This paper is intended to provide a brief introduction to how economists assess the importance of education and training in the Australian economy and how the allocation of resources to education can be assessed. Included in the introduction are statistics illustrating the enormous impact of education and training on Australia's economy and a discussion of possible reasons individuals, employers, and governments allocate resources to education and training. Basic distinctions between compulsory and postcompulsory education, general and vocational education, preemployment education and employment-related training, and general and specific training are drawn in part 2. The following considerations in assessing governments' role in allocating resources to education and training are discussed in part 3: efficiency and equity arguments; funding and provision options open to governments; and the Australian government's role in the provision, finance, and regulation of education and training. Part 4, which is devoted to the problem of treating education and training as investments by using the human capital model, examines the following topics: stocks and flows; measures of human capital; key linkages; and rates of return. Part 5 describes a process for assessing the contribution made by education and training to economic performance. The document contains 48 references. (MN)