This study, conducted by the Basic Research and Implementation in DevelopinG Education Systems (BRIDGES) Project, demonstrates a relatively inexpensive way for governments to increase the effectiveness of their teaching force. The report describes distance teacher education programs in Sri Lanka and Indonesia as being cost-effective (the low institutional costs result from economies of scale and high cost recovery), especially those which combine self-instruction with tutor-supported small group learning, and are particularly effective in subjects that are verbal and information-oriented, as opposed to math- and skills-oriented. Following a foreword and an executive summary, the report is organized into five sections. The first section, an introduction, discusses the need for inservice teacher education, the promise of distance education, and the need for studies of program cost-effectiveness. Section 2 describes teacher education in Sri Lanka and Indonesia. The third section presents the current study: its objectives, an explanation of the concepts of training costs and program effectiveness, the overall research design, cost-effectiveness, and studies and findings in Sri Lanka and Indonesia. Section 4 presents cross-national comparisons. The final section suggests general implications for policy and specific policy implications for Sri Lanka and Indonesia. (LL)