Challenges of the Knowledge Economy for Education Carl Dahlman World Bank World Education Market...

Challenges of the Knowledge Economy for Education

Carl DahlmanWorld Bank

World Education MarketLisbon

May 20, 2003©Knowledge for Development, WBI

Structure of Presentation

1: The Knowledge Revolution2: Knowledge Economy: Definition and

Framework3: Implications for Education and

Training4:Key Trends in Education and Training5: Challenges to Education and Training6:Challenges to Developing Countries7: The Way Forward

©Knowledge for Development, WBI

The Knowledge Revolution - 1Ability to create, access and use knowledge is becoming fundamental determinant of global competitiveness

Seven key elements of “Knowledge Revolution”

Increased codification of knowledge and development of new technologies

Closer links with science base/increased rate of innovation/shorter product life cycles

Increased importance of education & up-skilling of labor force, and life-long learning

Investment in Intangibles (R&D,education, software) greater than Investments in Fixed Capital in OECD


The Knowledge Revolution - 2Greater value added now comes from investment in intangibles such as branding, marketing, distribution, information management

Innovation and productivity increase more important in competitiveness & GDP growth

Increased Globalization and Competition

• Trade/GDP from 38% in 1990 to 52% in 1999

• Value added by TNCs 27% of global GDP

Bottom Line: Constant Change and Competition Implies Need for Constant Restructuring and Upgrading


Implications for Developing Countries

Developing Countries run of risk of being left behind as a result of increasing importance of knowledge and of a widening knowledge divide with advanced countries.

They need to develop coherent strategies to deal successfully with the constant restructuring resulting from the knowledge revolution.

They will need to make more effective use of knowledge for their development--to become knowledge economies.



World GDP/capita and Population A Two Millennium Perspective

0

1000

2000

3000

4000

5000

6000

0

120

200

280

360

440

520

600

680

760

840

920

1000

1080

1160

1240

1320

1400

1480

1560

1640

1720

1800

1870

1950

1998

0

1000

2000

3000

4000

5000

6000

7000

World GDP per capita (1990 international $) World Population (Million)

Source: Angus Maddison, The World Economy : A Millennial Perspective, OECD: Paris, 2001

GDP per capita

World Population (mill)

World GDP/Capita and Population

Growing Differences in GDP/Capita

Per Capita GDP for Selected Regions or Countries (1990 international $, 1480-1998)

0

5000

10000

15000

20000

25000

30000

1480 1560 1640 1720 1800 1870 1950 1998

Western Europe

Eastern Europe

United States

Latin America

Japan

China

India

Other Asia

Africa

Source: Angus Maddison, The World Economy : A M illennial Perspective, OECD: Paris, 2001

GDP/Capita Growth: Korea vs Ghana

0

2

4

6

8

10

12

14

1960 1965 1970 1975 1980 1985 1990 1995 2000

K n o w le d g e m a k e s th e D if fe r e n c e K n o w le d g e m a k e s th e D if fe r e n c e b e tw e e n P o v e r ty a n d W e a lth . . .b e tw e e n P o v e r ty a n d W e a lth . . .

R e p . o f K o r e a

G h a n a

T h o u s a n d s o f c o n s ta n t 1 9 9 5 U S d o lla r s

D if fe re n c e a t t r ib u te d to k n o w le d g e

D if fe re n c e d u e to p h y s ic a l a n d h u m a n c a p ita l


2.1: The Knowledge Economy

There are many definitions of the “Knowledge Economy”, many emphasizing just information technology and high technology

We take a broader definition: “An economy that makes effective use of

knowledge for its economic and social development. This includes tapping foreign knowledge as well as adapting and creating knowledge for its specific needs.”


2:2 Framework for Using K4DFour Key Functional Areas

Economic incentive and institutional regime that provides incentives for the efficient use of existing and new knowledge and the flourishing of entrepreneurshipEducated, creative and skilled peopleDynamic information infrastructure Effective national innovation system


K-Assessment Benchmarking Methodology

KAM: 76 structural/qualitative variables to benchmark performance on 4 pillars

Variables normalized from 0 (worst) to 10 (best) for 112 countries and nine regional groups.

www1.worldbank.org/gdln/kam.htmBasic scorecard for 14 variables at two

points in time, 1995 and 2002Aggregate knowledge economy index

(KE)


Education in Global Context


3: Implications for Education and Training

Education and training are the key enablers of the knowledge economyThere is an increased premium on education because need education and new skills to adapt and use new technologiesDeveloping countries are handicapped by low enrollment rates and low educational attainment among the working populationDealing with this challenge will require greater coordination among different ministries and between government and the private sector


