Investing in education for future prosperity of the Kingdom of Saudi Arabia Education Evaluation in the Kingdom: A Prelude to Education Quality and Development Riyadh November 3-5, 2014 Satya Brink Brink, KSA, 20151

Investment in education is a major expenditure of government budgets, particularly in Saudi Arabia Source: Ministry of Finance of respective countries, Alpen capital, 2014 Estimated Government spending on education as a percentage of total government expenditure, 2014 Brink, KSA, 20152

Why is basic education compulsory in most countries? Few government requirements are compulsory – voting, military service, payment of taxes in some countries but compulsory education for children is almost universal Education is provided as a right in order to ensure that all children start out with a level playing field Basic education ensures life opportunities for future generations of the country Education builds human capital for the labour market Education fuels economic growth of the country now and in the future Education is important for nation building and social development. Brink, KSA, 20153

How does education support the GDP of a country? Contributes to economic activity Working in the labour market during adult life Non-labour market activities with economic value Volunteer work Raising children Informed consumption Savings Investments Saves public expenditures Cost saving positive actions such as health behaviours (nutrition, not smoking, etc) Living independently without relying on government programs (Income support, housing assistance, etc) Not participating in crime and other activities that require public expenditures Brink, KSA, 20154

Education is a vital driver of the labour market and economic growth EducationEconomy Prepare all students, boys and girls, with work related skills though fluctuation in number of children in schools Sufficient workforce to meet demand of a growing economy and avoiding skill shortages Literacy and learning to learn for lifelong learning to gain transferable skills Prepare for labour growth followed by shortage due to demography with little underemployment and only frictional unemployment Problem solving, creative, entrepreneurial graduates Innovation for competitiveness through new products and processes to compete with high quality for the price Quality of education and excellence in resultsPool of workers with human capital that can work smarter for productivity in a diversified economy Brink, KSA, 20155

Primary and Secondary SchoolTertiary Education Year Number 6,391,6446,811,0957,250,8941,258,2881,452,2851,663,953 Ratio % Gross enrolment and ratio Primary and Secondary school, compared to Tertiary Education, 2013 to 2019, Saudi Arabia Sufficient workforce to meet demand of a growing economy and avoiding skill shortages Prepare all students, boys and girls, with work related skills though fluctuation in number of children in schools Source: Alpen capital, 2014 Brink, KSA, 20156

Source: United Nations, World Population Prospects Prepare for labour growth followed by shortage due to demography with little underemployment and only frictional unemployment Literacy and learning to learn for lifelong learning to gain transferable skills Brink, KSA, 20157

Improvements in education result in higher skills in each new generation thereby improving the human capital in the labour force Source: OECD, PIAAC Brink, KSA, 20158

Source: Levy and Murnane, 2013 Innovation for competitiveness through new products and processes to compete with high quality for the price Problem solving, creative, entrepreneurial graduates Brink, KSA, 20159

The demand for higher level skills are growing rapidly compared to low level skills in reading Reading and numeracy are foundational skills learned at school. If adults have to be retrained in reading and numeracy, a country is paying twice for the development of the skill. Source: OECD, PIAAC Brink, KSA,

Source: Sanders & Rivers Cumulative and Residual Effects on Future Student Academic Achievement, McKinsey; In Barber & Mourshed (2007), The Effect of Teacher Quality Pool of workers with human capital that can work smarter for productivity in a diversified economy Quality of education and excellence in results Brink, KSA,

Each country should improve the quality of its own education system but its citizens should be capable of living and working in a globalized world There is evidence to show that it is not necessary to follow the same path as countries that are leaders in education, but a country can forge its own path to the top. A system can make significant gains from whatever level it starts from, and these gains can be achieved in 6 years or less (McKinsey, 2010) A growth scenario of OECD countries based on increasing the PISA performance by 25 points over the next 20 years would increase the GDP of these OECD countries by US$115 trillion in present value terms. Brink, KSA,

Long term macro impacts of a good system of education on the economy Opportunities for participation in the workforce Personal returns of education during working life is an incentive Develop diversity of talent and expertise for a diversified economy Equality promotes both educational performance and the economy Saudi Arabia has set some goals for the growth of its economy Increase in the employment rate from 41% Ability of the economy to absorb 400,000 youth annually in the labour market Reduction of skill shortages in specific economic sectors Decrease skill mismatches Brink, KSA,

High quality compulsory education ensures success in further education and in the labour market Economic growth requires high value products and processes which requires a more educated workforce Unless students are well prepared during compulsory education they will not thrive in higher education The kind of things that are easy to teach are easy to automate or outsource Brink, KSA,

Earning potential: Returns of education rise during the peak working years (35-45) encouraging work in the labour market and the economy Source: Georgetown University’s Center on Education and the Workforce Brink, KSA,

Source: Georgetown University’s Center on Education and the Workforce Lifetime earnings are related to education with a large difference between those who have a diploma and those who don’t in the USA and most other countries Brink, KSA,

Distribution of the employed population by major occupations, men and women aged 15 and over, Canada, 2011 A diversity of talent and experience is required to meet the needs of the labor market and to avoid skill mismatches and skill shortages Statistics Canada, National Household Survey, 2011 Brink, KSA,

When equality is high, economic growth is also high, fostered by educational performance Brink, KSA,

When there is high inequality the rate of growth of the economy is impacted negatively Brink, KSA,

Gender equity Saudi unemployment by education and gender s Lack of gender equity in employment results in unused human capital or cognitive surplus Unused human capital reduces the returns to education in the GDP. Both public and private returns to investments in higher education unrealized. More women than men graduate from higher education in Saudi Arabia. High unemployment in general and among women in particular. Many educated women are not in the labour force. Women tend to study traditional fields such as teaching. Skills mismatch high between graduates and market demands. Brink, KSA,

Saudi Arabia has launched extensive education reforms Saudi Arabia “ aspires to achieve a knowledge-based society through the adoption of a distinct quality education.” In May 2014, King Abdulla approved funding of SAR 80 billion for a five year plan for the reform of the education sector The progress of the reforms and the results achieved in school improvement and student performance will be monitored by the Public Education Evaluation Council Brink, KSA,

What can you expect in the economy from reforms? Long term impact of educational reform in 2010 on economic growth over the life time of students born in 2010 OECD, The high cost of low performance Brink, KSA,

شكرا Thank you Brink, KSA,