Literacy is the ability to use text to communicate across space and time. It is often reduced to read and write, or, sometimes, the ability to read. In modern context, the word means reading and writing in a level adequate for written communication and generally a level that enables one to successfully function in a society. Recently the National Council of Teachers of English have added "visually representing" to the list of communicative competences that fall under the guise of literacy.
The New literacy studies provides an alternative view of literacy.
The standards for what level constitutes "literacy" vary between societies. Other skills such as computer skills or basic numeracy may also be included. These and the increasing inclusion of sound, still and moving images and graphical elements in digitally based communication call for an even broader concept of literacy.
Many policy analysts consider literacy rates a crucial measure of a region's human capital. This claim is made on the grounds that literate people can be trained less expensively than illiterates. Policy makers also argue that literacy increases job opportunities and access to higher education. In Kerala, India, for example, female and child mortality rates declined dramatically in the 1960s, when girls schooled to literacy in the education reforms after 1948 began to raise families. Recent researchers, however, argue that correlations such as the one listed above may have more to do with the effects of schooling rather than literacy in general.
The history of literacy is several thousand years old, but before the industrial revolution finally made cheap paper and cheap books available to all classes in industrialized countries, about a century and a half ago, literacy existed only in a tiny minority of the world's different societies. As an example, in 1841 England 33% of men and 44% of women signed marriage certificates with their mark as they were unable to write. Only in 1870 was Primary education made available for all in England.
The definitions of literacy have changed throughout history. At one time, a literate person was one who could sign their name. At other points, literacy was measured by the ability to read the Bible. Literacy has also been used as a way to sort populations and control who has access to power. In the United States following the Civil War, the ability to read and write were used to determine whether one had the right to vote. This effectively served to prevent former slaves from joining the electorate and maintained the status quo.
Examples of highly literate cultures in the past
The use of an ideogram based writing system makes basic literacy relatively easier to attain than the use of an alphabet based one, so it is estimated that through the more prosperous decades of her different imperial dynasties China reached very high levels of basic, functional, literacy.
Similarly, the existence of secular and religious texts as well as references to great metaphysical debates including reading and writing contests in those texts from the Indian subcontinent (South Asia) points to a highly, perhaps selectively, literate culture there as far back as five to eight thousand years ago. Some major Hindu texts and other discourses contensting them are supposed to be eight thousand years old.
Because of its emphasis on the individual reading of the Koran in the original Arabic alphabet many Islamic countries have known a comparatively high level of literacy during most of the past twelve centuries.
In New England, the literacy rate was over 50 percent during the first half of the 17th century, and it rose to 70 percent by 1710. By the time of the American Revolution, it was around 90 percent. This is seen by some as a side effect of the Puritan belief in the importance of Bible reading.
Some people argue that one of the most effective methods of teaching literacy involve direct instruction of simplified phonetic systems. Others, however, argue that a more wholistic method modeled after the way language is acquired is the most effective for teaching literacy. This disagreement has been termed "the reading wars" and is most evident in the pressures placed on schools to use commodified, prepackaged basal series and literacy programs to teach their children.
In English, for example, the Distar system, developed by the RAND Corporation, has been adapted into a simple literacy instruction manual ("Teach your Child to Read in 100 Lessons") that permits an adult to teach a child by simply reading and following instructions. All of the complex instructional lesson design, skill building and optimal repetition and review have been "canned" in the book's instructional design. A computer program is even available that uses a similar system, but directly pronounces and tests the lessons, eliminating the need for a literate adult.
Comprehensive phonic programs exist, based on such systems as the Orton phonogram system, which was originated to teach brain-damaged veterans to read again. Using the 73 Orton phonograms and 14 spelling rules, 50,000 English words can be accurately pronounced and spelled with only 23 exceptional words. Although quite hard to learn, and far more exacting to teach, such systems provide students with powerful basic language skills.
