Policymakers in developing countries have long been troubled by the undesirable, but apparently unavoidable, choice between providing broad access to education and developing high-quality schools. Recent evidence, however, suggests that this is a bad way to think about human capital development. Grade repetition and high dropout rates lead to a significant waste of resources in many school systems. Students in quality schools, however, respond in ways that reduce such inefficiencies, perhaps even sufficiently to recoup immediately investments in quality. Promoting high-quality schools, however, is more difficult than many have thought, in part because research demonstrates that the traditional approach to providing quality—simply providing more inputs—is frequently ineffective. Existing inefficiencies are likely to be alleviated only by the introduction of substantially stronger performance incentives in schools and by more extensive experimentation and evaluation of educational programs and school organizations. Incentives, decentralized decision making, and evaluation are alien terms to education, in both industrial and developing countries, but they hold the key to improvement that has eluded policymakers pursuing traditional practices.