This paper documents the importance of continued investment in basic education and argues that investments need to be carefully targeted to address the constraints that limit the coverage and quality of education if they are to provide expected benefits. Part I begins with a discussion of the returns to investment in education. Part II then describes gaps in the coverage and quality of basic education and evaluates some key constraints responsible for those gaps. The conclusion offers a set of recommendations for planning and implementing effective investments in basic education, based on the lessons of global experience. (Contains 17 tables, 7 figures and 19 footnotes.) [This document was supported by the Norwegian Government.]