In Higher Education Washington DC, 22 January 2004 Ron Perkinson International Finance Corporation Health & Education Department www.ifc.org / www.ifc.org/edinvest
The Global Market
$2.2 trillion+ total one third of market in USA approx 15% only in the developing world Teachers 5% of global labor force Primary & Secondary Education substantially public funded Tertiary & Adult Education changing landscape - free provision diminished regulatory governments more liberalized private sector participation growing (est 17%) Sources: Merrill Lynch 2000; OECD 2000; World Bank; IFC:
Students Studying Abroad
Over 1.6 million international tertiary students abroad in OECD countries (est $30 billion market) Over 580,000 in USA 2001/02 or around 35% of OECD total (6.4% inc from Yr 2000) UK had 14% of OECD total in 2001 students from China increased by 67% from previous year 31% increase from India Other significant OECD share Germany ( 12% ) Australia ( 10% ) France ( 8% ) and NZ ( 5% ) ERASMUS program over 120,000 students a year
International Students Big Business
Australia 160,000+ foreign students in Yr 2001 growing to 560,000 by Yr 2025 double again in distance programs 50%+ from Singapore and Hong Kong are distance % of Total Exports 11% and 4% respectively of Australia and NZs in Yr 2000 3.5% and 3.2% respectively of US and UKs China 44,700 foreign students in Yr 2000 of which 70% from Asia 12% from Report commissioned by 11% IDP Education Australia; China Education Yearbook, 2002 Europe from the USA
Enrollment in Private Higher
Education (as a % of total) 84
Korea
**
76 76 75
Philippines Japan India
71 71 69
Dominican Republic Brazil El Salvador
64
Colombia
60 58 56
Indonesia Chile Mexico
38
Portugal
34 32
Peru United States
10
20
30
** = Latest Internal ADB est YR 2001
40
50
Sources: IBRD/IFC; UNESCO 2000; OECD 2001; Levy Research on Private Higher Education April 2002;
60
70
80
90
Medical Schools growing % private
Recent growth in medical schools greater proportion private Globally 1300 in 1995 today nearly 2000 260 medical colleges in India approx 30% are private Private medical schools also growing in Malaysia, Thailand, Middle East, LAC and Former Soviet Union Sources: Chronicle July 2003; IFC
World Population Growth
Year
Population
Time Per Billion
Yr 1
250 m
1800
1b
1800 yrs
1930
2b
130 yrs
1960
3b
30 yrs
1975
4b
15 yrs
1988
5b
13 yrs
2001
6b
13 yrs
Source: 6 Billion Human Beings: - Muse de l'Homme Musum National d'Histoire Naturelle, Paris France
Balancing Education Sector Needs . . . .
. . . . With Fiscal Realities
Economic decline available resources for education shrink
Governments reconciling and balancing education fiscal realities and demographic trends Supplementary costs shifting to parents and students Tuition fees increasing globally
Trends in Public & Private Financing
Education Global Estimates - All Countries 1996 to 2000 100
% of Financing Education
87% 80
83%
Public investment
60
40
20
Private investment 17% *
13% * 0 1996
1998
Source:: OECD 2000; UNESCO 1999; IFC staff estimates 2002:
Private Investment
2000 * = est. Trends in
Trends in Private and Public
Investment In Developing Countries 19702000 16
14.65%
% of GDP
12
Private investment 8
Public investment
7.05%
0 1970
1974
1978
Source:: IFC 2000 Trends in Private
Investment
1982
1986
1990
1994
1998
1999
2000
Global Giants Lack of Supply
in the worlds most populous countries
China: 10 to 11% gross enrollment Yr 2000 7.2 m students enrolled (excluding distance) admitted 2.2 m new students in Yr 2002 26 m students currently in high school
15 m students to enroll over next 4 years
India: 6% gross enrollment 10,900 HEIs (includes 237 Deemed Universities) over 8 m students enrolled some programs - 5000 Sources: Unesco 2000; India Planning Commission Report 2002; China Dept of Statistics 2002 applicants per place
Funding Comparatives . . . the most populous nations
India China LAC
UK USA
Total Population approx
1000
1260
520
60
280
Public Expenditure on Education ($B)
16
23
94
72
480
% Global Budget
0.7%
1.0%
4.2%
3.2%
22%
Per 10 m Population
$0.16 b
$0.2 b
$1.8 b $12 b
$17 b
Sources: UNESCO 1999 & 2000; World Bank 2001; US Department of Education 2001; Department of Education & Skills UK, 2002
Student Financing Over 60 countries have student loans mostly public schemes Variable performance Loan schemes important can improve access and opportunity Some barriers private banking sector experience limited cost of credit usually high mobility of students after graduating underwriting risk and cross border issues difficult Access to proven systems & experience valuable