A key technique in many comprehensive phonic systems is a spelling copybook, a sort of personal dictionary in which a student keeps a personal alphabetized list of words for review. The copybook usually shows how the word is pronounced, accented and syllabalized, and how standard spelling rules are invoked to determine its conventional spelling. These phonics based programs are based on the assumption that knowing how to pronounce a word is the same as reading. Phonics based programs also assume that a good reader is someone who reads every word. However, more subtle and complete approach to literacy learning recognizes that reading depends heavily on the reader's prior knowledge of not only letters and sounds, but also the context of the content. For example, "clozed" passages show that only 4/5's of a passage is needed in order for comprehension. In other words, the effective reader simultaneously draws from both the bits and pieces of the words as well as his or her knowledge of the material.
Several learning styles challenge conventional literacy programs. Some believe that visual and auditory learners often do well with conventional curricula. Simplistically, some also believe that kinesthetic learners often do well to use a copybook, less classroom practice and dictation, and more pencil practice, with a collection of magnetized letters and a steelboard to manipulate word-roots, prefixes and suffixes. Those who see literacy learning as part of a meaningful cultural and community practice challenge conventional literacy practices and address the needs of diverse learners by presenting multiple and varied learning opportunities for using text within their classroom. <-- (someone, please fix this run-on sentence)
The degree of comprehension of course varies from person to person depending upon the interaction of their individual level of development as well as the cultural understandings they bring with them. The conditions for whether one has achieved a certain state of "literacy" differ depends on who is defining the standard. For one attempt to define a standard of literacy, see  (http://www.literacyonline.org/explorer/defliteracy.html).
It is well-established that children become able to "blend sounds" at different ages. Thus phonetic systems often cannot be applied by very young children.
Experts differ in their approach to this issue, some advocating a delayed, but more rapid acquisition of reading by means of phonetics, while others advocate early acquisition of a basic vocabulary through a "see and say" method.
A secondary advantage of phonetics is that it improves readers' spelling and writing abilities. See and say methods are said to increase the word acquisition rate and reading speed of many students. The problem with phonetics is that it does not address the issue of comprehension.
While young children often require several hundred hours of instruction, spread over much of a year, motivated adults using a good instructional method can often acquire basic literacy with forty or fewer hours of instruction. This is most likely related to the wealth of contextual knowledge adults bring with them allowing them to make connections that young children are not yet able to do.
"According to UNESCO statistics, almost a billion illiterates remain as we approach the year 2000."  (http://www.literacyonline.org/explorer/overview.html)
Lack of literacy
Many have been concerned about the illiteracy of the world population, despite the fact that literacy rates have increased steadily over the past few decades, especially in the third world. Third world nations which adopted communism (China, Cuba, and Vietnam, for example), experienced some of the most dramatic growth of literacy, approaching US and European rates. The United Nations defines illiteracy as the inability to read and write a simple sentence in any language. Figures of 1998 show that 16% of the world population is illiterate (by the UN definition). In the United States alone, 5% of the population is illiterate by the US Government definition, according to the 1990 Census. Seven million UK residents are functionally illiterate according to Government figures. Among the Arab states, more than 25% of men and 50% of women are illiterate as of 2000.  (http://www.uis.unesco.org/ev.php?ID=4960_201&ID2=DO_TOPIC) The most likely reason for low levels of literacy is lack of education.
Some have suggested that the lower the illiteracy rate of a country, generally the lifespan increases, although critics have argued that this is a Post hoc. Literacy does aid the provision of healthcare in a number of very practical ways (ability to read prescriptions and understand doctors conclusions are two examples of this).
Literacy in the 21st century
For the contemporary world literacy now comes to mean more than just the ability to read, write and be numerate. It involves, at all levels, the ability to use and communicate in a diverse range of technologies. Since the computer became mainstream in the early 1990s, its importance and centrality in communication has become unassailable. We should now, properly, speak of literacies. These literacies always involve technology and the ability to use technology to negotiate the miriad of discourses that face us in the modern world. These literacies concern using information skillfully and appropriately, and are multi-faceted and involve a range of technologies and media. In sum, today's students need to cope with a complex mix of print, visual and interactive media.
Numeracy, Dick and Jane New literacy studies.