Transcript Increasing Competition

The Impact of The Knowledge Economy
on Higher Education and Life Long
Learning
Carl Dahlman
Georgetown University
HD Week: Tertiary Education, Innovation and
Competitiveness Pannel
Washington DC
October 30, 2006
STRUCTURE OF PRESENTATION
• An Increasingly Globalized and
Competitive World
• Education and Innovation as Key Elements
for Increased Competitiveness and Growth
• Key Trends in Higher Education
• Key Policy Issues for Developing Countries
• Key Implications for Role of Government
• Key Implications for the Bank
An Increasingly Globalized and
Competitive World Economy
• Increasing Globalization
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–
–
Rapid reduction of transportation and communications costs.
Increasing global information (political, cultural, socio economic)
Strong trends towards regional integration (NAFTA, EU,
ASEAn+3)
• Increasing Competition
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–
–
Significant trade liberalization is creating global market and
increased competition
Share of exports and imports to GDP has increased from 40% in
1990 to 55% in 2004
Value added directly controlled by MNCs is 27% of global GDP in
2002
[Underestimate: doesn’t include backward supply linkages or forward
linkages to marketing, distribution, service, etc.]
Innovation and Higher Education as Key
Elements for Competitiveness and Growth
• Innovation and higher educaion are becoming more
important because of the increase in the rate of the
creation and dissemination of new knowledge
• Innovation is becoming a more important element of
competitiveness and growth as there is greater mobility of factors,
products, services and knowledge.
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–
–
A larger percentage of a country’s economic growth can be attributed to
more effective use of knowledge, even in developed countries
Countries behind the global frontier can dramatically increase their
performance by improving their ability to innovate
Expenditures on R&D globally have been increasing, particularly the
share contributed by the productive sector
• Education is the fundamental enabler of the knowledge
economy and a key to long term competitiveness and
growth
–
–
–
Rising labor productivity accounted for half of GDP per capita growth in
most OECD countries between 1990 and 2000
What is critical no longer basic or even secondary education, but higher
education and the constant upgrading of skills
This is a challenge for all countries of the world
Global Trends in Education and Training
• Increasing educational attainment
• Continued high returns to higher levels of
education until very recently
• Increasing globalization of education
• Challenge of competition for high level human
capital
• Increasing tendency for adults to go back to school
or to get new skills
• Increasing private provision of education
• Increased need to approach education and training
as life long process from cradle to grave
• Growing use of ICTs in education
• Universities becoming critical players in
Knowledge Economy
Higher Education Worldwide
• In 2003 there were over 100 m students worldwide
– approx 4 m of the 2000 – 2003 increase. was in China
• 2005 est. is over 110 million students worldwide
– China added another 7 million,
• --China reached 23 million largest in world
• Further 5% inc in 2006 lifted global to > 115 m
• The Private higher education market is estimated to be
worth around $400 billion worldwide (of a total of $2.5
trillion – and growing
Sources: * Drawn from Merryl Lynch 2000 updated; IFC staff estimates 2005; China MoE, China Education &
Human Resources Report, Higher Education Press, Beijing, 2003
Increasing Globalization of Education
• Tertiary students studying outside their home
country increased from 0.6 million in 1975 to
2.7 in 2004
• Education institutions are also going global
through:
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–
–
Physical presence in foreign countries
Associations with local universities
Internet based courses
• GATS is pushing for increasing liberalization
in trade in educational services
• Therefore there is growing competition in
educational services which will be putting
increasing pressure on educational systems
in developing countries
Distance Education
• Tertiary distance education is 15% of all higher education students
• Of the 10 largest distance education institutions in the world, 7 are
located in developing countries
• Asia has over 4 m students
• 23% of India’s HE enrollments are distance
• Over 30% of all tertiary courses in Russia are distance
• LAC has over 1 million tertiary distance education students
• E.A.D.T.U. – 18 members – 14 countries – > 1 million students
• UK’s Open University has > 210,000 students, incl cross-border
• Australia – over 50% of foreign students enrolled on Australian
campuses from Singapore and Hong Kong, are distance
Sources: ‘The Changing Enterprise’ – ACE 2002; World Bank & IFC; IDP Education Australia 2002; Philip G. Altbach– Tertiary Education
& Management (No.1, 2004); UK Open University, 2005.
