This discussion paper is designed to stimulate dialogue within the United Nations system and the donor community with a view to enhancing the effectiveness of development cooperation. The paper also aims to increase awareness among policymakers about options for change and UNESCO's potential role in the context of the renewal and prioritization of education. The focus of the report is the decline in education in developing countries as a result of structural adjustment and trade policy stabilization. Access to knowledge is a key ingredient of demographic growth. With declining budgets allocated to education, developing nations are reaching crisis situations in human development. Chapters include: (1) "Introduction"; (2) "Brief Review of Current Research"; (3) "Systematic Evidence of the Incidence of Adjustment on Education"; and (4) "Improving Education under Adjustment and Economic Restructuring: What Options?" Numerous tables and a bibliography complete the text. (EH)