Low- and middle-income countries in East Asia need to make their higher education systems more responsive to labor market demands and the economy as a whole to climb up the income ladder, says a new World Bank East Asia and Pacific Regional Report released today.
Across the region, higher education institutions can realize their full potential by providing skills and research to spur productivity and innovation, considered critical to achieving growth in a competitive global environment.
Titled “Putting Higher Education to Work: Skills and Research for Growth in East Asia”, the report sheds light on the functional skills that workers must possess to be employable and to support firms’ competitiveness and productivity. It also examines how higher education systems can produce research that will help apply, adapt and develop new technologies that will drive growth.
Impressive gains have been made in expanding access to higher education over the past two to three decades in the region, with enrollment rates rising to 20 percent or more in many countries from very low levels. The greater challenge overall is improving quality, to address vulnerabilities in developing and deploying enough of the right type of skills and research.
“With aging populations, developing economies in the region face the challenge of achieving growth led by gains in productivity. The significance of higher education will increase as countries work to escape the middle income trap,” said James W. Adams, World Bank East Asia and Pacific Regional Vice President.
According to the report, higher education institutions in developing East Asia do not sufficiently provide their graduates with the skills that firms need. “Employers in both manufacturing and services are looking for problem-solving, communications, management and other skills that will support higher productivity. Yet employer perceptions and wage skill premiums point to gaps in these skills in newly hired professionals,” said World Bank Lead Economist Emanuela di Gropello, lead author of the report.
"The mismatch between the skills that firms need and that higher education institutions produce may mean longer lags in getting a good job after graduation -- lags that may frustrate expectations among the young," said Emmanuel Jimenez, World Bank Human Development Sector Director, East Asia and Pacific Region.
In addition, higher education institutions are not contributing the type of research needed to boost technological upgrading in firms. Universities can produce ideas for the business community, contributing to knowledge and technological innovation through basic and applied research and technology transfer. But university involvement is limited in most countries, even in technology adaptation and upgrading.
“The evolving links between higher education systems and the business sector are becoming a major focus of policy as the role of technology in development expands. Not only do they impart education, but universities are viewed more and more as sources of industrially valuable technical skills, innovation, and entrepreneurship,” said co-author Prateek Tandon, World Bank Economist.
Why isn’t higher education fulfilling its potential? The main reason identified by the report is that higher education institutions have been managed as “disconnected” individual institutions. Governments have a fundamental role in making higher education work as a system where individual institutions are well connected among themselves and to firms, research institutions and earlier levels of education.
The report suggests three priority areas where public policy can play a constructive role in improving higher education outcomes:
More efficient and effective financing
- Adequately finance and incentivize research
- Prioritize underfunded fields such as science and engineering
- Provide sufficient scholarships and loans for the poor and disadvantaged
Better management of public institutions
- Improve the management of public higher education institutions, where 70 percent of all East Asian students are enrolled, by encouraging greater autonomy and accountability
- Greater decision making autonomy in areas such as academic curricula, staffing and budgeting should be encouraged
- Accountability can be enhanced by delegating more power and responsibilities to institutions and governing boards and by providing students with information to choose and move across institutions
Stewardship of the higher education system
- Put in place adequate incentives for private institutions so that they can further help governments increase enrollment and strengthen skills
- Ensure stronger links between industry and universities
- Take advantage of opportunities provided by international higher education markets