The Impact of The Knowledge Economy on Higher Education and Life Long Learning Carl Dahlman Georgeto

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The Impact of The Knowledge Economy on Higher
Education and Life Long Learning Carl
DahlmanGeorgetown UniversityHD Week Tertiary
Education, Innovation and Competitiveness
PannelWashington DC October 30, 2006
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STRUCTURE OF PRESENTATION

• An Increasingly Globalized and Competitive World
• Education and Innovation as Key Elements for
  Increased Competitiveness and Growth
• Key Trends in Higher Education
• Key Policy Issues for Developing Countries
• Key Implications for Role of Government
• Key Implications for the Bank

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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, ASEAn3)
• Increasing Competition
• Significant trade liberalization is creating
  global market and increased competition
• Share of exports and imports to GDP has increased
  from 40 in 1990 to 55 in 2004
• Value added directly controlled by MNCs is 27 of
  global GDP in 2002
• Underestimate doesnt include backward
  supply linkages or forward linkages to marketing,
  distribution, service, etc.

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Innovation and Higher Education as Key Elements
for Competitiveness and Growth

• Innovation and higher educaion are becoming more
  important because of the increase in the rate of
  the creation and dissemination of new knowledge
• Innovation is becoming a more important element
  of competitiveness and growth as there is greater
  mobility of factors, products, services and
  knowledge.
• A larger percentage of a countrys 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 RD globally have been
  increasing, particularly the share contributed by
  the productive sector
• Education is the fundamental enabler of the
  knowledge economy and a key to long term
  competitiveness and growth
• Rising labor productivity accounted for half of
  GDP per capita growth in most OECD countries
  between 1990 and 2000
• What is critical no longer basic or even
  secondary education, but higher education and the
  constant upgrading of skills
• This is a challenge for all countries of the
  world

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Global Trends in Education and Training

• Increasing educational attainment
• Continued high returns to higher levels of
  education until very recently
• Increasing globalization of education
• Challenge of competition for high level human
  capital
• Increasing tendency for adults to go back to
  school or to get new skills
• Increasing private provision of education
• Increased need to approach education and training
  as life long process from cradle to grave
• Growing use of ICTs in education
• Universities becoming critical players in
  Knowledge Economy

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Higher Education Worldwide

• In 2003 there were over 100 m students worldwide
  approx 4 m of the 2000 2003
  increase. was in China
• 2005 est. is over 110 million students worldwide
  China added another 7
  million,
• --China reached 23 million largest in world
• Further 5 inc in 2006 lifted global to gt 115 m
• The Private higher education market is estimated
  to be worth around 400 billion worldwide (of a
  total of 2.5 trillion and growing

Sources Drawn from Merryl Lynch 2000
updated IFC staff estimates 2005 China MoE,
China Education Human Resources Report, Higher
Education Press, Beijing, 2003
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Increasing Globalization of Education

• Tertiary students studying outside their home
  country increased from 0.6 million in 1975 to
  2.7 in 2004
• Education institutions are also going global
  through
• Physical presence in foreign countries
• Associations with local universities
• Internet based courses
• GATS is pushing for increasing liberalization in
  trade in educational services
• Therefore there is growing competition in
  educational services which will be putting
  increasing pressure on educational systems in
  developing countries

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Distance Education

• Tertiary distance education is 15 of all higher
  education students
• Of the 10 largest distance education institutions
  in the world, 7 are located in developing
  countries
• Asia has over 4 m students
• 23 of Indias HE enrollments are distance
• Over 30 of all tertiary courses in Russia are
  distance
• LAC has over 1 million tertiary distance
  education students
• E.A.D.T.U. 18 members 14 countries gt 1
  million students
• UKs Open University has gt 210,000 students, incl
  cross-border
• Australia over 50 of foreign students enrolled
  on Australian campuses from Singapore and Hong
  Kong, are distance

Sources The Changing Enterprise ACE 2002
World Bank IFC IDP Education Australia 2002
Philip G. Altbach Tertiary Education
Management (No.1, 2004) UK Open University, 2005.
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Some Growth in On-Line Education

• US remains biggest adopter - 2.6 million students
  16 of over
  all enrolments
  approx
  40 of these are fully on-line
  83 of all
  public universities have one or more courses
  on-line
• Estimate approaching 1m students on-line in China
  Internet and Satellite
  68 universities approved by MoE in 2004
• Still few champions in developing countries
  Tec de Monterrey,
  83,000 students (Universidad Virtual), over 5000
  in LAC
  
  Frequently Faculty (not students)
  can be main obstacles
• Use of on-line delivery in corporate training
  overtaking higher education usage in developed
  and developing countries
  driven significantly by
  US companies
  major growth predicted in
  developing countries

Sources IDC 2003 IFC 2005 China Ministry of
Education and IFC staff estimates Sloan
Consortium Report, 2004
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Universities Becoming Critical Players in the
Knowledge Economy

• Role of Universities not just to train high level
  human manpower
• In context of KE are now increasing critical as
  generators and disseminators of knowledge
• RD
• Spin-off of high tech firms
• Licensing of technology
• Contract research with firms and public research
• Consulting services
• They are also becoming important players in
  helping develop national competitiveness and
  development strategies

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Key Policy Issues for Higher Education

