Economy of Educationin Iran

University of Tehran

Faculty of World Studies

Economics, 2013-14

Dr. Adeli

Sepehr Arefmanesh

Cont

ents Economy and Education

Some Concepts

Structure of Educational system in Iran

School Enrolment

How Much is Spent on Education?

Quality of Education

What is the Role of Government?

Private Sector

Knowledge Economy

Cont

ents Economy and Education

Some Concepts

Structure of Educational system in Iran

School Enrolment

How Much is Spent on Education?

Quality of Education

What is the Role of Government?

Private Sector

Knowledge Economy

Education and Economics

Qualityof Life

GDP

the increase in price indexes in Iranian economy impactsthe domestic product percentincrease in education expenditures leads to a 0.31%increase in GDP

In most countries the governmentsubsidizes education, soaccess to education determines whobenefits from the subsidies. Becausespending on education represents asubstantial share of governmentbudgets, in both industrial anddeveloping countries, the educationsys-tem is effectively a major conduitfor the distribution of public subsidies.Furthermore, education affectspeople’s life chances as adults, interms ofearning capacity as well as socialmobility, so equity in educationalopportunity influences the futuredistribution of income, wealth, andstatus in society.

Equity

Qualityof Life

“An individual will invest in his orher human capital—an additionalyear of schooling or on-the-jobtraining—as long as the marginalgain from that investmentexceeds its added cost. The gainsextend over a lifetime and arediscounted to the present.”

In most countries the governmentsubsidizes education, soaccess to education determines whobenefits from the subsidies. Becausespending on education represents asubstantial share of governmentbudgets, in both industrial anddeveloping countries, the educationsys-tem is effectively a major conduitfor the distribution of public subsidies.Furthermore, education affectspeople’s life chances as adults, interms ofearning capacity as well as socialmobility, so equity in educationalopportunity influences the futuredistribution of income, wealth, andstatus in society.

According to the government, over 95%of Iranian children currently receiveprimary and secondary education atpublic schools, all of which are single

sex.

95%

country’sliteracy

rate, whichweighed in at85% for adults

and 99% foryouths in

2010, compared to 65% and

87%, respectively,

99%

According to the WorldBank, education is a key

element for themillennium Development

Goals.

country’sliteracy

rate, whichweighed in at85% for adults

and 99% foryouths in

2010, compared to 65% and

87%, respectively,

According to the WorldBank, education is a key

element for themillennium Development

Goals.

Learning needsBasic learning needs refer to the essentialtools for learning (e.g. literacy, oralexpression, numeracy, problem-solving) aswell as basic learning content (e.g.knowledge, skills, values and attitudes)that individuals should acquire in order tosurvive, develop personal capacities, liveand work in dignity, participate indevelopment, improve quality of life, makeinformed decisions and continue thelearning process. The scope of basiclearning needs, and how they should bemet, varies by country and culture, andchanges over time. The other needs referto the needs from pupils besides thelearning needs. It can be the needs forfinancial support, the needs for lawassistance, the needs for under-standing, etc. The same as the basiclearning needs, the other needs alsodepend on the social, economical, politicaland cultural context of eachregion/country.

Capital expenditure on educationExpenditure for assets that last longer thanone year. It includes expenditure forconstruction, renovation and major repairs ofbuildings and the purchase of durableequipment or vehicles.

Some ConceptsLearning needsBasic learning needs refer to the essentialtools for learning (e.g. literacy, oralexpression, numeracy, problem-solving) aswell as basic learning content (e.g.knowledge, skills, values and attitudes)that individuals should acquire in order tosurvive, develop personal capacities, liveand work in dignity, participate indevelopment, improve quality of life, makeinformed decisions and continue thelearning process. The scope of basiclearning needs, and how they should bemet, varies by country and culture, andchanges over time. The other needs referto the needs from pupils besides thelearning needs. It can be the needs forfinancial support, the needs for lawassistance, the needs for under-standing, etc. The same as the basiclearning needs, the other needs alsodepend on the social, economical, politicaland cultural context of eachregion/country.

DecentralizedWithdrawn from a center or place ofconcentration; especially having power orfunction dispersed from a central to localauthorities. In this module, it refers todecentralized levels of the educationadministration such as at theprovincial, district or local levels, and todecentralized processes of planning andmanagement of education.

Number of Students

The current structure of the system consists of non-compulsory pre-elementary education, elementary, lowersecondary (guidance), upper secondary, and highereducational institutions. All public institutions are underthe control of the Ministry of Education.

Structure of EducationalSystem in Iran

the total enrollment within acountry "in a specific level of

education, regardless ofage, expressed as a

percentage of the populationin the official age group

corresponding to this level ofeducation.

60

80

100

120School Enrolment, (% gross)

School Enrolment

the total enrollment within acountry "in a specific level of

education, regardless ofage, expressed as a

percentage of the populationin the official age group

corresponding to this level ofeducation.

0

20

40

60

preprimary primary secondary tertiary

2004 2005 2006 2007 2008 2009 2010 2011 2012

Current expenditure on educationExpenditure for goods and services consumed within the current year and which will be renewed if neededin the following year.

