The article reviews the evidence on the role of education in economic development, with emphasis on issues that have appeared in the literature in the past two decades: the contribution of education to economic growth, the screening hypothesis, the segmentation of the labour market, the return to investment in schooling, and the effects of education on unemployment and income distribution. It concludes with an optimistic assessment of the contribution of educational investment to the development process, especially when such investment is targeted to primary schooling, general education, and improvements in the quality of instruction and when it is accompanied by cost-recovery at the higher levels of education.