4: Key Trends in Education and Training

Increasing educational attainmentContinued high returns to higher levels of educationIncreasing contribution of education to GDP growthIncreasing globalization of educationIncreased prevalence of life-long learningGrowing role of corporate training


Increasing Educational Attainment

Countries

1980 1990 2000 (projection)

Low Income 3.9 4.7 5.4 Middle Income 5.5 6.8 7.3 High Income 9.3 9.6 10.2

Average Years of Schooling of the Total Population Aged 15 and Over

1980 1990 2000 High Income – Middle Income

3.8 2.8 (26.3%) 2.9 (- 3.6%)

High Income – Low Income

5.4 4.9 (9.3%) 4.8 (2.1%)

Difference in Average Years of Schooling Between Income Groups

(unit: years; % indicates reduction of the gap in comparison to the previous decade.)

Data Source: World Bank and Robert Barro and Jong-Wha Lee’s International Data on Educational Attainment Updates and Implications (2000).


Continued High Returns to Higher Education Relative to Upper Secondary (1999)

0

0.5

1

1.5

2

2.5

3

3.5

Argentina Brazil Chile Indonesia Thailand

NonePrimaryLwr Sec.Tertiary


Increasing Contribution of Education to GDP Growth

Extensive empirical research shows positive contribution of education to growthMost recent OECD study finds:

Human capital has been one of key factors tied to recent growth in OECD countriesEstimated effect on GDP of one additional year of education among 15-64 year olds is around 6% on averageIn developing countries, human capital increases have a higher impact on growth than in OECD countriesThat impact is bigger for the relatively more advanced developing countries, suggesting there is a threshold effect at higher levels of upper secondary and tertiary attainment

OECD Financing Education Investment and Returns (2002)©Knowledge for Development, WBI

Increasing Globalization of Education

At higher education level there are more than 1.6 million students studying outside their home countryEducation institutions are also going global through:

Physical presence in foreign countriesAssociations with local universitiesInternet based courses

GATS is pushing for increasing liberalization in trade in educational servicesTherefore there is growing competition in educational services which will be putting increasing pressure on educational systems in developing countries


Growing Role of Adult Learning-1

Participation in Adult Learning in US as % of adults age 18 and above By Level of Educational Attainment Educational Attainment 1991

Total 1995 Total

1999 Total

Total 37.9 44.3 48.1 Grade 8 or less 8.0 10.9 14.9 Grades 9-12 16.1 23.5 25.8 High school diploma or equivalent

26.7 33.0 38.6

Some college, including vocational / technical

52.6 58.7 58.9

Bachelor’s degree or higher 56.5 62.1 64.8 Source: U.S. Department of Education


Growing Role of Adult Learning-2 Participation in Adult Learning in US as % of adults age 18 and above By Age Age 1991

Total 1995 Total

1999 Total

18-24 69.1 68.3 69.9 25-34 42.2 53.0 60.3 35-44 46.6 51.0 51.7 45-54 33.3 47.0 49.5 55-64 23.0 28.2 35.2 65 and above 10.5 15.2 18.7 Source: U.S. Department of Education


Growing Role of Corporate Training

In 1994, US corporations spent $17 billion on salaries of formal trainers, and the opportunity cost of wages and salaries paid to those being trained was $74 billionThis sum of $91 billion was almost as much as total public expenditures on higher education, which was about $110 billion.Corporate training has been growing and includes not only training in firms by own trainers, but training in formal institutions as well as specialized training such as ICT certificate training by Microsoft, CISCO, etc.

5: Challenges to Education and Training

The Irony of Low Productivity of the Educational SectorImproving the productivity of education and trainingFinancing needs of education and trainingRole of Public vs Private


Productivity Irony

Education is the fundamental enabler of the knowledge economyYet it has very low productivity improvement over timeEducation is one of the most traditional sectors in the economyProduction function basically has not changed over several centuriesNot clear there has been much of an improvement in quality as measured by standardized tests


Increasing Cost Per Student 1960-2000 (US Data)

Public School Resources in the United States, 1960-2000

Source: U.S. Department of Education (2002)

1960 1970 1980 1990 2000 Pupil-teacher ratio

25.8 22.3 18.7 17.2 16.0

% teachers with master’s degree or more

23.5 27.5 49.6 53.1 56.2

Median years teacher experience

11 8 12 15 15

Current expenditure/ADA (2000/2001 $’s)

$2,235 $3,782 $5,124 $6,867 $7,591


Virtually No Increase in Quality

Figure 1: US Student Achievement by Age Group in 1970 and in 1994

222261

305

231266

300

050

100150

200250

300350

Age 9 Age 13 Age 171970/73 1994

Average NAEP* Test Score(Mathematics and Science)