It includes expenditure on:personnel salaries, pensions and benefits; contracted or purchased services; other sources includingbooks and teaching materials; welfare services; and other current expenditure, such as subsidies tostudents and households, furniture and minor equipment, minorrepairs, fuel, telecommunications, travel, insurance and rents.

Expenditure on education

0

1

2

3

4

5

6

2004 2005 2006 2007 2008 2009 2010 2011 2012

Public education expenditure (% of GDP)

Academic year Percentagechange

Quality of Education

Pritchett (2001), and Benhabib and Spiegel (1994) suggestthat the effectiveness of education and education spendingon growth depends on the quality of institutions in theeconomy. As long as the other bottlenecks remain in theeconomy, increasing education may not lead to highergrowth.

Academic year Percentagechange

2007/08 2008/09 2009/10 2010/11 2011/12 2011/12

Student to school 98.9 100.1 102.7 98.8 113.4 14.8

Student to Classroom 22.4 22.7 22.7 22.6 23.4 3.7

Student to teacher 16.0 16.8 17.3 15.6 15.1 -3.3

Source: Ministry ofEducation

Quality of Education

Educational quality—measured by whatpeople know—has powerful effects onindividual earnings, on the distributionof income, and on economic growth.

• The educational quality in developingcountries is much worse than educationalquantity ,

• Just providing more resources to schoolsis unlikely to be successful—improvingthe quality of education will take majorchanges in institutions

The quality of education isdetermined by the quality of the:(a) learning environment,(b) teaching-learning process, and(c) learning outcomes in terms ofknowledge, skills, attitude andabilities imparted. Educational quality—measured by what

people know—has powerful effects onindividual earnings, on the distributionof income, and on economic growth.

• The educational quality in developingcountries is much worse than educationalquantity ,

• Just providing more resources to schoolsis unlikely to be successful—improvingthe quality of education will take majorchanges in institutions

There are two different schools of thought regarding( )the effects of education expenditures

on economic growth.One group believes that the government spending oneducation and health care can increase economic growthand reduce income inequality and poverty• Mauro(1998) highlighted the links between corruption and education spending.

He shows that in those countries with wide spread corruption, the governmentallocates fewer resources to education.

• In recent years, one of the main criteria for debt forgiveness of the HeavilyIndebted Poor Countries has been increasing spending on education (Andrewset al. 1999).

One group believes that the government spending oneducation and health care can increase economic growthand reduce income inequality and poverty• Mauro(1998) highlighted the links between corruption and education spending.

He shows that in those countries with wide spread corruption, the governmentallocates fewer resources to education.

• In recent years, one of the main criteria for debt forgiveness of the HeavilyIndebted Poor Countries has been increasing spending on education (Andrewset al. 1999).

The other group of researchers undermines the positive andsignificant effect of education (spending) on aggregated indicatorssuch as growth and poverty.• Jimenez (1986) suggested that the poor do not benefit from education spending and such

spending does not reduce income inequality. Fields (1980) and Ram (1989) also have a similarview.

• Farzanegan (2009) investigated the role of education on illegal activities in Iran, controllingfor other factors. He concludes that education may decrease incentive for illegal trade whena country benefits from a good quality of political and economic institutions.

• Blankenau and Simpson (2004) in a theoretical study show that the relationship betweeneducation spending and growth is conditional on the government spending, the tax structureand production technologies

Rewards offered to incite toaction or greater effort. Ineducation, incentives such asschool lunch, schooluniform, free textbooks, etc.are offered to motivatestudents to attend schoolregularly and to improve theiracademic performance.

Who is charge of Regulations ?The Ministry of Education regulates primary and secondaryeducation.The Ministry of Science, Research and Technology(MSRT) and the Ministry of Health and Medical Education(MHME) regulate tertiary and higher education in Iran.All three Ministries are responsible for the management of thecomprehensive educational system at their respective levels. Theyregulate syllabuses, teaching methodologies, control nationalexaminations and enforce many standards for school and universitymanagement systems.

Rewards offered to incite toaction or greater effort. Ineducation, incentives such asschool lunch, schooluniform, free textbooks, etc.are offered to motivatestudents to attend schoolregularly and to improve theiracademic performance.

A great share of country's budget is dedicated to educationconsidering the large number of students. Although the Constitutionhas delegated such services and other expansive services togovernment, to achieve the complete and comprehensive operationof such services requires high facilities and services[KarimiPetanlar. Saeid & Mehnatfar. Yousef , 2005].

In these cases maybe it is more appropriate to lead public servicestoward usage and coverage of low-income class and to oblige high-income classes supply the expenditures for these services. To doso one can suppose involving the private sector in education andeven high education and encouraging people to participate. Theincrease in number of high education centers run by public capitalhas led to severe increase in government's ongoing budget andeven constructional budget.

Public vs. Private Education

A great share of country's budget is dedicated to educationconsidering the large number of students. Although the Constitutionhas delegated such services and other expansive services togovernment, to achieve the complete and comprehensive operationof such services requires high facilities and services[KarimiPetanlar. Saeid & Mehnatfar. Yousef , 2005].

