity tightens the public purse-strings, ever increasing school-age populations stretch these dwindling resources, and other social and economic factors present compelling competition for the same funds. The heavy subsidization of education implicit in traditional policy--especially of higher education at the expense of primary schooling--with its concomitant economic inefficiencies and inequities is no longer appropriate. Supported by empirical evidence, this book examines the potential effects of policy alternatives in several areas of education financing and management: (1) The contribution of private financing and selective user changes, especially in higher education, and reallocation of public spending; (2) Selective student loan and scholarship programs in higher education; and (3) Decentralization and role of private and community schools. Implementation of these policies may be difficult because of conflicts with traditional educational and political philosophies, and established administrative institutions. Included are statistical tables, case studies, instances of reform, and a bibliography. (KWL)