Source: US Department of Education

*NAEP: The US National Assessment of Educational Progress


Why Has Productivity Been So Low?Education policies are very input based They ignore incentives to improve student performance or to conserve on costsUntil recently education sector has had characteristics of public monopolyThere is also evidence of little correlation between educational expenditures and performanceEducation sector has very long lead times so accumulating evidence is slowEducation also has very important social and consumption features, not just economic


Improving the Productivity of Education

Use new ICT technologies more extensivelyImprove the incentive regime and management of education systemsImprove knowledge management in the education sectorImprove the pedagogy of educationReduce the time it takes to get different levels of education


Financing Needs for Education

Estimate size of formal education market is at least US $1.9 TrillionAdding training, it is likely to be $2.4 trillionImproving access and quality is likely to raise it significantly over next decadeMost of this additional financing is likely to have to come from the private sector


Global Shares of Education Market (2001)

Expenditures by Education Level(Public vs Private as % GDP)

0

1

2

3

4

5

6

7

OECD US WEI China

<Ter. Pub<Ter. PriTer. PubTer. PriTotal


Tapping More Private Resources

Rely more on private tuitions

Develop student loan systems

Rely more on private providers of formal education specialized education and training

But address growing equity problems as there is growth of private share

Role of Public and Private

Increasing role of private educationincreased from 13%n in 1996 to 18% in 2000Increasing focus on life-long learningImplies need for system with multiple pathways and multiple providersImplies setting up institutional and regulatory system that permits thisImplies changing the role of government


Changing Government Role from Provider to Coordinator

Policy Issue Current Role K-Economy Role

Integration & coordination at national level

Compartmentalized, sectoral approach

Coordinator for multi-sectoral approach

Coordination across governance levels

One-way control and regulation

Two-way mutual support & partnerships

Government as enabler Controls and regulates Creates choices, provides information & incentives, facilitates cooperation/provision

Linkage between education & labor market/society

Supply is institutionally driven

Demand is learner driven

Qualifications assurance system

Natl standards linked to curriculum & student assessments

Diverse system of recognition and quality control

Administration and management

Rules and regulations, provision

IncentivesFacilitation of providers


6: Challenges for Developing Countries

Increasing access to basic educationIncreasing access to secondary and higher educationProviding education for population already outside standard formal system Increasing qualityIncreasing equityResponding to increasing international competition


In 1990 the UN Conference on Education for All called for universal primary education by 2000. But in 2000 there were still 113 million primary-school-age children not in school, 60 percent of them girls and 80 percent living in South Asia and Sub-Saharan Africa. The Millennium Development Goals (MDGs) set a more realistic but still difficult deadline of achieving universal primary education by 2015. They have also set a target of obtaining gender equality in primary and secondary education by 2005 and at all levels no later than 2015.

The Millennium Development Goals for Education

© Knowledge for Development, WBI

Challenge of Meeting Universal Primary Education


Implications for Tertiary 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 alsoshorter degrees from polytecniques and junior collegesspecialized 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


Implications for Lifelong LearningStock challenge: rapid creation and diffusion of knowledge means even adults constantly have to learn, therefore need

Multiple mechanisms for continuous training beyond formal education systemTo exploit potential of information and communications technologies to expand training opportunitiesEffective system for skills assessment and certification

Flow challenge: education system must teach students how to learn through their lifetime regardless of when they leave it: implies need for

Better teaching and learning pedagogies for core skillsBroader interdisciplinary approachesFinancing mechanisms to expand access and improve quality

Developing countries need to address both stock and flow challenges, though severely financially constrained


Increasing QualityOn most international standardized tests, developing countries do worse than average for OECD countries

In part due to lower expenditures, and less complementary resources such as less educated teachers, fewer books and facilitiesBut also due to more antiquated teaching pedagogy, less effective incentive regimes and governance structuresAnd generally more regulated sector

Need not only to improve resources, but also to improve pedagogy and institutional incentive regime


Increasing Equity

Share of private financing of education in developing countries is already higher than in developedIt is likely to have to increase because of limited government budgetsAs more toward more private financing already serious problems of inequality will be increasedGovernment will have to pay more attention to addressing the equity problem

Responding to Increasing International Competition

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

7: Way Forward

Must improve productivity of educationImprove efficiency through better management accountability etcUse ICT technologiesChange the production functionImprove incentive regime

Change the content of educationBasic skillsTeaching learning to learnJust in time knowledge


