Global Education Market
Presentation To
International Forum On Investment
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 NZ’s in Yr 2000
– 3.5% and 3.2% respectively of US and UK’s
• China
– 44,700 foreign students in Yr 2000 – of which 70% from Asia
– 12% from Europe – 11% from the USA
Report commissioned by IDP Education Australia; China Education Yearbook, 2002
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
0
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:” - Musée de l'Homme Muséum 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
Source:: OECD 2000; UNESCO 1999; IFC staff estimates 2002:
1998
* = est. – Trends in Private Investment
2000
Trends in Private and Public
Investment In Developing Countries
1970–2000
16
14.65%
% of GDP
12
Private investment
8
Public investment
7.05%
4
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 world’s 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 HEI’s (includes 237 Deemed Universities)
– over 8 m students enrolled
– some programs - 5000 applicants per place
Sources: Unesco 2000; India Planning Commission Report 2002; China Dept of Statistics 2002
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 of change
• The increasing importance of knowledge
• 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 Canada’s
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
on-line – up from around 7% three years earlier
• $150 billion industry by 2025
Sources: IDC; IFC2002
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
• ICT’s and the Internet – optimizing use of new technologies
– models advancing quality-based mass education delivery
There is nothing permanent . . .
except change
Heraclitus