Labor market productivity of education is analyzed by race and compared to investment levels. While investment was highly favorable to whites, more detailed analysis shows interesting allocations within racial groups by type of schooling. Per capita and total investment in general secondary education of black South Africans is neglected relative to university and technical education of the same group, and university subsidies appear inequitable even within the black population. Comparisons to Latin America, from which generic lessons can be drawn, are consistent with an inefficient economy based on populistic politics. A call is made for more informed policy debate about education investment. Policy recommendations include subsidies based on individual need, and not on historic ethnic administration; concentration on primary and particularly secondary education of the disadvantaged; and funding and administrative mechanisms that increase efficiency in the system. [JEL I21, J71] Copyright (C) 1996 Elsevier Science Ltd
