Transcript wem2001 education market

Public Private Partnerships
Global Trends and Relevant Issues in
Chinese Education
Beijing, China
1st November, 2005
Ron Perkinson
Principal Education Specialist
International Finance Corporation
(World Bank Group)
www.ifc.org
Carl Dahlman
Professor of International Relations and
Information Technology
Georgetown University, Washington DC, USA
`
Structure of Presentation
1.
2.
3.
4.
Challenges for China
The Knowledge and Education Challenge
Global Trends in Education and Training
Broad Overview of Education and Leaning
System in China
5. Key Challenges of Life Long Learning for China
6. Greater Partnership between Government and the
Private Sector
7. Getting More Private Sector Participation in
Education and Training in China
Challenges to Chinese Development
• Increasing Globalization and International Competition
• Limited Natural Resources
• Need for a more knowledge intensive growth strategy
• Providing productive employment for
– Migrants from rural to urban
– Workers laid off as result of China’s economic
restructuring
– New entrants to labor force
• Increasing Inequality
• Need to turn abundant human resources into
strategic advantage
An Increasingly Globalized and
Competitive World Economy
• Increasing Globalization
–
–
–
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
–
–
–
Significant trade liberalization is creating larger global
market and increased competition
Share of exports and imports to GDP has increased from
38% in 1990 to 52% in 2002
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.]
Education and Innovation as Key Elements
for Competitiveness and Growth
• Education and Innovation are becoming more important
– the increase in speed of the creation and dissemination of
new knowledge
• Education is the fundamental enabler of the knowledge
economy and a key to long term competitiveness and growth
–
–
–
Not just basic and secondary education, but higher education and the constant
upgrading of skills
This is a challenge for all countries of the world
There is also increasing competition for people with high level skills
• Innovation is becoming a more important element of
competitiveness and growth – there is greater mobility of
products, services and knowledge.
–
–
–
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
Key Challenges for Education & Training
• Increasing globalization and competition
–
–
–
Need higher level education to keep up with and make effective use of
rapidly changing knowledge
Also need high level scientific and technical manpower to create new
knowledge
But also need system of continuous training in order to constantly up-skill
or re-skill people who have already passed through the formal educational
system
• Therefore need to move to system of life long learning
–
–
–
–
Needs to cover all levels of formal education as well as
Enterprise based training
Plus all kinds of specialized training to re-skill people
As well as education and training for persons who have already left labor
force
• This system will need to have
–
–
–
Multiple public and private providers of education and training
Multiple pathways to different levels of competence
Coordination among many suppliers/accreditors/regulators
Key Issues that Need to be Addressed for An
Effective System of Life Long Learning
• Assessment of peoples education and skills
–
–
–
Not just years of education or raw ability scores
Also functional ability such as measures by OECD adult literacy tests, PISA
Plus specific job related skills
• Certification and accreditation
–
–
Not just in countries but also across borders
And not just for physically present universities, but also for distance learning programs
• Financing education and training
–
–
Government, vs firm, vs. individual
Full market vs. grants and loans
• Effective use of information technologies in general and
distance education
–
–
In classrooms: computer based instruction, internet materials, video, etc
Radio, TV, Interactive video, internet based courseware and simulations, etc.
• Information on
–
–
–
Needs of market,
Quality of different providers,
Quality and skills of students/workers
Implications for Role of Government and
Structure of Education and Training Systems
• Implies rethinking the role of government
–
–
–
–
–
What does the government need to provide? What can be provided by the
private and non-government sector?
Who can best set the standards and do the accreditation? What should be
compulsory and what voluntary?
What should be the financing role of government versus that of parents or
corporations?
What role does government have in ensuring equity as there is a growing
private system?
How can government promote development of an education loan market?
• Implies rethinking and improving structure
and content of education and training systems
–
–
–
Major challenges in what content and skills should be given at different
levels of formal education
How to do this in the most cost effective way?
