For most people this routing when they are 10 (or so) decides what routes are open to them later in life. There are exceptions to this (my host sister went to Realschule, and later took the Abiture, the the test that got her into college), but they are pretty rare.
I have always been a bit leery of choices made so early in life, but it works pretty well in Germany.
In somewhere like Iran you may see very high graduation rates in part because you may need to be selected as best student (a former employer I interviewed with, the owner got into college because he was best math student in a class of something like 1000 children.)
Dropout rate because of failure to adapt, of course, would be a good thing. Those who aren't fit for a career in engineering for instance were rapidly ejected into a different program from my public college I went to (like 25+% ejected first year, memory says it was more like 50%), which meant very few people wasted lots of money on a dead career path.
There is also the Gesamtschule, which combines the three tracks (Hauptschule, Realschule, Gymnasium) into a single school.
This is in North Rhine-Westphalia.
If for whatever reason the demographics at each track are not the same as those of the nation it will get called racist and shut down quick.
In Germany, our system is far more inclusive at all levels which means we don't have that much of a problem with early stage ethnic discrimination. Not to say we don't have any problems at all (far from it, in fact!) but it's nowhere near as bad as in the US, and additionally for once we Germans don't have historical baggage that's keeping us down.
It's only the pseudo-social scientists who can't do proper data analysis (finding out the real confounding variable) that push the college propaganda
