Entrepreneurial Universities and Private Higher Education Institutions Professor Moses Oketch University College London, Institute of Education m.oketch@ucl.ac.uk Presentation at International Seminar on Innovations in Financing Higher Education (16-17 February 2017) India Habitat Cetre, New Delhi
Paper Outline Background Rationale James Estelle Excess demand vs. Differentiated demand and Samuelson Public vs. Private Goods Determinants of emergence and growth in private Universities Enterprise University Conclusion
Conceptual focus: RQ1: What determines the size of private sector in higher education? RQ2: How do universities as enterprise look like and what to they do? RQ3: How do both these two questions above advance or clarify our understanding of innovations in higher education finance?
What does HCT claim? HCT argues that investment in education makes individuals more productive and that a higher proportion of productive people in the workforce leads to economic growth HCT therefore provides: framework for analysing / predicting the private demand for education framework for assessing the social value of expenditures on education Underlying Assumptions HCT assumes that education leads to increased individual productivity HCT assumes that earnings are a proxy for productivity (i.e. the more productive you are, the more you will earn) HCT assumes that raising average and total incomes causes economic growth
Some empirics: Rate of Return Illustration (McMahon and Oketch, 2010)
Broad arguments All over the world HE has become very expensive Debate today is which funding model or combination is economically feasible and sensible, pragmatic and moral, within any given context. Taxpayer-funded model seen as free can support effective but elite and small number of universities; widening participation require greater diversification of funding or shifting costs to those demanding higher education
Excess vs. differentiated demand Relative size of private sector is determined by excess demand and differentiated demand; Supply of education entrepreneurship in society; Collective choice process (democratic system that do not out law private provision)
Cont. Private sector as a market response to a situation where large groups of people are dissatisfied with the amount or type of government provision (James Estelle). However, what is private is not always clear-cut in contexts where funding and regulation involves the state.
Context Economic growth: SSA Africa has been experiencing fast economic growth. From 2001-10, six of the world s ten fastest-growing economies were in sub-saharan Africa. Youngest population: With almost 200 million people aged between 15 and 24, Africa has the youngest population in the world. And it keeps growing rapidly.
The number of young people in Africa will double by 2045. Between 2000 and 2008, Africa s working age population (15-64 years) grew from 443 million to 550 million; an increase of 25%. In annual terms this is a growth of 13 million, or 2.7% per year (World Bank 2011). If this trend continues, the continent s labour force will be 1 billion strong by 2040, making it the largest in the world, surpassing both China and India (McKinsey Global Institute, 2010).
Africa s youth population is not only growing rapidly, it is also getting better educated. Based on current trends, 59% of 20-24 year olds will have had secondary education in 2030, compared to 42% today. This will translate into 137 million 20-24 year olds with secondary education and 12 million with tertiary education in 2030 (African Economic outlook 2012)
Though usually positive, per capita growth has been slow-ish 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% -10.0% >2.8% Cen. Afr. Rep. Burundi Malawi Liberia Niger Mozambique Guinea Togo Comoros Madagascar Ethiopia Mali Burkina Faso Gambia, The Rwanda Uganda Zimbabwe Sierra Leone Benin Chad Senegal Tanzania Lesotho Kenya Cameroon Sao Tome and Cote d'ivoire Zambia Mauritania Sudan Ghana Nigeria Congo, Rep. Cabo Verde Swaziland Namibia South Africa Botswana Mauritius Gabon Source: own calculations, WDI annual growth rate, 2000-2008 annual growth rate, 2008-2014
Persistently youthful populations 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 15-24 years olds to working age population SE Asia, 2015 Eritrea Zimbabwe Rwanda Kenya Uganda Zambia Burundi Swaziland Mali Burkina Faso Gambia Senegal Malawi Lesotho Togo Chad Cabo Verde Angola Tanzania Cameroon Comoros Botswana Ethiopia Mozambique Sudan Nigeria Sierra Leone Congo Liberia Benin Guinea-Bissau Mauritania Madagascar Central African Ghana Somalia Namibia Côte d'ivoire Guinea South Sudan Gabon Niger South Africa Mauritius 2000 2015 Source: own calculations, UN population estimates
that have never been better educated, Change 2000-2015 0.25 0.2 0.15 0.1 0.05 0-0.05-0.1 Projected Change in Secondary Educational Attainment in Pop15+, 2000-2015 Liberia Madagascar Niger Mali Chad Tanzania Burkina Faso Uganda Burundi Senegal Cent Afr Rep Ethiopia Somalia Guinea Sudan Rwanda Sao Tome Sierra Leone Capo Verde Congo Benin Mozambique Mauritius Cote d'ivoire Comoros Ghana Lesotho Cameroon South Africa Zambia Guinea-Bissau Malawi Gabon Gambia Namibia Nigeria Swaziland Kenya Zimbabwe Source: own calculations, Wittgenstein Centre for Demography and Global Human Capital
that have never been better educated, Percent, 2000-2014 90 80 70 60 50 40 30 20 10 0 Employment in agriculture (in % of LF) Madagascar Rwanda Burkina Faso Guinea Guinea Uganda Tanzania Sierra Leone Zimbabwe Zambia Malawi Kenya Niger Togo Mali Ghana Liberia Nigeria Benin Sudan Senegal Congo, Rep. Gambia, The Ethiopia Botswana Namibia Sao Tome and Gabon Lesotho Mauritius South Africa Source: own calculations, WDI
Enterprise University + Social enterprise + Revenue generation enterprise through cost recovery measures + enterprise in context of public vs. private good
Conclusion + Comprehensive public-peripheral private (Excess demand); +Parallel public-private (Differentiated demand); +Strong public - private (Differentiated demand)