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Several decades of expenditure on education in developing countries has yielded mixed results. In addition, a decrease in official development assistance and a growth in private sector investment in these countries, demands the efficient allocation of resources to education. In response to this situation, the OECD Development Centre has undertaken a number of studies to identify those factors in educational systems that contribute to efficiency. This paper provides a discussion of the outcomes of four micro-based studies of the contribution of human capital to growth and development in Chile, Egypt, India and Tanzania, and extends the idea of efficiency within the formal educative process to the efficiency of the use of education and human capital within the economy as a whole. The author finds that, although human capital formation is crucial for growth, therefore justifying educational subsidies, the types of education and training stimulated by these subsidies must supply the labour needs of the economy.