We are moving to system of just in time learning for whatever is the
relevant need
Global Trends in Education and Training
• Increasing educational attainment
• Continued high returns to higher levels of education
until very recently
• Increasing contribution of education to GDP growth
• Increasing globalization of education
• Increasing tendency for adults to go back to school or
to get new skills
• Growing amount of training provided on the job or by
going back to formal education
• Increasing private provision of education
• Increased need to approach education and training
as life long process from cradle to grave
Changing the Education & Training Paradigm
Traditional Model
Information based
Rote learning
Teacher directed
Just in case
Formal education only
Directive based
Learn at a given age
Terminal education
Knowledge Economy Model
Knowledge creation/application
Analysis and synthesis
Collaborative learning
Just in time
Variety of learning modes
Initiative based
Incentives, motivation to learn
Lifelong learning
Three Challenges for
Education and Training in China
• Stock Challenge
– upgrading skills of people already out of the formal
school system
• Flow Challenge
– expanding formal educational enrolments and
increasing quality
• Dynamic Challenge
– adjusting education and training to rapidly and
constantly changing needs
Stock Challenge in China
• Rapid creation and diffusion of knowledge means
adults constantly have to learn. China has to upgrade
the skills of 700 million workers
–
–
–
–
Improve training to millions of rural migrants
Retrain millions of laid off workers
Upgrade skills of hundreds of millions of employed persons
Provide education and training to hundreds of millions of
adults outside the labor force
• China needs
–
–
–
Multiple mechanisms for continuous training beyond formal
education system
Effective system for skills assessment and certification
To exploit potential of information and communications
technologies to expand training opportunities
Flow Challenge in China
• China need to continue to expand access and
improve the quality of its formal education systems
which has more than 240 million students
• Education system must teach students how to learn
through their lifetime regardless of when they leave it:
implies need for
–
–
–
Better teaching and learning pedagogies for core skills
Broader interdisciplinary approaches
Financing mechanisms to expand access and improve
quality
• China need to address both stock and flow
challenges, though severely financially
constrained
Enrollments – Tertiary Sector
China, India's Developing Peers*
India
China
450
Index (1990 = 100)
400
350
300
250
200
150
100
50
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 Peers includes: Angola, Argentina, Bangladesh, Bolivia, Brazil, Bulgaria,Chile,Colombia, Dominican
Republic, Ecuador, Egypt, Ghana, Guatemala, Hungary, 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
China’s Gross Enrollment Rates
Index ( % Gross Enrollments )
. . . still some challenges ahead
85% Korea
81% USA
80+
70
64% UK
56% France
51% Japan
60
50
40
30
20
18% China
11% India
10
0
1980 1990 1992 1994 1996 1998 1999 2000 2001 2002 2003 2004*
Sources: World Bank Educational Statistics Database
Dynamic Challenge in China
• In designing system need to take into account
the changing population structure
–
–
–
Because of one child policy, school age population is already
starting to decrease at primary school level
But still need to expand enrollments at higher level
And need to plan for different mix of students - more adult
learners at higher level
• Need to take into account changing economic
structure resulting from rapid growth
–
–
Decrease in agriculture, increase in industry and especially in
services
Changing occupational structure and skill requirements especially of higher value knowledge skills in service sector
• Need to update the content of curriculum and
training to be relevant to changing needs
Overview of China’s Formal System
20 Million
(2005)
Higher
Education
950% inc
2.1 Million
52.4 Million
130 Million
1990
90.3 Million
Secondary
Education
72% inc
Basic
Education
2% inc
130 Million
2001
China’s Learning Needs Beyond Formal Education
Beyond
Retirement Age
Training for the
unemployed
Remedial/
Updating/
Upskilling the
Participating
Workforce
Labour Force
(750m)
Adult learners
Higher Ed
Formal
Education
(244m)
Secondary
Basic Education
Government Failure
– students out of
school
Key Challenges for LLL for China – (1)
• Fragmentation and Lack of Coordination of System
–
–
Many ministries involved controlling different parts
Growing private universities and training programs
• Need for a More Integrated and Coordinated
Approach
–
–
Need system that allows for multiple providers and multiple
pathways to different levels of education and skills
This requires broad set of general rules and standards and
coordination and mutual recognition among multiple systems
• Great Needs, Limited Finance, Imply Need for
Innovative Approaches
–
–
Govt cannot afford to finance increase in access and quality
Need to tap potential for private financing
Education expenditures from public and private
