Innovative Strategies in Higher Education for Accelerated Human Resource Development in South Asia

INNOVATIVE STRATEGIES IN

Higher Education

for Accelerated Human Resource

Development in South Asia

January 2014

© 2014 Asian Development Bank

All rights reserved. Published in 2014.

Printed in the Philippines.

ISBN 978-92-9254-421-8 (Print), 978-92-9254-422-5 (PDF)

Publication Stock No. RPT136076

Cataloging-in-Publication Data

Asian Development Bank.

    Innovative strategies in higher education for accelerated human resource development in South Asia.

Mandaluyong City, Philippines: Asian Development Bank, 2014.

1. Higher education.  2. Human resource development.  3. South Asia.  I. Asian Development Bank.

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Table of Contents

Tables, Figures, and Boxes

Foreword

Skilled human resources are one of the major binding constraints to sustain high economic growth in South Asia. It is therefore not surprising that the findings from the study show that South Asian countries need to invest significantly in human capital to reap the benefits arising from the limited window of demographic dividend available in the next 3–4 decades and to move up the value chain. The findings are a reminder that the countries’ competitiveness and ability to move up the value chain in the longer term will come from innovation, knowledge, and skills, and not from cheap labor or natural resources, which tend to be short-lived. From the current low skills equilibrium linked to low global competitiveness index and human development index, the South Asian countries have a historical opportunity to leapfrog through strategic investment in human capital anchored on information and communication technology.

Asia 2050, published in 2011 by the Asian Development Bank, presents two scenarios: (i) the Asian Century with sustained high economic growth leading to doubling of Asia’s share of global gross domestic product (GDP) from around 25% currently to just over 50% by 2050; and (ii) the middle income trap for several countries, leading to much lower growth and GDP. The initial heavy reliance of the East Asian tiger economies on exportled growth, anchored on early investment in basic education, yielded the necessary skills to take advantage of short-lived cheap labor to build the foundation at the beginning of their journey to prosperity. They were able to quickly expand their investment in secondary education, technical and vocational education and training (TVET), and subsequently in higher education to supply skilled workers to sustain high economic growth and gradual transition to a knowledge economy. The rest is history.

A 2012 McKinsey report, The World at Work, noted that South Asian countries, along with some developing economies in Africa, will contribute 60% of the labor force required by the global economy by 2030 due to demographic dividend arising from a growing young population in these developing economies and shrinking working-age populations in advanced economies due to aging. The same report also noted that developing economies, including in South Asia, will face a surplus of low-skilled workers, while there will be a shortage of medium and highly skilled workers.

This regional report, prepared with financial support from Australian Aid, is based on eight country-level reports on TVET and higher education. The report has sought to identify priorities in TVET and higher education on how to meet the emerging needs for skilling and/or upskilling a large number of young people to turn them into a productive and competitive force in both the domestic and global labor markets.

We will continue to learn more about emerging opportunities and seek viable options to support South Asian developing member countries in their efforts to improve the skills and knowledge of their populations to become more productive and competitive, leading to inclusive and sustainable growth.

Juan Miranda

Director General

South Asia Department

Asian Development Bank

Preface

The report highlights a number of strategic areas for further dialogue and improvements. In technical and vocational education and training (TVET), it reconfirms that the system remains fragmented, with many ministries involved in each country in providing TVET services although there has been progress in developing and approving national skills development policies, setting up apex bodies to coordinate TVET, and moving toward a unified quality assurance framework. The report notes that the overall provision remains marginal against the actual labor market needs; private sector and employer involvement is limited, as are mechanisms to promote public–private partnerships; and funding remains only a fraction of the projected needs for TVET with an absence of sustainable financing mechanisms such as levies or tax incentives exercised by over 65 countries in the world.

The report emphasizes three major areas to elevate the importance of skills development to reap the benefits offered by the demographic dividend and to move up the value chain: establishing and/or restructuring existing institutions for effective coordination and institutional autonomy to flexibly respond to emerging labor market needs; establishing a single, unified, and sustainable funding window to expand performance-based quality skills training programs to meet the huge needs for training many more people for domestic and overseas labor; and enhancing quality assurance to meet national and international standards, including preparing training packages, training trainers, and building a robust monitoring system.

