RonPerkinson EdForum GlobalTrends Jan2004

Global Education MarketGlobal Education Market

Presentation ToPresentation To

International Forum On Investment International Forum On Investment In Higher Education In Higher Education

Washington DC, 22 January 2004Washington DC, 22 January 2004

Global Education MarketGlobal Education Market

Presentation ToPresentation To

International Forum On Investment International Forum On Investment In Higher Education In Higher Education

Washington DC, 22 January 2004Washington DC, 22 January 2004 Ron Perkinson Ron Perkinson

International Finance Corporation International Finance Corporation Health & Education Department Health & Education Department

www.ifc.org www.ifc.org / / www.ifc.org/edinvestwww.ifc.org/edinvest

• $2.2 trillion+ total$2.2 trillion+ total – one third of market in USA – one third of market in USA – approx 15% only in the developing world – approx 15% only in the developing world

• Teachers Teachers – 5% of global labor force– 5% of global labor force

• Primary & Secondary EducationPrimary & Secondary Education – substantially public funded – substantially public funded

• Tertiary & Adult EducationTertiary & Adult Education – changing landscape - free – changing landscape - free provision diminished – provision diminished – regulatory - governments more liberalized regulatory - governments more liberalized – private sector participation growing – private sector participation growing (est 17%)(est 17%)

The Global MarketThe Global Market

Sources: Merrill Lynch 2000; OECD 2000; World Bank; IFC:

• Over 1.6 million international tertiary students Over 1.6 million international tertiary students abroad in OECD countries (est $30 billion market)abroad in OECD countries (est $30 billion market)

• Over 580,000 in USA 2001/02 – or around 35% of Over 580,000 in USA 2001/02 – or around 35% of OECD total (6.4% inc from Yr 2000)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

Students Studying AbroadStudents Studying Abroad

• AustraliaAustralia 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% 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

• ChinaChina – 44,700 foreign students in Yr 2000 – of which 70% from Asia – 12% from Europe – 11% from the USAReport commissioned by IDP Education Australia; China Education Yearbook, 2002

International Students – Big BusinessInternational Students – Big Business

Enrollment in Private Higher Education (as a % of total)

Enrollment in Private Higher Education (as a % of total)

3234

3856

5860

6469

7171

757676

84

0 10 20 30 40 50 60 70 80 90

United States

Peru

Portugal

Mexico

Chile

Indonesia

Colombia

El Salvador

Brazil

Dominican Republic

India

Japan

Philippines

Korea

Sources: IBRD/IFC; UNESCO 2000; OECD 2001; Levy – Research on Private Higher Education – April 2002;

**

** = Latest Internal ADB est YR 2001

• 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

Medical Schools – growing % privateMedical Schools – growing % private

Sources: Chronicle July 2003; IFC

Source: “6 Billion Human Beings:” - Musée de l'Homme Muséum National d'Histoire Naturelle, Paris –France

World Population GrowthWorld Population Growth

YearYear

PopulationPopulation Time Per Time Per BillionBillion

Yr 1Yr 1 250 m250 m – –

18001800 1 b1 b 1800 yrs1800 yrs

19301930 2 b2 b 130 yrs130 yrs

19601960 3 b3 b 30 yrs30 yrs

19751975 4 b4 b 15 yrs15 yrs

19881988 5 b5 b 13 yrs13 yrs

20012001 6 b6 b 13 yrs13 yrs

• 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 

Balancing Education Balancing Education Sector Needs . . . .Sector Needs . . . . . . . . With Fiscal . . . . With Fiscal

RealitiesRealities

0

20

40

60

80

100

1996 1998 2000

% o

f F

inan

cing

Edu

cati

onTrends in Public & Private Financing Trends in Public & Private Financing

Education Global Estimates - All CountriesEducation Global Estimates - All Countries

1996 to 2000

Source:: OECD 2000; UNESCO 1999; IFC staff estimates 2002: * = est. – Trends in Private Investment

Private investment

Public investment

83%

17% *13% *

87%

Trends in Private and Public Trends in Private and Public Investment In Developing CountriesInvestment In Developing Countries

1970–2000

0

4

8

12

16

1970 1974 1978 1982 1986 1990 1994 1998 1999 2000

% o

f G

DP

Source:: IFC 2000 – Trends in Private Investment

Private investment

Public investment

14.65%

7.05%

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

Global Giants – Lack of SupplyGlobal Giants – Lack of Supply in the world’s most populous countries

Sources: Unesco 2000; India Planning Commission Report 2002; China Dept of Statistics 2002

IndiaIndia ChinaChina LACLAC UKUK USAUSA

Total Population Total Population approxapprox 10001000 12601260 520520 6060 280280

Public Expenditure Public Expenditure on Education ($B)on Education ($B)

1616 2323 9494 7272 480480

% Global Budget% Global Budget 0.7%0.7% 1.0%1.0% 4.2%4.2% 3.2%3.2% 22%22%

Per 10 Per 10 mm Population Population $0.16 $0.16 bb $0.2 $0.2 bb $1.8 $1.8 bb $12 $12 bb $17 $17 bb

Funding ComparativesFunding Comparatives . . . the most populous nations

Sources: UNESCO 1999 & 2000; World Bank 2001; US Department of Education 2001; Department of Education & Skills UK, 2002

Student FinancingStudent 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’Higher Education – ‘the perfect storm’ . . . . . . the six converging the six converging

forces of changeforces 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 ManagementAccreditation & Quality Management

AccreditationAccreditation

• 80+ countries with accreditation systems

• Sets minimum standards

• Level playing field important – commercial stability

QualityQuality

• Increased attention to QMS

• Growing awareness of co-op regional initiatives

• 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

. . . . GATS . . .. . . . GATS . . .

• 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’

Changing Business ModelsChanging Business Models

• 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

Lifelong Learning Lifelong Learning Changing Student ProfilesChanging Student Profiles

Sources: OECD 2000/2001; ‘The Changing Enterprise’ – ACE 2002;

• 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

Faculty – the ageing workforceFaculty – the ageing workforce

Source: “The Brave New World of Higher Education”; Madeleine Green, Peter Eckel – ACE; & Andris Barblan – EUA; 2002

• 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

Distance EducationDistance Education

Source: ‘The Changing Enterprise’ – ACE 2002; World Bank & IFC;

On-Line Education – steady growthOn-Line Education – steady growth

• Many On-Line players Many On-Line players – some operations are in good health – and growing – some operations are in good health – and growing – (Bilgi University and RMIT) – (Bilgi University and RMIT)

• Yr 2002, 19% of corporate training in US was on-Yr 2002, 19% of corporate training in US was on-line – up from around 7% three years earlierline – up from around 7% three years earlier

• $150 billion industry by 2025$150 billion industry by 2025

Sources: IDC; IFC2002

The Parallel Training UniverseThe 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 OutlookFuture 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