Higher Education and the World Bank

Richard Hopper Education Specialist The World Bank 15 April 2007

Enrollment trends

50 40 % 30 20 Enrollment rates by income level (1980-2001) 70 60

High Income Upper Middle Income World Total

10 0 1980 1985 1990 1997

Lower Middle Income Low Income

1999 2000 2001

Enrollment rates by region (1970-2001) 60 50 Eastern Europe/Central Asia 48.6

40 30 20 10 0 1970 1980 1985 1990 1995

Year

1997 Latin America/Caribbean 25.2

22.4

Middle East East Asia/Oceania 14.6

10.7

Southern Asia 3.6

Sub-Saharan Africa 1999 2000 2001

Equity

Equity remains a problem

• Mexico (2005) – Only 1% of 15-24 year olds from poorest quintile attend tertiary education – While 32% from richest quintile attend • USA (2005) – Only 8.3% of students from the poorest income quintile are likely to access top-ranked universities – While 50% of richest quintile are likely to attend • France (2005) – Only 6% of students from the lowest quintile are likely to attend a Grande Ecole – While 15% of the middle quintile are likely to attend

Tertiary Enrollment by Quintile

45. 0 40. 0 35. 0 30. 0 25. 0 20. 0 15. 0 10. 0 5. 0 0. 0 Spain Q1 - Poorest Peru Q2 Q3 Mexico Q4 Brazil Q5 - Richest

Quality

Quality and relevance of studies increasingly important

• Knowledge-driven economic growth… – Requires higher labor productivity and an increased demand for skilled workers – Changes the education and training needs of the labor force as skills become obsolete and require updating – Aging populations and the need for updating skills means a more diverse set of clients (students) in tertiary education • lifelong learning

Changes in demand for job skills 1960-1998

-6 -8 -10 0 -2 -4 16 14 6 4 2 12 10 8 1969 1974 1979 1984

Expert Thinking Complex Communication

1989

Routine Manual

1994

Routine Cognitive Non-Routine Manual

1998 Source: Autor, Levy, and Murnane (2003) “The Skill Content of Recent Technological Change: An Empirical Exploration,”

Quarterly Journal of Economics.

Divergence in returns to schooling by education level in Latin America

from Holm-Nielsen et al. (2001)

130 120 110 100 90 80 70 60 1982 1984 1986 1988 1990 1992 1994 1996 1998 Tertiary Upper sec Primary Low er sec

Finance

Tertiary education spending relative to GDP, OECD 1998

2 % 1 0.8

0.6

0.4

0.2

1.8

1.6

1.4

1.2

0 Au st ra lia Au st ria Be lg Be iu lg iu m m (F Cz l) Ca ec na h da Re pu bl De ic nm ark Fi nl an d Fra nc Ge e rm an y Gre ec Hu e ng ary Ic el an d Ire la nd It al y Ja pa n Kore a M Ne ex th ico er Ne la w nd Z s ea la nd Norw ay Pol an d Port ug al Sp ai n Sw ed Sw en itz erl an d Tu rk ey UK US

Poor internal efficiency remains a waste of public resources

• Proportion of enrolled students who never finish their studies: – 75% in Argentina – 60% in Morocco – 30% in Australia • Proportion of students who graduate on time: – 13% in Italy

Proportion of private enrollment 2003

Phi l i ppi nes Kor ea J apan Indonesi a Col ombi a Indi a Br az i l Bangl adesh Ni c ar agua Par aguay J or dan Per u Ec uador Chi l e Congo Nepal USA Guat emal a Thai l and El Sal v ador Mex i c o Venez uel a Ar gent i na Hondur as Rwanda Mal asi a Bol i v i a Papua New Gui nea Keny a Zi mbabwe Panama

0 10 2 0 3 0 4 0 5 0 6 0 7 0 8 0 9 0

Longstanding challenges

• How can governments develop a financially sustainable tertiary education system in the face of expanding demand?

• How can governments maintain or improve the quality of tertiary education under such financial pressures?

Importance of Science and Technology

Knowledge capacity as development strategy

14 12

Rep. of Korea

10 8 6 4 2 0 Difference attributed to knowledge

Ghana

1960 1965 1970 1975 1980 1985 1990 1995 2000 Difference due to physical and human capital

Science Development and Creation Science Use, Operation and Maintenance R&D Design & Engineering Technician & Craft Skills & Capabilities Basic Operators Skills and Capabilities Higher levels require higher-order capacity of human resources

S&T Lessons From World Bank Operations

• Developing human capital is an essential pre requisite for S&T capacity building • Sustained long-term engagement is key • Specific investment loans have better results than budget support – hands-on rather than arm’s-length • Comparative advantage is created not given – Salmon, grapes in Chile – Cut flowers in Tanzania – Electronics in Korea and Taiwan • Interventions work best when grounded in each country's own S&T and industrial strategy

S&T Challenges

• Ability to produce new knowledge (R&D) is important, yet absorptive capacity of enterprises and labor force must be developed institutions?