Some Growth in On-Line Education
• US remains biggest adopter - 2.6 million students
– 16% of over all enrolments
– approx 40% of these are fully on-line
– 83% of all public universities have one or more courses on-line
• Estimate approaching 1m students on-line in China
– Internet and Satellite – 68 universities approved by MoE in 2004
• Still few champions in developing countries
– Tec de Monterrey, 83,000 students (Universidad Virtual), over 5000
in LAC
– Frequently Faculty (not students) can be main obstacles
• Use of on-line delivery in corporate training overtaking higher
education usage in developed and developing countries
– driven significantly by US companies
– major growth predicted in developing countries
Sources: IDC 2003; IFC 2005; China – Ministry of Education and IFC staff estimates; Sloan Consortium
Report, 2004
Universities Becoming Critical Players in the
Knowledge Economy
• Role of Universities not just to train high level
human manpower
• In context of KE are now increasing critical as
generators and disseminators of knowledge
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–
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R&D
Spin-off of high tech firms
Licensing of technology
Contract research with firms and public research
Consulting services
• They are also becoming important players in
helping develop national competitiveness and
development strategies
Key Policy Issues for Higher Education
• Trade-off between higher education and
basic education
• Financing needs are beyond public finance
possibilities
• Low productivity and high cost
• Responding to increasing competition
• Content
• Delivery
• Quality Assurance
Trade-offs between higher education
and basic education
• Gaps remain in basic education, but higher
secondary and tertiary education is
becoming increasingly critical for
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–
–
effective use of knowledge
creation and adaptation of knowledge
global competition
• But not just full degrees and PhDs, but also
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shorter degrees from polytecniques and junior
colleges
specialized high level technical training in
multiple institutional settings and across
disciplines
• Developing countries are even further
behind in enrollment ratios, flows, structure
and quality of upper and tertiary education
than in basic education
Funding Comparatives
. . . the most populous examples
India China
1060
1300
S&E
Asia*
600
16
45
18
94
72
480
% Global Budget
0.7%
2.0%
0.8%
4.2%
3.2%
22%
Per 10 million
Population
0.18b $0.36b $0.3b
$1.8b
$12b
$17b
Total Population
LAC
UK
USA
520
60
280
approx
Public Expenditure
on Education ($B)
Sources: UNESCO 1999 & 2000; World Bank 2001; US Department of Education 2001; Department of Education & Skills UK, 2002;
China National Center for Education, 2002/3; OECD 2002
* All Sth & East Asian countries without China & India
Tertiary Education in 40 Developing Countries
Tertiary Enrolments, % Total Enrolments
Public Spending on Tertiary Ed, % Total Public Spending on Education
Public Spending per Tertiary Student
OECD
180
Index (1990 = 100)
$7,712
2001
160
140
120
$618
100
80
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
Sources: World Bank Development Indicators; World Bank Edstats; UNESCO Global Education Digest;
OECD Education at a Glance; IFC calculations
*Developing 40 includes: Angola, Argentina, Bangladesh, Bolivia, Brazil, Bulgaria, Cambodia, Chile, China,Colombia, Dominican
Republic, Ecuador, Egypt, Ghana, Guatemala, Hungary, India, Indonesia, Jamaica, Jordan, Kenya, Madagascar, Malaysia, Mauritius,
Mexico, Mozambique, Pakistan, Peru, Philippines, Poland, Romania, Russia, Senegal, South Africa, Thailand, Trinidad & Tobago,
Turkey, Uganda, Uruguay, and Vietnam
Note: All amounts are in constant 1995 US$ Values
Spending Per Student – Tertiary Sector
OECD
USD per Student (Constant 1995 USD)
$13,343
Developing Asia’s Global Peers*
Developing Asia**
1,800
in 2002 $$
OECD
1,600
OECD
1,400
$5,737
$7,712
2001
1990
1,200
1,000
$1,067
$899
800
16% decrease
600
$405
400
200
$278
46% increase
0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
Sources: World Bank Development Indicators; World Bank Edstats; UNESCO Global Education Digest;
OECD Education at a Glance, 2004; IFC calculations
**Developing Asia includes: Bangladesh, China, India, Indonesia, Malaysia, Philippines, Thailand, and Vietnam
*Developing Asia’s Global Peers include: Angola, Argentina, Bolivia, Brazil, Bulgaria,Chile,Colombia, Dominican Republic, Ecuador,
Egypt, Ghana, Guatemala, Hungary, Jamaica, Jordan, Kenya, Madagascar, Mauritius, Mexico, Mozambique, Pakistan,
Peru,Poland, Romania, Russia, Senegal, South Africa, Trinidad & Tobago, Turkey, Uganda, and Uruguay
Improving the Performance of
Education and Training
• Improve productivity of education
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Increase efficiency through less regulation, more
accountability, greater flexibility to respond to needs of
productive sector
Improve incentive regime for teachers and faculty
• Improve the content of education
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Improve critical thinking and problem solving skills,
