Two decades of research on the external efficacy of educational investments in developing countries have produced a persuasive rationale for expanding access to schooling and raising educational attainment levels. Schooling has been associated with such outcomes as the following: (1) rationalistic attitudes conducive to participating in modern production and governance institutions; (2) profound cognitive changes resulting from using written language and adopting new technologies; (3) involvement in the market economy; and (4) lower fertility rates, good nutritional practices, and better health. There are several explanations for schooling's impact, including those stressing the social organization of schooling, secular literacy as a cognitive development process, and human capital and social discontinuity theories. These explanations implicate the school curricula, literacy, instructional organization, and the articulation of schooling with the wage economy as some mechanisms through which individuals change and societal benefits occur. The literature reviewed in this paper has been divided into four sections corresponding to different school outcome domains. The first section comprises studies of schooling's modernizing effects on individual attitudes. The second section reviews research on the effects of school-acquired literacy and numeracy on cognition. The third and fourth sections survey research on the relationship between schooling and employment, earnings, productivity, and benefits such as improved health, nutrition, and fertility control. Conclusions and implications are discussed at length. (110 references) (MLH)