Human capital is a vital element for the competitiveness of any country and amongst the most important areas of investment for economic and social development. The legacy of Soviet education has left the countries of Eastern Europe and the South Caucasus (EESC) with very good performance on education indicators such as enrolment and literacy rates, girls’ participation, progress to higher levels of education and pupil-teacher ratios. Yet on a number of other indicators, especially those related to spending, quality and relevance of education, the EESC countries fail to approach the international benchmarks, and thus to mobilise the full competitiveness potential of their people and economies. Despite, sometimes, considerable budgetary efforts, spending per student is low and is stagnating or declining in many countries. Judging by international surveys, the quality of school education in the EESC countries ranges from average, through significantly below average, to very low. Tertiary enrolment rates in Azerbaijan, Georgia and Republic of Moldova are below the level needed to compete effectively with OECD countries, and vocational education and training (VET) in all of the EESC countries is in urgent need of reform.