Scholars have attempted to discern the effects of competition between the public and private education sectors within the United States and in other countries, but no study has attempted to measure systematically the causal impact of competition by looking at variation across countries. Countries where more people choose to invest in private schools may have other attributes, such as more income or a greater commitment to education, that lead to higher levels of achievement. If this is the case, any positive correlation between private schooling and student achievement could reflect a country's income or educational commitment rather than any beneficial effects of competition. In this study, the authors solve this conundrum by taking advantage of the historical fact that the amount of competition in education today varies from one country to another for reasons that have little to do with contemporary school quality, or national income, or commitments to education. The extent of private schooling stems in large part from the Catholic Church's decision in the 19th century to build an alternative system of education wherever they were unable to control the state-run system. Findings from this international study of 29 countries indicate that competition from private schools improves student achievement, and appears to do so for public school as well as private school students. Furthermore, it produces these benefits while decreasing the total resources devoted to education, as measured by cumulative educational spending per pupil. Under competitive pressures from private schools, the productivity of the school system (measured as the ratio between output and input) increases by even more than is suggested by looking at educational outcomes alone. Ironically, although Catholics historically placed less emphasis on education than did adherents of many other religions, their resistance to state-run schooling in many countries helped create institutional configurations that continue to spur student achievement. (Contains 3 figures.)