University and Regional Development in Korea

University and Regional Development

in Korea

Bong Gun ChungMinistry of Education & HRD, Korea

Presentation at World Bank BBLDecember 18, 2003

My Story Goes :

What is the Problem? Regional Balance As A National Agenda Three Reform Laws for Balanced Development Some Features of Higher Education in Korea Government Policies for Higher Education Problems of Local Colleges & University Strategy of Univ. Industry Research Cooperation Further Issues and Problems Concluding Remarks

Description of the Problem : Shooting the Two Runaway Rabbits

The disparity between Large Capital Area and local cities and provinces are exacerbated.

The problems of local universities, for instance, low quality and lack of students, are compounded by the enlarging disparity between Center and Local.

However, local universities are requested by the government to solve the problem of enlarging disparity by becoming key players for regional innovation system.

Is it possible that the faltering local universities could solve the worsening problems of the local community?

Regional Balance for Competitiveness

The regional balance issue was chosen as one of the pivotal campaign pledges of President Roh. - The inefficiency of concentration in LCA reaches critical point. - Investment in local area will be profitable in the long run.

The powerful Presidential Commission for A Balanced National Development was launched in March 2003. - Local industries combined with the knowledge and skill base of neighboring colleges and universities should be the engine for regional development. - The Commission has designed Regional Innovation System.

Backdrop of Problem Identification

Disparity between Center&Local

As of 2001, GRDP of Large Capital Area comprised 47.1% of the total.

The GRDP of LCA showed a temporary decrease in mid 1990s, reversed afterward.

As of 2001, the local tax revenue of Large Capital Area comprised 58.7% of total.

In this regard, the financial independence level of LCA was 84.1%, compared to the national average of 62.9%.

% GRDP

Concentration of Population& Wealthin LCA

population

GRDP

MoIR, 2003

Concentrated R&D Funds/Manpower

As of 2001, 62.7% of funds, 58.6% of manpower, and 66.7% of R&D institutions are located in Large Capital Area.

67% of university related R&D institutions and 60.1% of students are outside of the LCA, but funds and quality of manpower are not sufficient.

R&D public

R&D univ

R&D private

MoIR, 2003

The Debate on Concentration Effect

The concentration of population and industry in the LCA increases the national wealth,while the efficiency of

the investment is higher than that of the non-LCA

The concentration of population causes the diseconomy of urbanization and localization.

There are economy of urbanization and localization, however, it has been decreasing.

- The Localized Economy Index of 1982 as 1 decreased to

0.789 in 2001. (Reversed Cost Elasticity to no. of Employed) - The Urbanized Economy Index of 1982 as 1 decreased to 0.759 in 2001. (Reversed Cost Elasticity to Population.)

Concentration in Large Seoul Area(One quarter of

Population)

TransportationCrime

pollution

UrbanizationCost

Investment

concentration

DisparityConflictresource

misallocation

WeakNational

competitiveness

Low real estate priceGrowing DependencyWeak Local industryWeak Local market

Concentration ofPower elites

Hegemony ofUniversities

In LSA

Brain drainFrom local

Drain ofPopulation

capital

Effects of Brain Drain from Local

Chanseok Park, 2003.

3 Laws for A Balanced Development

The three presidential commissions for regional development have proposed laws that are titled as “The Ad Hoc Laws for Happiness of Korea.”

The Ad Hoc Law of National Balanced Development - Regional Councils and Special Budget Account for RIS The Ad Hoc Law of Decentralization - extensive delegation of powers of the central government

The Ad Hoc Law for Construction of New Capital - new Capital at the geographical center of the ROK

Specialization

Local univRHRD

SpreadInstitutions

DevelopingPoor regions

Master Plans of 5 Year Balanced Development

Special Budget Account

Coordination of Funds

Nat’l Council forBalanced Development

Regional Council forInnovation

The ad hoc Law for Balanced Development

Goal

Core Projects

5 year Plan

Funds&

Admin.

Balanced Development

Scheme for A Balanced Development

Scheme for Regional Development

Local Gov’t

Local Industries

RIS

LocalUniv.