sources as share of GDP (1980-2001)
6.00%
Share of GDP
5.00%
4.00%
Private education funding
as share of GDP
3.00%
Public education funding
as share of GDP
2.00%
1.00%
19
80
19
83
19
86
19
89
19
92
19
95
19
98
20
01
0.00%
Year
Source: Angang Hu 2003
Funding Comparatives
. . . the most populous examples
India China
1000
1260
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
0.16b $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
Financing Challenge of LLL: Increasing
Resources for and Productivity of Education
• Increase public resources for education
• Increase students contributions to cost of delivering
public education, including loans
• Increase private provision of education and training
• Develop student loan and education finance market
• Improve the productivity of education
–
–
–
–
–
Improve the incentive regime and management of education
systems
Improve knowledge management in the education sector
Reduce the time it takes to get different levels of education
Improve the pedagogy of education
Use new ICT technologies more extensively
Key Issues in LLL for China – (2)
• Poor Demand Supply Links of Education and Training
to Labor Market
–
–
•
Mismatch between skills supplied and needs of market
Poor information on career options, income streams, quality
of different providers
Need for Massive Upgrading of Skills
–
–
Require innovative ways to reduce skills gaps of population
already in labor force
Need to put in place system to continuously upgrade skills
• Need to Improve Quality and Content
–
–
–
Quality at all levels low
Need to improve assessments
Need to reform curriculum and teaching pedagogies
Key Issues in LLL for China – (3)
• Need to Realize Potential of ICT
Technologies to Expand Access and Quality
of education and training
–
–
Need to develop more providers
Need to help create more content
• Need for Accreditation, Vocational
Qualification and Certification
–
–
Need better accreditation of education and training
providers
Need effective system for assessing and certifying
vocational qualifications (and not necessarily just
by government)
Need for Greater Partnership between
Governments & Private Sector in Education
• Government has key role as architect and coordinator of
life long learning system
–
–
–
–
–
Legislation / Regulations and standards / Quality assurance
Equity
Finance
Information on needs of dynamic and rapidly growing system
quality of different education and training providers, and
qualifications and competencies of people
Encouragement for development of specialized intermediary
institutions to fill gaps
• Key private sector role
–
–
–
Increasing tuition payments by students in public system
Increasing provision of education at all levels, but especially higher
education and training
Helping develop the education market: finance, information,
content, standards, qualifications, accreditation
Public Private Partnerships in
Global Education
4 types of Private Sector Interventions
1. Private Financing – tuitions & fees; capital projects
2. Private Management – outsourcing; services;
3. Private Provision / Delivery – outsourcing; public
procurement; private delivery using public facilities
4. Private Ownership – “BOT” (build/operate/transfer);
outright sale; joint venture
Spending Per Student – Tertiary Sector
USD per Student (Constant 1995 USD)
US$ per Student (in Constant 1995 US$)
China, India's Developing Peers*
China
India
China
OECD
>$800
$12400
2004
2004
1,800
OECD
1,600
OECD
1,400
$5,737
$7,712
2001
1990
1,200
1,000
$816
$856
5% decrease
400
$334
10% increase
200
$312
$327
800
600
$342
2% decrease
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; IFC calculations
*Developing Peers includes: Angola, Argentina, Bangladesh, Bolivia, Brazil, Bulgaria,Chile,Colombia, Dominican
Republic, Ecuador, Egypt, Ghana, Guatemala, Hungary, 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
Growth demands alternative forms of
financing and provision of
post secondary education and training
• Record 20 million students enrolled in Chinese colleges
in 2004 – largest college-student population in the world
• 4.2 million freshmen in 2004/05 - double of 1998
• College acceptance rate in 2004/05 was about 60%
• Growing two-way relationships with foreign partners
Education Expenditure Comparatives - 2003
Global GDP
Public education spending = 5.9% of global GDP
China
Total Public Expenditure
3.2% of GDP
Current Private Expenditure
1.6% of GDP
Total (Public & Private) = 4.8% of GDP
China needs around 50% increase on current public
expenditure to exceed world average
China – Projected Enrollments
2000 to 2020
Millions
Projected
Enrollments
2000
2005
2010
2020
宽口径高等教育
Higher Education
11
20
25
>30
其中：研究生
Postgraduates
0.3
0.6
1.0
>1.0
高中阶段
Senior Secondary
22.5
40
43
~ 46
初中阶段
Junior Secondary
62
63
63
~ 63
130
~130
~ 130
~130
小学
Primary
Source: 张 力 Zhang Li – December 2004 - 中国· 国家教育发展研究中心 - 中国· - 家教育发展研究中心 National Center for Educational Development Research, MOE, China
Three things that attract
private sector investment !
• Positive regulatory environments
• Financial incentives and returns
• Opportunities for good corporate citizenship
Private Investors Will Avoid . . .