In these cases maybe it is more appropriate to lead public servicestoward usage and coverage of low-income class and to oblige high-income classes supply the expenditures for these services. To doso one can suppose involving the private sector in education andeven high education and encouraging people to participate. Theincrease in number of high education centers run by public capitalhas led to severe increase in government's ongoing budget andeven constructional budget.

At the elementary, lower secondary (guidance), and upper secondarylevels, private schooling is conducted in the form of non-profitinstitutions. These schools must conform to the regulations of theMinistry of Education, though they are financed primarily throughtuition fees received from students. Private institutions follow thesame curriculum as public institutions. The schools are highly selectiveand are allowed to design their own entrance examinations.Approximately 6% of upper secondary institutions are private.

Public vs. Private Education

Students who study on non-public schools:

Knowledge Economy

The knowledge economy has manifold formsin which it may appear but there arepredictions that the new economy willextend radically, creating a pattern in whicheven ideas will be recognised and identifiedas a commodity. This certainly is not the besttime to make any hasty judgment on thiscontention, but considering the very natureof 'knowledge' itself, added to the fact that itis the thrust of this new form of economy,there certainly is a clear way forward for thisnotion, though the particulars (i.e. thequantum of the revolutionary approach andits applicability and commercial value),remainin the speculative realm, as of now.

The knowledge economy has manifold formsin which it may appear but there arepredictions that the new economy willextend radically, creating a pattern in whicheven ideas will be recognised and identifiedas a commodity. This certainly is not the besttime to make any hasty judgment on thiscontention, but considering the very natureof 'knowledge' itself, added to the fact that itis the thrust of this new form of economy,there certainly is a clear way forward for thisnotion, though the particulars (i.e. thequantum of the revolutionary approach andits applicability and commercial value),remainin the speculative realm, as of now.

An economic and institutional model that provides incentivesfor the efficient creation, dissemination, and use ofknowledge to promote growth and increase welfare;

An educated and skilled population that can create and useknowledge;

An innovation system composed of firms, researchcenters, universities, consultants, and other organizations

that can tap into the growing stock of globalknowledge, adapt it tolocal needs, and transform it into

products valued by markets;fo

ur

pil

lar

s.

Various features indicate thatthe development process hasreached certain limits

• Dependence on oil, tourism andremittances and very limiteddevelopment of themanufacturing sector.

• Little diversification of exportproducts.

• Poor integration in the worldeconomy. The region’saverage rate of FDI is 6percent of GDP, the world’slowest.

• An insufficiently developedprivate sector. The publicsector remains the mainsource of jobs (publicadministrations, stateenterprises).

An innovation system composed of firms, researchcenters, universities, consultants, and other organizations

that can tap into the growing stock of globalknowledge, adapt it tolocal needs, and transform it into

products valued by markets;

A dynamic information infrastructure that can facilitate theeffective communication, dissemination, and processing of

information.fou

rp

illa

rs.

Various features indicate thatthe development process hasreached certain limits

• Dependence on oil, tourism andremittances and very limiteddevelopment of themanufacturing sector.

• Little diversification of exportproducts.

• Poor integration in the worldeconomy. The region’saverage rate of FDI is 6percent of GDP, the world’slowest.

• An insufficiently developedprivate sector. The publicsector remains the mainsource of jobs (publicadministrations, stateenterprises).

The Knowledge Economy and GDPThere is a strong correlation between acountry’s overall knowledge economyreadiness index and its level ofdevelopment as measured by GDP percapita . This can be interpreted in twoways. On the one hand, investment infactors related to the knowledgeeconomy in past decades contributedecisively to growth performances. Onthe other hand, the higher the level ofdevelopment, the greater the ability toinvest in aspects of the

The Knowledge Index or KI is an economicindicator prepared by the World BankInstitute to measure a country s ability togenerate, adopt and diffuse knowledge.Methodologically, the KI is the simpleaverage of the normalized performancescores of a country or region on the keyvariables in three Knowledge Economypillars - education and human resources,the innovation system and information andcommunication technology (ICT)

Indexes

The Knowledge Economy and GDPThere is a strong correlation between acountry’s overall knowledge economyreadiness index and its level ofdevelopment as measured by GDP percapita . This can be interpreted in twoways. On the one hand, investment infactors related to the knowledgeeconomy in past decades contributedecisively to growth performances. Onthe other hand, the higher the level ofdevelopment, the greater the ability toinvest in aspects of the

Iran’s Data

The Knowledge Index or KI is an economicindicator prepared by the World BankInstitute to measure a country s ability togenerate, adopt and diffuse knowledge.Methodologically, the KI is the simpleaverage of the normalized performancescores of a country or region on the keyvariables in three Knowledge Economypillars - education and human resources,the innovation system and information andcommunication technology (ICT)

The Knowledge Economy Index (KEI)takes into account whether theenvironment is conducive forknowledge to be used effectivelyfor economic development. It is anaggregate index that represents theoverall level of development of acountry or region towards theKnowledge Economy.