Summary and ConclusionsThe knowledge revolution and the knowledge economy are a challenge to all countriesDeveloping countries run big risk of falling behindThey need to develop coherent strategies to take advantage of the new potentialImproving access and quality of education; retraining and lifelong learning are at the very center of what they have to do to improve their prospectsBecause of the magnitude of challenge, can’t just replicate what traditionally has been done

Need to learn about cost effective new approaches, tools and techniquesNeed to take advantage of these to leapfrog to catch upConferences 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


End

[email protected]: 202 458 7504

A N N E X


Benchmarking Changes Over Time


0

5

10Econ. Incentive Regime

Innovation

Education

Information Infrastructure

most recent 1995Brazil

INFORMATION INFR.:-Tel. Lines per 1000 people- Computers per 1000 people- Internet hosts per 10,000 people

ECON. INCENTIVE REGIME:-Tariff & Non-tariff barriers-Property Rights-Regulation

EDUCATION:- Adult literacy rate- Secondary Enrollment- Tertiary Enrollment

INNOVATION:-Researchers in R&D- Manuf. Trade as % of GDP- Scient. & Tech. Pub. per million people

Strong Correlation KEI & GDP/Capita


Three Sectors Compared


Source: Knowledge Management in the Learning Society, OECD, 2000

Educational Attainment in OECD: Adult Population

OECD: percentage of the population that has attained upper secondary or tertiary education (1998)

42 38 30

2319

14

47

25

0102030405060708090

100

25-34 35-44 45-54 55-64Age group

%

Tertiary

Upper secondary


Low Educational Attainment AmongAdult Population in LDCs

China: percentage of the population that has attained upper secondary or tertiary education (1998)

197 713

53

3 3

0

20

40

60

80

100

25-34 35-44 45-54 55-64Age group

%

Tertiary

Upper secondary


Challenge of Meeting Universal Primary Education


Higher Education Enrollment Ratio (1997)

Average Exp./ Full time Student 1999 in US$ Equivalent PPP

0100020003000400050006000700080009000

10000

OECD WEI CHINA

PrimayBsc Sec.Upr SecTertiary


Low Secondary Enrollment Rates Relative to Per Capita Income

.

Tasa

Net

a de

Esc

olar

idad

en

Sec

unda

ria, 1

998

PIB per cápita (en log), 19985 6 7 8 9 10 11

20

40

60

80

100

Nicaragu

Guyana

Ecuador

El SalvaParaguay

Jamaica

Dominica

Peru

Colombia

Belize

Venezuel

Mexico

Costa Ri

Brazil

TrinidadChile

Argentin

China

Indonesi

PhilippiThailand

MalaysiaKorea

Hong Kon

New ZealCanada

Australi

SwedenFinlandUnited S


Even Lower Tertiary Enrollment Rates Relative to Per Capita Income

.

Tasa

Bru

ta d

e E

scol

arid

ad e

n U

nive

rsid

ad, 1

998

PIB per cápita (en log), 19985 6 7 8 9 10 11

0

20

40

60

80

Haiti

NicaraguHondurasGuyana

Bolivia

SurinameGuatemal

EcuadorEl Salva

ParaguayJamaica

Dominica

Peru

Colombia

Belize

PanamaVenezuel

Mexico

Costa Ri

Brazil

Trinidad

ChileBarbados

Argentin

Bahamas

ChinaIndonesi

PhilippiThailand

Malaysia

Korea

Hong Kon

Singapor

New ZealCanada

Australi

Sweden

Finland

United S


La calidad de la educación también es pobreResultados académicos promedio en las

pruebas de matemáticas, lectura y ciencias y su relación con el PIB per cápita.

Resultados académicos en ingreso nacional


Global Population and GDP by Income Classification of Countries

Population

Global population 6.1 billion

GDP

Global GDP 31,121US$ bn


Population (%) GDP (%) Education Market (US$ bn)

Education Market (% of

total)

USA 4.7 32.3 654 35Other High Income 11.0 47.6 860 46Upper Middle Income 8.2 7.8 133 7Lower Middle Income 35.3 8.8 151 8Low Income 40.9 3.5 60 3World (%) 100 100 1,857 100Total Real Values (current US$ bn ) 6.1 31,121 1,857

Global Shares 2001

Note: For the calculations of the Education Market shares we used 6.5% of GDP for the USA, 5.8% for High Income and 5.5% for the rest of the group classifications

Challenges of the Knowledge Economy for Education Carl Dahlman World Bank World Education Market...

Documents

Transcript of Challenges of the Knowledge Economy for Education Carl Dahlman World Bank World Education Market...