In higher education, the report highlights the global trends during the past 20 years: elite to mass higher education, emergence of private higher education, increased reliance on tuition, autonomy with accountability, and emergence of special types of higher education. It also highlights the need to establish new institutions for quality assurance, to conduct high-quality research, and to develop specialized institutions. As emerging new practices, the report notes strategic planning, income generation, budget allocations through funding formulas, a focus on applied research, and public–private partnerships. It also points out shortcomings, such as weak quality assurance systems, lack of importance given to applied research, weak autonomy and accountability, and existence of only a few specialized institutions.

Noting that cheap labor or abundant resources are no longer a comparative advantage, it recognizes productivity gains driven by innovation as the real advantage. Highlighting the trend toward global integration, creation of a global labor market, and move toward a knowledge economy and information society, the report calls for constant innovation to generate new knowledge and to apply such knowledge. It underscores the need for a flagship university in each country that would serve as the standard for its move toward having a world-class higher education system offering relevant and quality undergraduate and postgraduate programs. The report recommends depoliticizing higher education institutions, providing institutions more autonomy with increased accountability, diversifying and expanding resources for higher education, and defining a national higher education strategy.

This publication is one of the two-part regional report on TVET and higher education. It presents the findings of the regional technical assistance project Development Partnership Program for South Asia—Subproject 11: Innovative Strategies for Accelerated Human Resource Development in South Asia. Three country-level workshops were held during the first week of December 2012 in Sri Lanka (1 December), Nepal (3 December), and Bangladesh (5 December) to validate the findings and to seek consensus among some of the key stakeholders around major recommendations and next steps.

The findings emanate from country-level analyses supported by national consultants in each of the three focus countries—Bangladesh (Md. Mohiuzzaman for TVET and M A Mannan for higher education), Nepal (Devi Dahal for TVET and Hridaya Bajracharya for higher education), and Sri Lanka (Sunil Chandrasiri for TVET and higher education with initial inputs from Dayantha Wijeyesekara on TVET)—as well as desk reviews of Bhutan and the Maldives by the national coordinator, Nicholas Tenazas, based in Manila. The regional reports were prepared by Richard Johanson (TVET) and William Saint (higher education). The reports also benefited from comments from David Ablett, Brian Chin, Sofia Shakil, Gi-Soon Song, and Karina Veal from the South Asia Human and Social Development Division (SAHS); Rudi Van Dael from the Bangladesh Resident Mission; Smita Gyawali from the Nepal Resident Mission; and Nelun Gunasekera and K.M. Tilakratne from the Sri Lanka Resident Mission. Brajesh Panth, lead education specialist in SAHS, managed and coordinated the studies with support from Rhona B. Caoli-Rodriguez. He also gave presentations at the country-level workshops held in Bangladesh, Nepal, and Sri Lanka in December 2012 and at the Asian Development Bank in January 2013. Criselda Rufino and Erwin Salaveria provided valuable administrative and logistical support.

Sungsup Ra

Director, South Asia Human and Social Development Division

South Asia Department

Asian Development Bank

Abbreviations

Currency Equivalents

as of 24 September 2013

How to Shape Higher Education for Global Competitiveness in South Asia

Depoliticize higher education systems, institutions, and campus life. University life is politicized to an unacceptable degree in all three countries. A highly politicized campus creates a dysfunctional university, which stands a high probability of sending dysfunctional graduates into the world of work.

Devise a long-term strategy for higher education to steer investments and decision making. The strategy should clearly spell out the country’s vision, expectations, and priorities as a guide for medium-term action plans for the development of relevant, good-quality higher education; and should complement this with a realistic and sustainable scheme for financing these plans.

Choose one institution in each country and develop it into a flagship research university over the coming decade. Concentrate resources disproportionately in this institution. Establish strong postgraduate and research programs. Pay academic staff internationally competitive salaries. Recruit the best students.

Give higher education institutions greater autonomy of action, combined with increased accountability for performance at all levels. Autonomy is necessary to enable institutions to innovate and adapt in response to rapidly changing external conditions. Accountability is required to ensure that autonomous decision making is responsive to government priorities and societal needs.