Improve communication skills and ability to work in groups
Teach learning to learn
• Develop more effective system of lifelong
learning
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More flexibility in terms of multiple pathways to different
competencies
Develop better system of just in time training
Increasing Competition
• Domestic competition
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Traditional universities
New domestic entrants
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Firms setting up their own in-house universities
Publishing houses
Media companies
• Foreign competition
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Students studying abroad
Foreign providers tapping local market
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100% foreign owned investment
joint ventures
Franchises
Distance education
Responding to Increasing
International Competition
• Higher levels and better quality of education
increasingly critical for intl. competitiveness
• Education sector itself facing greater international
competition
• Developing countries are going to have to make
major investments in increasing quantity and quality
of education and training
• In addition,their education and training sectors are
going to have to become much more efficient and
competitive
• This is going to require major reform and innovation,
as well as better realignment of public and private
roles as well as domestic and foreign
Future Outlook
• Financing of education will tighten
• Demographics will outweigh fiscal realities
• New systems and curriculum for lifelong learners
– education and training will become more market-led / relevant
• Knowledge societies – important for economic development
– fostering innovation, competitiveness, more educated and
skilled workforce
• Globalization and Internationalization – changing the future
landscape of higher education, national and cross-border
– transferability of credits & qualifications, national & foreign
• ICT’s and the Internet – optimizing use of new technologies
– models advancing quality-based mass education delivery
Implications for Government
• Critical to have greater coordination among the key
stakeholders including different parts of government as well as
domestic and foreign providers, and the users including
children, parents, and firms. Address issues of
– New role of government –from main provider to orchestrator
– Accreditation, certification, recognition
– Information about markets and providers
– Finance (increasing role of private financing) and equity
• Improve productivity of education and training
– Improve efficiency through better management
accountability etc
– Change the “production function” of education and training
– Use ICT technologies
– Improve incentive regime
• Improve the content of education and training
– Basic skills
– Teaching learning to learn
– Just in time knowledge
Implications for the Bank
• Bank is not responding effectively to increasing
demands
• Challenge is not doing more of the same, but also
doing things differently, and more effectively
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Not just public, but public private cooperation in context of
lifelong learning, and the massive financial costs
Not just just traditional four year universities but more
diversified range of institutions
From traditional face to face education to anywhere at any
time at any pace
• There are tremendous opportunities to expanding
this line of business which is critical for the
competitiveness and growth of developing countries
World Bank Group
4 decades of education lending
Category Fiscal Year
By Education Level
63 - 69
70 - 79
80 - 89
Primary Education
2
13
19
Percent
90 - 99 00 - 02
38
50
Secondary Education
52
19
8
15
15
Vocational postsecondary education
24
33
27
9
7
Tertiary education
20
30
43
25
15
2
5
3
13
13
including teacher training
Other education *
44%
65%
22%
* = Projects supporting more than one level of education or projects such as those supporting
lifelong learning that do not fit well into one of the other categories
Between 2003 to 2005 – the % of lending
for higher education declines further
World Bank Lending for Tertiary Education FY00-05
3,000
US$ Million
2,500
2,000
1,500
Average 12% ’03 to ‘05
1,000
500
FY00
FY01
FY02
Tertiary Education
FY03
FY04
FY05
Total Education
Moving Forward
• Because of the magnitude of challenge, developing
countries can’t just replicate what traditionally has
been done
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Need to learn about cost effective new approaches, tools and
techniques
Need to take advantage of these to leapfrog to catch up
• Reforming higher education is very challenging
because of old traditions and vested interest.
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Need to develop effective strategies to get stakeholder
awareness
Need real buy-in to get effective reform
• Conferences such as these are part of the process of rethinking what has to be done, but then need to move to
how-- implementation of new policies and more public
and private partnerships and investment