NIS:Central Gov’t

Upgrade to innovateKnowledge&skill

Upgrade to produceHuman Resources

Venture&NewBusinesses

Improvementof Businesses

Regional Development

Self-sustainedLocalization

UIR

univ. industry research cooperation

the key element of RIS

Higher Education and Community

teaching

research

service

innovation

skill

Culture,community

Higher Education Region

OECD (1999) The Response of Higher Educational Institutions to Regional Needs, p.11

Some Features of Higher Education in Korea

Rapid Expansion, particularly since 80’s

Heavily dependent on private resources

Low level of investment in faculty and facilities

Hierarchy among colleges and universities

0

100

200

300

400

500

600

1967

1971

1975

1981

1985

1990

1995

En

tran

ts (

1,00

0)

0

200

400

800

1200

1600

2000

Tot

al E

nro

llm

ents

(1,

000)

Total Tertiary Enrollments

Entrants Total

Jr. College

Univ.

From Chun Shik Woo, 2002

Rapid Expansion

Increase in Enrollment

0

10

20

30

40

50

60

70

80

90

1970 1990 2003

KoreaUSAJapan

Korea: Statistical Yearbook of Education, each year

USA: Digest of Education Statistics 2001, NCES, Table 185

Japan: White Paper, MEXT, Heisei 13th year

2000

2000

Rapid increase since 1990 in colleges and universities

Reasons for the Rapid Expansion

High Rate of Return in Socioeconomic, Cultural, and Psychological Terms

Demand on college graduates accompanied by economic growth

Changes in the Control Policy of the Government - The 1981 Graduation Quota System with 130 percent Admission

- The 1994 Ease of Control on New Establishment based on the principle of free entry to market

Private Universities in Korean H.E.

location schools Public Private % of private

Large CapitalArea

2 year collegeUniversityGraduate school

4433

4862

482

92.393.993.6

subtotal 41 592 93.5

Local Area

2 year collegeUniversityGraduate school

1222138

9481

357

88.778.672.1

subtotal 172 532 75.6

total 213 1,104

Source: KEDI, MoE&HRD, Statistical Yearbook of Education, 2003, p. 604

Large share of Private Universities

Relative Proportions of Public&Private Expenditure on Tertiary Education

0

10

20

30

40

50

60

70

80

Korea USA Japan Britain Australia OECDave

publicprivatesubsidy

EAG, 2003, OECD, p. 220

Expenditure for Higher Education

Expenditure for Higher Education

total public private

Korea USAFranceCanadaGermanyU.K.Japan

2.62.71.12.61.01.01.1

0.60.91.01.61.00.70.5

1.91.8 0.11.00.10.30.6

Country mean 1.3 1.0 0.3

% of GDP, 2000

OECD, EAG 2003, p.208

An international comparison

Korea(1999) USA(1995) UK (1999)

PublicUniversity

PrivateUniversity

PublicUniversity

PrivateUniversity

Government funds 57.5 4.8 51.0 16.4 53.3

Education 37.6 0.6 48.5

Research 13.4 15.9 4.7

Tuition fees 42.5 66.8 18.8 43 11.9

Private gifts, grants, contracts 9.0 4.1 9.1 10.7

Endowment income 11.2 0.6 5.2

Sales and services 2.1 22.2 21.0 17.0

Other sources 6.1 3.3 5.3 7.0

Source: Lee and Woo (2001).

Sources of finance for H.E.

Dependent on tuition & fees

Number of Students per Professor

0

5

10

15

20

25

30

35

40

45

public private

totalLCAlocal

Jinwha Chung, KIET, 2003

Year 2002

Number of Pupils per Teacher

Primary Lower secondary

Upper secondary

Higher Education

Korea, 1999Korea, 1996JapanGermanyBritainUSA

32.231.221.221.022.516.3

21.925.517.116.417.416.8

22.523.114.112.412.414.5

38.526.311.512.318.514.0

OECD ave 18.0 15.2 14.1 15.3

Hyunsook Yu, KEDI, 2001, p.17

Year 1999

Competitiveness of Korean H.E.