• Ineffective regulations and frameworks – commercial uncertainty
• Political instability
• Revenue controls / capping tuition fees
– can heighten commercial risk where marginal returns exist
– can jeopardize commercial objectives, including capability to
invest in higher quality inputs
– can cause insufficient financial returns for servicing debt, or to
provide fair returns to shareholders
• Uneven playing fields – where loans to Govt. hybrids & SOE’s are
made on ‘soft’ / ‘favored / not-real-profit basis – where vested
interests are impervious to change
• Inefficient / inconsistent / uneven approval processes
– where private investors are disadvantaged
Public Private Partnerships
Success Factors
•
•
•
•
No revenue controls (eg. capping tuition fees)
(Foreign) – no limiting equity & ownership
Even treatment of public and private providers
Meets market demand – (eg. growing demand for
skilled labor)
• Incentives for private investment and participation
– financing and provision
• Positive regulations for private investment
– more ‘enabling’ and less ‘controlling’
Examples of Risk Sharing
Structures
Examples
Scenario 1
Scenario 2
Local Bank 79%
Local Bank 50%
– IFC 10%
– IFC 10%
– Foundation 10%
– University 5%
– Local Bank 6%
– University 10%
– Foundation 10%
– Local Bank 10%
Total 30%
Third Level
Mezzanine Level
First Level
Total 11%
Eduloan - South Africa
private financing for students attending public institutions
• Started Yr 2000/01 – initial IFC investment US$2.8 million
• Payroll-based lender – collections through payroll deductions
• Students are working – bank/employers share the risk
• Access to public University & Technikon programs – soon extends
to professional training including nursing and other programs
• Delinquencies – have been low (less than 2%)
• EO 2003 there were 49,000 students being financed – expected to
reach US$ 40 million portfolio (est 97,000 students) by EO 2006
• Loan amounts per student are small - est. up to US$ 500 range
– repayable within 12 months
How can donor or public funds
leverage private sector financing
in education??
New innovations for donors . . .
Donors are beginning to look for other options
– how to better optimize the use of available funds
Traditional model
$25 million = 5000 FTE students @ $5000 tuition fees
Example
Only
The Advent Of Donor Interest In Partnering
With Local Banks & Investors?
Loan Facility
securitized through
risk sharing
structure
Optimize
use of
$25m
Loan Facility
(assume) US$40.5m
Investors / Banks
participate
Other $15m
= 3000 FTE
Student Scholarships
Local
Bank/
Investors
60%
Senior Risk
Bank or possible
strategic partner
(administrators)
40%
IFC
10 %
Mezzanine Risk
First Level Risk
30%
Cash Reserve/
Trust Fund
25%
Risk
5%
Risk
Eg First $10m
Examples only
Less $0.5m
Education Institution
$40m =
8000
FTE
Students
Previous vs. New
Previous
$25 million
= 5000 FTE Student
Scholarships
@ $5000 ea
New
$40m =
8000 FTE
Students
+
$15m =
3000
FTE
Students
=
=
Total
5000 FTE Students
Total
11000 FTE Students
= 2.2 times the coverage using the same $25m
Example
Only
The Advent Of Donor Interest In Partnering
With Local Banks & Investors?
Loan Facility
securitized through
risk sharing
structure
Optimize
use of
$25m
Loan Facility
(assume) US$40.5m
Investors / Banks
participate
Other $15m
= 3000 FTE
Student Scholarships
Local
Bank/
Investors
60%
Senior Risk
40%
IFC
10 %
Mezzanine Risk
First Level Risk
30%
Cash Reserve/
Trust Fund
25%
Risk
Other Donors
5%
Risk
Eg First $10m
Examples only
Education Institution
Less $0.5m
Bank or possible
strategic partner
(administrators)
$40m =
8000
FTE
Students
The Next Wave
. . . myth or reality?
Donors are interested in risk sharing initiatives to
leverage private sector financing
What about governments?
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 *
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
The World Bank Group
Multilateral Investment
Guarantee Agency,
1988
International Development
Association, 1960
International Finance
Corporation, 1956
International Bank for
Reconstruction and
Development, 1945
IFC’s Growing Education Business
• Universities
• Colleges
• Technical & Vocational Education & Training
• Education Communications Technology Platform
• Schools
• Education financing facilities
– student financing
– smaller institutions
– special purpose funds
PPP’s – today’s examples
1. Private provision – supplementing delivery to remote / distance
settings
2. Private sector technology and communications solutions for
public institutions
3. Private foreign providers internationalizing curriculum with local
public providers
4. Foreign private investors partnering with public institutions in
local joint private/commercial initiatives
5. Private medical school partners with a public hospital – to
become a teaching hospital
PPP’s – today’s examples
6. Private agency establishes degree granting institute and
provides programs on behalf of a public regulatory body
7. Private institution establishes information centers / libraries
for public institutions
8. Private banks establish student financing facility for public
and pvt institutions
学到老
. . . 用到老!
“It doesn’t matter if a cat is
black or white . . . .
as long as it catches mice.”
Deng Xiaoping