• Vietnam – spillovers are not automatic • Few centers of excellence or competition among many • Tension between expanding the supply of skilled workers and industry demand for skilled workers – chicken and egg problem – brain drain vs. skill shortage – supply with limited demand • Thailand or Malaysia – demand with limited supply • Long term commitment – S&T requires long-term political engagement – >10 years for capacity to affect development

Country analysis:

Korea

1969 1977 1978 1979 1980 1981 1982 1983 1984 Education Projects (Projects 1-5) Support to Secondary and Vocational Schools 1985 Heavy Machinery Project 1987 1988 1989 1990 Electronics Technology Project Small and Medium Machinery Industry Project Technology Development Project Series (Projects 1-3) 1991 1992 1993 1994 1995 Industrial Finance Project Education Sector Loan Project- Programs for S&T Education Small and Medium Industry Bank Project Series Technology Advancement Project Series (Projects 1-3) Universities S&T Research Project Health Technology Project Vocational Education Project 1996 Financial Intermediation Project 1997 1998 Vocational Schools Development Project Science Education and Libraries Computerization Environmental Research and Education Project Environmental Technology Development 1969 1977 1978 1979 1980 1981 1982 1983 1984 1985 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Knowledge economy

Economic Revolution Technological Revolution

Knowledge Economy New Face of Higher Education Fast Connected Evolving Quality-driven Agile Slow Isolated Static Seniority-driven Rigid

New Opportunities

2 3 1 4

Knowledge for Development

Economic Structure and Incentives Education Information Infrastructure Innovation System

•

Tariff and non-tariff barriers

•

Property rights

•

Regulation

•

Universal basic education enrollment and completion

•

Secondary enrollment, completion and quality

•

Tertiary enrollment, quality, system flexibility

•

Lifelong learning to update skills; multiple entry points

•

Telephone capacity/capita

•

Computers /capita

•

Internet hosts /capita

•

Researchers in R&D

•

Manufacturing trade as % of GDP

•

Scientific articles/million pop.

Crisis prevention vs. coherent policy

• Many countries tend to be reactive – Lack of national policy debate and framework for higher education lead countries to

react

to problems • The World Bank helps governments avoid reactive practices by developing and implementing higher education strategies – More flexible systems and institutions – Focus on governance, finance (efficiency), quality (innovation), and equity

State role in strategy development

• Describing the status quo • Identifying issues, diagnosing problems • Presenting potential options • Engaging stakeholders in dialogue • Developing a shared vision • Investing in elements that improve… – Institutional agility – Education quality – Internal and external efficiency – Equity • Initiating innovative resource distribution mechanisms that focus on organizational behaviors • Engaging stakeholders in throughout the process

Range of World Bank interventions and investments in higher education

Governance

• Move from state control to state oversight – Encourage private sector development • Ease restrictions on private providers • Develop reasonable oversight for private sector so as not to stifle innovation or growth • Maintain equal standards for public and private provision – Build institutional management capacities at public institutions in support of greater autonomy • Governing board development and training • Accountability systems (stakeholder / civil society membership) • Strategic planning exercises • Leadership training • Financial management / procurement capacity • Management information systems • Curriculum reviews and revisions • Human resources management • Modular academic programs (LMD, credit systems, lifelong learning) • Admissions reform (entrance exams, etc.) • Civil service adjustment

Finance

• Investment budget mechanisms – Formula funding – Bloc grants – Competitive funding • Linked to quality improvements or government priorities – Research funding • Recurrent budget mechanisms – Performance-based financing • Demand-side financing – Student loans – Vouchers, scholarships • Cost recovery mechanisms

Quality

• Centers of excellence • Quality assurance systems (accreditation) – Establish quality assurance systems – Reform existing quality assurance systems – Develop institution-level quality practices – Develop professional licensing capacity • Link financing to quality assurance determinations • Develop benchmarking capacity • Develop system and institution performance indicators • Develop measurements for student learning outcomes • Encourage mutual recognition systems • Faculty training and upgrading of skills to improve pedagogy, teaching methods, student learning • Develop competency frameworks

Efficiency and equity

• Expansion of private sector – With parallel finance innovations • Efficiency gains in public sector – Double sessions – Repetition reduction • Non-university tertiary education • Develop pathways to link technical vocational education with university education • Distance education, non-traditional learning • University partnerships and sandwich programs • Labor market observatories • Graduate tracer surveys • Support public-private partnerships between universities and industry

Infrastructure

• Post-conflict reconstruction – Leverage as opportunity to rethink pre existing system • Construction of new institutions • Installation or upgrading of information technology

Science and technology

• Millennium Science Initiatives – Universities and research institutes • Science and technology projects – Universities, research institutes, industry • Agricultural technology investments • Private sector development investments

World Bank Lending for Tertiary Education by Region, Fiscal 1990 – 2006 Middle East & North Africa $450 million 7% South Asia $909 million 14% Sub-Saharan Africa, $906 million 14% Latin America & the Caribbean $1,749 million 26% Europe & Central Asia, $438 million 7% East Asia & Pacific, $2,221 million 32%

Ten Largest Borrowers for Tertiary Education, Fiscal 1990 – 2006

Indonesia Mexico India China Korea, Republic of Malaysia Brazil Chile Colombia Hungary 435 352 311 242 231 220 206 Millions of U.S. dollars 635 750 714

World Bank Lending for Tertiary Education by Region, Fiscal 2001 – 2006 South Asia $335million 22% Middle East & North Africa $88 million 6% Sub-Saharan Africa $223 million 15% East Asia & Pacific $109 million 7% Europe & Central Asia $37million 2% Latin America & the Caribbean $728 48%

Ten Largest Borrowers for Tertiary Education, Fiscal 2001 – 2006

Mexico India Colombia Indonesia Chile Tunisia Afghanistan Ethiopia Ghana Sri Lanka 42 38 37 30 30 96 87 194 247 Millions of U.S. dollars 409