1999 2000 2001 2002 2003

47/47 43/47 47/47 41/49 28/30

2001 2002 2003

19/47 17/49 16/30

World Competitiveness Yearbook, each year, IMD

World Competitiveness Yearbook, each year, IMD

Transfer of knowledge between univ and industries

Competitiveness of higher education

SWOT Analysis of H.E. in Korea

Strength Opportunity

Weakness Threats

High level of enrollment

R&D capacity potent

Government support

Knowledge based econ

Lifelong learning era

Environment

Lack of specialization

Evaluation system

Government control

Isolated from Industry

Recruitment crisis

Pressure to open market

Government Policy for H.E.

Quality Control Practices by per-student Indices - The approval of new establishment is usually made when the criteria of land, building, and faculty are met.

Control of Enrollment Quota - The Ministry of Construction and Transportation, not the MoE&HRD is

authorized to approve the increase of the colleges and universities in LCA. Provision of Financial Resources - Various types of earmarked budgets are provided by different government ministries to induce changes and reforms in universities.

Specialization of Schools - The MoE&HRD has been trying to introduce the specialization of colleges and universities such as research, education, and vocational training.

Quality Control by Indices

Humanities/ socsci

Basic/natural science

Engineering

Arts/athlete

medicine

Building space perstudent, m2

12 17 20 19 20

Number ofProfessorsper student

25 20 20 20 8

In order to secure the financial stability of schools, all private universities are mandated to possess the property for profit that is equal to the total amount of the annual revenue.

The minimum criteria for establishing univ.

Comparison of Increase in Schools

Number of schools

2 year college

university

Graduate

school

1981

LSA 42 42 90

local 90 47 61

total 132 89 151

2002

LSA 51 66 483

local 108 97 462

total 159 163 945Educational Statistics, KEDI, 1981, 2002

For the purpose of population control the increase of universities in LCA is half of those in the local area.

Financial Resources for H.E.

Operation&capitalFor public univ

MoE&HRD

Research funds etc

Other ministries

General purpose

Special purposeGov’t

In-Univ.

Privatesector

Operation&capitalFor public univ

Research fundsetc

MoIC

MoST

MoIR

MoAF

MoHS

FacilitiesEquipment

Research fundetc

Brain Korea 21Engineering

Int’l manpowerEducation reform

etc

Basic scienceModel univ

Research ctrScience Res CtrEngineering RC

Regional RCSpecialized Res

Techno ParkTech Incubator CtrNew tech ventureHeath/Medicine R

etcMoL

3.3

2.4

0.9

1.3

1.1

0.34

0.53

Gov’ttotal

OperationCapital

Private fund In-Univ

fund

Gov’tR&D fund

Outer-Univ.fund

2.5

3.3

0.8

0.30.1

1.1

Unit: trillion Korean Won, 2000

Source: Hyunsook Yu, KEDI, 2001

Specialization of Colleges&Universities

Medium levelprofessional

High level professional

Field technician

Local univ RIS Local voc collegespecialization

Brain Korea 21 Project

Univ Industry ResCooperation

Scholarship for engineering/science student

SpecializationLCA univ

Local Brain Korea 21

Voc coll tailoredcurriculum

Voc coll in LCAspecializationbasics

Bottom Up

allocation

Top downallocation

2,637

(31%)

3,965

(46%)

1,980

(23%)3,150

(37%)

5,432

(63%)

Unit : 0.1 bil Korean Won, 2004

Specialization of schools

present future

total LCA local total LCA local

Research

Education

Field

16

82

9

12

23

1

4

59

8

31

29

47

19

9

8

12

20

39

107 36 71 107 36 71Survey from 107 engineering colleges, including 11 polytechs

KIET, 2002 (from Jung Jin Wha, 2003)

Specialization that schools want to be in future

Current State of Local Universities

Wide Spread Unpopularity - As of 1999, 62.5 percent of the top 5 percent of Korean SAT enter the universities in LCA of which accommodation ratio to the total is 32.5 percent.

Increasing Vacancy - The under-recruitment of LCA schools is 1.5% compared to that of 7.5

in local areas. Increasing numbers of local universities are losing students.

Low Level of Employment Rate - In mid 90’s the employment ratio of LCA schools was 70.9% compared to

57.0%. After the foreign currency crisis, they were 60.8% and 56.0%.