Find ways to diversify and expand the revenue available to underwrite improvements that must be made. Gains do not come without costs. Expanded, more relevant, and higher-quality education will necessitate additional funding, most likely from private as well as public sources. Increase overall public investment in higher education to world benchmarks. Introduce a simple funding formula for allocating government funds to universities that is based on enrollments and perhaps one small performance variable. Experiment with competitive funds and performance incentives.

Pay more explicit attention to the relevance of higher education. Public and private institutions should reposition their higher education offerings to mediate the tension among the individual expectations of university students, labor market opportunities, and the human resource needs of national economic development objectives. Public–private partnerships and university–industry research collaboration could be usefully explored. Employ competitive funds to inject greater relevance into teaching and learning.

Establish reliable standards of quality within public and private higher education. Set up a credible quality assurance mechanism. Invest strongly in upgrading the qualifications of academic staff across the entire higher education system. Introduce career progression pathways to ensure that a teaching career in higher education becomes appealing and attracts talented people on a long-term basis. Seek excellence in a few academic programs of high relevance to economic priorities. Use competitive, merit-based admissions.

Invest significantly in information and communication technologies infrastructure that ties together regional populations, university students, institutions of higher education, research centers, and public service agencies into a national knowledge sharing, e-learning, and innovation network. Experiment with e-learning and develop appropriate local programs. Use computer-based instruction to deliver self-paced learning, problem-solving pedagogy, and global information resources.

Prepare, propose, and approve an umbrella higher education law that formalizes as many of the modifications suggested above as possible. Higher education legislation is conspicuously outdated in Bangladesh, Nepal, and Sri Lanka. Mechanisms for governance, management, financing, and quality assurance would benefit from reforms in all three countries.

Executive Summary

HIGHER EDUCATION IS A KEY NATIONAL ASSET FOR IMPROVING ECONOMIC COMPETITIVENESS

Knowledge has become the heart and soul of development in the 21st century. Knowledge fuels economic growth in the knowledge economy. Comparative advantages in national institutional capacities to access, assess, adapt, and adopt knowledge now drive the innovation that leads to productivity gains and economic growth. Growth is no longer based primarily on comparative advantages in labor or natural resources. Today, the knowledge economy and the information society are the basis for future development. In this arena, higher education is widely recognized as a key national asset that improves competitiveness.

For this reason, governments are placing greater emphasis on investments in higher education. The reasons for this are compelling. First, evidence affirms that countries that invest heavily in higher education benefit economically and socially. Second, econometric tests show a causal relationship linking the level of knowledge accumulation to future economic growth. Third, quality higher education is essential for economies that want to move up the value chain in their production processes. Fourth, recent successes in expanding primary and secondary education enrollments are fueling a rising demand for access to postsecondary opportunities. Fifth, Organisation for Economic Co-operation and Development (OECD) countries provide considerable evidence that research and development performed by universities and the public sector has a positive effect on overall productivity and growth. Sixth, quality higher education produces better primary and secondary school teachers, thereby contributing to the quality of the education system and ultimately to excellence in higher education, which in turn generates a more highly skilled labor force.

In this context, the question currently confronting policy makers is not so much whether to invest in higher education, but rather how best to invest, how much to invest, and how to finance these investments. Unfortunately, many developing countries approach this challenge from a disadvantaged position, given that higher education was underappreciated and underfunded for almost 2 decades due to strong government and donor emphases on basic education.

In the global competition for excellence in higher education, current development strategies often include institutional diversification; science and technology promotion; research capacity-building; expansion of the use of information and communication technology (ICT) for teaching, learning, and management; lifelong learning; and public–private partnerships. Financing strategies tend to focus on private provision; identifying sustainable levels for tuition fees; various financial cost-sharing mechanisms such as student loans, income-contingent loans, and education bonds; institutional income generation; earmarked taxes; and sports lottery earnings. Many of these topics are explored in this report from a South Asian perspective, with special attention to Bangladesh, Nepal, and Sri Lanka.

SOUTH ASIAN ECONOMIES LACK VITAL ELEMENTS FOR