• Trade-off between higher education and basic
  education
• Financing needs are beyond public finance
  possibilities
• Low productivity and high cost
• Responding to increasing competition
• Content
• Delivery
• Quality Assurance

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Trade-offs between higher education and basic
education

• Gaps remain in basic education, but higher
  secondary and tertiary education is becoming
  increasingly critical for
• effective use of knowledge
• creation and adaptation of knowledge
• global competition
• But not just full degrees and PhDs, but also
• shorter degrees from polytecniques and junior
  colleges
• specialized high level technical training in
  multiple institutional settings and across
  disciplines
• Developing countries are even further behind in
  enrollment ratios, flows, structure and quality
  of upper and tertiary education than in basic
  education

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Funding Comparatives
. . . the most populous examples
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
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Tertiary Education in 40 Developing Countries
OECD 7,712 2001
618
Sources World Bank Development Indicators World
Bank Edstats UNESCO Global Education Digest
OECD Education at a Glance IFC
calculations Developing 40 includes Angola,
Argentina, Bangladesh, Bolivia, Brazil, Bulgaria,
Cambodia, Chile, China,Colombia,
Dominican Republic, Ecuador, Egypt, Ghana,
Guatemala, Hungary, India, 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
Note All amounts are in constant 1995 US Values
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Spending Per Student Tertiary Sector
Developing Asias Global Peers include Angola,
Argentina, Bolivia, Brazil, Bulgaria,Chile,Colombi
a, Dominican Republic, Ecuador, Egypt, Ghana,
Guatemala, Hungary, Jamaica, Jordan, Kenya,
Madagascar, Mauritius, Mexico, Mozambique,
Pakistan, Peru,Poland, Romania, Russia, Senegal,
South Africa, Trinidad Tobago, Turkey, Uganda,
and Uruguay
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Improving the Performance of Education and
Training

• Improve productivity of education
• Increase efficiency through less regulation, more
  accountability, greater flexibility to respond to
  needs of productive sector
• Improve incentive regime for teachers and faculty
• Improve the content of education
• Improve critical thinking and problem solving
  skills,
• Improve communication skills and ability to work
  in groups
• Teach learning to learn
• Develop more effective system of lifelong
  learning
• More flexibility in terms of multiple pathways to
  different competencies
• Develop better system of just in time training

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Increasing Competition

• Domestic competition
• Traditional universities
• New domestic entrants
• Firms setting up their own in-house universities
• Publishing houses
• Media companies
• Foreign competition
• Students studying abroad
• Foreign providers tapping local market
• 100 foreign owned investment
• joint ventures
• Franchises
• Distance education

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Responding to Increasing International Competition

• Higher levels and better quality of education
  increasingly critical for intl. competitiveness
• Education sector itself facing greater
  international competition
• Developing countries are going to have to make
  major investments in increasing quantity and
  quality of education and training
• In addition,their education and training sectors
  are going to have to become much more efficient
  and competitive
• This is going to require major reform and
  innovation, as well as better realignment of
  public and private roles as well as domestic and
  foreign

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Future Outlook

• Financing of education will tighten
• Demographics will outweigh fiscal realities
• New systems and curriculum for lifelong learners
  education and
  training will become more market-led / relevant
• Knowledge societies important for economic
  development
  fostering innovation, competitiveness, more
  educated and skilled workforce
• Globalization and Internationalization changing
  the future landscape of higher education,
  national and cross-border
  transferability of
  credits qualifications, national foreign
• ICTs and the Internet optimizing use of new
  technologies
  models advancing quality-based mass education
  delivery

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Implications for Government

• Critical to have greater coordination among the
  key stakeholders including different parts of
  government as well as domestic and foreign
  providers, and the users including children,
  parents, and firms. Address issues of
• New role of government from main provider to
  orchestrator
• Accreditation, certification, recognition
• Information about markets and providers
• Finance (increasing role of private financing)
  and equity
• Improve productivity of education and training
• Improve efficiency through better management
  accountability etc
• Change the production function of education and
  training
• Use ICT technologies
• Improve incentive regime
• Improve the content of education and training
• Basic skills
• Teaching learning to learn
• Just in time knowledge

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Implications for the Bank

• Bank is not responding effectively to increasing
  demands
• Challenge is not doing more of the same, but also
  doing things differently, and more effectively
• Not just public, but public private cooperation
  in context of lifelong learning, and the massive
  financial costs
• Not just just traditional four year universities
  but more diversified range of institutions
• From traditional face to face education to
  anywhere at any time at any pace
• There are tremendous opportunities to expanding
  this line of business which is critical for the
  competitiveness and growth of developing countries

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World Bank Group
4 decades of education lending
65
44
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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
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Between 2003 to 2005 the of lending for
higher education declines further
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Moving Forward

• Because of the magnitude of challenge, developing
  countries cant just replicate what
  traditionally has been done
• Need to learn about cost effective new
  approaches, tools and techniques
• Need to take advantage of these to leapfrog to
  catch up
• Reforming higher education is very challenging
  because of old traditions and vested interest.
• Need to develop effective strategies to get
  stakeholder awareness
• Need real buy-in to get effective reform
• Conferences such as these are part of the process
  of re-thinking what has to be done, but then need
  to move to how-- implementation of new policies
  and more public and private partnerships and
  investment