Problems

Current State of Local Universities

Causes of the Problem

Socioeconomic Gap between LCA and Locals Enlarged

Concentration of Decent Jobs in LCA

Top Down Fragmented Projects by Central Government

Lack of Leadership in Regions for Univ. and Industry

Low Investment in Local Colleges and Universities

Easy Approval of Establishment of Universities

Shooting the Two Rabbits

Reinforcing Univ. Industry Research Cooperation

Customer Oriented Education & Training

R&D for Production Technology Innovation

Technology Transfer and Advice to Firms

Assistance to Incubate New Businesses

Successful UIRC brings in regionaldevelopment

Univ. Industry Research Cooperation

Insulation between Univ. and Industries - Univ. : academicism and supplier centeredness - Industry : distrust on the competency of univ.Problems in Funding System and Practice - insufficient amount with irregularity - coordination among different funding sources - researcher’s needs rather than those of industries - equipment for research rather than manufacturing

Diagnosis of Problems

Problems of C&I in Engineering College

description firmsuniversity

LSA Local

Insufficient general educationInsufficient basic educationTheory oriented educationOutmoded curriculumInsufficient case studiesPoor facility for practice& experimentInsufficient exchange btn univ&industryLack of field experience of facultyLack of effort by faculty to innovatePoor academic management

2.842.762.403.163.353.213.193.073.022.71

2.692.422.222.502.923.393.222.502.252.11

2.592.542.462.722.943.113.272.592.412.30

Number of cases 625 36 71

4 point Likert scale 1 = not serious, 4 = very seriousSource : Jinwha Chung, 2002.

Complaints by Firms on Univ Education

Federation of Korean Industries, 2002. 12

87%Practice&field education

75%Creativityeducation

68%Field

experience offaculty

70%Diverse

instructions

72%Curriculum

update

Geography - Universities that are located inside industrial complex - Campuses that are clusterized for industriesEquipped with High Quality Facilities - Attractive to neighboring industries to participateOpenness of the Universities - Exchange of personnel between univ and industries - Curriculum tailored to the needs of industries - Emphasis on the technology that industries demand

Univ. Industry Research Cooperation

Factors for Success from Case Studies

Fostering UIR-centered Universities - select & concentrate on 10 Hub Universities for UIR

School Enterprise in Public Universities - sales of the goods and services produced in classes

Campus Head Quarter for UIR Cooperation - control all UIR related activities, programs, funds

Reward System for Professors - favors in faculty evaluation, Patent fees

Curriculum Development by Business Requests - specialized departments and courses

Highlights of New UIR Cooperation

Issues and Problems

Survival of the Fittest Funds are concentrated to selected local universities. How many weak ones should perish? Ironically, balanced development causes inequality.

Insufficient Resources The budget increase for local universities are incremental, so that the funds should be concentrated rather than spread to more AMAP.

Inefficient Coordination at Center & Local The Ministries insist on funding of their own respective programs at schools. Waste and duplication are likely at the center and local.

Reverse Discrimination to LCA The schools in Large Seoul Area are disadvantaged due to the special support to the local ones as the total amount of funds are limited.

Hegemony Conflicts in Local Community Deans, presidents, mayors, governors will compete for RIS leadership

Insufficient incentives for firms to participate The policy measures for UIRC are tilted to univ compared to individual firms to take part in the cooperative relationship.

Issues and Problems

Issues and Problems

values academicism vocationalism

Nature of higher eduFaculty evaluationManagement of schoolIncentive structure

Pure science, basicsAcademic achievementNon-profitEquity

Applied scienceService, participationProfitReward & punishment

Value conflict in reinforcing UIRC

Job stability of faculty unfavorable to UIRC The job stability and the inflexible labor market of Korean professors are likely to be unfavorable to UIRC as they are not motivated to seek for out-bounding activities.

Some Facts about UIRC

institutions traits

UniversityPolytechnicVocational college

New technology development, consulting, designEquipment, technical guidanceInternship, customized curriculumMoE&HRD, 2003

What companies benefit from UIRC

Personal acquaintance

Through gov’t projects

Searching for themselves

etc

44.6 19.3 27.9 8.2

How companies enter UIRC

MoIR, 2003

%

Concluding Remarks

Policy makers should always keep in mind that :

“Isn’t UIRC Panacea to the complicated problems of the deteriorating local universities and the disparity between center and local?”

What should you do if it shouldn’t be one?

Thank you!