Higher Education the perfect storm
. . . the six converging
forces ofofknowledge change The increasing importance
The further impact of globalization
The impact of increasing competition The continued impact of internationalization The continuing Information & Communications Technologies revolution Decline in public financing sourcing alternative financing
Source: World Bank Constructing Knowledge Economies 2002; The Changing Enterprise ACE 2002; IFC
Accreditation & Quality Management
Accreditation 80+ countries with accreditation systems Sets minimum standards Level playing field important commercial stability Quality Increased attention to QMS Growing awareness of co-op regional initiatives
. . . . GATS . . . 144 countries trade in higher education services Raise Barriers or Limit Entry? entry of foreign providers in to local markets - or limit how foreign providers operate in domestic markets Issues of IP and equal treatment of national and foreign providers on education subsidies
Changing Business Models
Changing modus operandi Public goes Private new forms of competition Shift from venue-driven to market-driven delivery systems Market demand for flexible delivery options (evenings; weekends; distance learning; use of new learning technologies) E-learning - investment confidence and sector growing From isolated university models to linked HEI courses QA and credit transfer systems broader options and career pathways Separation of institutional management and academic power of faculty different control over business administration
Lifelong Learning Changing Student Profiles Adults with tertiary qualifications increased from 22% to over 40% today in OECD countries Over 40% of undergraduates in US & 30% of Canadas undergraduate students are over 25 yrs Yr 2000 over 20% of first year university students were over 27 yrs in Australia, NZ, Denmark, Norway & Sweden Lifelong learning attracting new learners more diversified older and part time students Sources: OECD 2000/2001; The Changing Enterprise ACE 2002;
Faculty the ageing workforce
By Yr 2010 as student demographics increase growing competition looming for Scholars increasing global pressure on staffing Canada, 33% of faculty over 55 years 50% are 40 to 54 yrs USA, 30% are over 55 years 27% are 40 to 54 yrs Impact on developing countries potential brain drain higher salary incentives elsewhere loss also to private sector Source: The Brave New World of Higher Education; Madeleine Green, Peter Eckel ACE; & Andris Barblan EUA; 2002
Distance Education Asia has 3.5 m students (2000) China Central Radio and TV University has 1.5 million enrolls over 100,000 each year 30% of all tertiary courses in Russia are distance LAC has over 1 million tertiary distance education students Technikon South Africa has another 60,000 students The E.A.D.T.U. 18 members 14 countries 900,000 students Canada 500,000 students many on-line
British Open University 154,000 students produces 9% of
all undergraduates at 5% of national university budget Source: The Changing Enterprise ACE 2002; World Bank & IFC;
On-Line Education steady growth
Many On-Line players some operations are in good health and growing (Bilgi University and RMIT) Yr 2002, 19% of corporate training in US was line up from around 7% three years earlier $150 billion industry by 2025 Sources: IDC; IFC2002
on-
The Parallel Training Universe
New players in higher education offering education and training in more advanced technologies. Global I.T. companies / I.T. training providers (NIIT; SSI/Aptech;) operate outside certified higher ed credentials and accreditation but some affiliations In Yr 2000, global I.T. companies certified 1.6 million students worldwide with 2.4 million certificates in Information Technologies. Cisco provides certificated training for 400,000 students in 150 countries
Future Outlook Financing of education will tighten demographics outweigh fiscal realities growth in non-public financing New business models Public going Private trend will grow Knowledge societies and lifelong learning important for economic development new systems for education and trg Globalization and internationalization changing the future landscape of higher education, national and cross-border ICTs and the Internet optimizing use of new technologies models advancing quality-based mass education delivery
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