1. The Growing Trade in Education Goods and Services Stephen P. Heyneman Vice President, International Operations Global Resources Division Frontline Group 1729 King Street, Suite 200 Alexandria, Virginia 22314 Tel: (703) 684-8400 Fax: (703) 684-9489 Email: sh@imd-net.com Presented to the Symposium on The World Education Market Vancouver, British Columbia May 24-27, 2000

2. 2 Presentation Outline zWhat does the commercial education goods and services sector look like? zWhat do we know about markets? yWithin the U.S. yWithin OECD countries yWithin middle and low income countries zWhat can we predict about the future of international trade? yDrivers of change yIllustration: Testing and Assessment yDebate over the morality of educational trade zSummary zWhat does the commercial education goods and services sector look like? zWhat do we know about markets? yWithin the U.S. yWithin OECD countries yWithin middle and low income countries zWhat can we predict about the future of international trade? yDrivers of change yIllustration: Testing and Assessment yDebate over the morality of educational trade zSummary

3. 3 Textbooks Teaching materials Supplemental Materials Vocational/Scientific Equipment Educational Software Videos/Multimedia School Supplies Goods Testing Certification Test Preparation After school programs Tutoring Consulting Services Elementary and Secondary Education Post-secondary Education Distributed Learning Corporate Training and Adult Learning Technology-based Training Early Education and Child Care Adult Education/Continuing Education Special Education Markets Corporations Individual Consumers Schools

4. 4 What does the Sector Look Like in OECD Countries? zLarge growth expected in particular arenas zExamples yProducts: textbooks and educational software yServices: testing and evaluation zWide variation in spending/pupil

5. 5 Variation in Student Non-Salary Expenditures within OECD Countries

6. 6 Consumer Market for Home Computers #s of Units

7. 7 Education Software Market for Schools & Private Consumers Source: IDC Financial Times $U.S. in millions

8. 8 What does the Sector look like in Low and Middle Income Countries? zFour out of five of the worlds students zLower spending/student zHigher educational spending associated with economic growth zStrong potential markets in specific regions and countries zFour out of five of the worlds students zLower spending/student zHigher educational spending associated with economic growth zStrong potential markets in specific regions and countries

9. 9 Distribution of Elementary and Secondary School Students* *World Total = one billion children enrolled of the 1.5 billion in the 5-18 age group By Category of Economic Development EnrollmentAge Group

10. 10 Distribution of Elementary and Secondary School Students* *World Total = one billion children enrolled of the 1.5 billion in the 5-18 age group By Region EnrollmentAge Group

11. 11 Low Spending on Teaching Materials/Student $U.S.

12. 12 Low Spending Does not Mean Small Markets Source: UNESCO Statistical Yearbook, 1998

13. 13 As economies grow, more is spent on goods and services per student

14. 14 Markets for Teaching Materials in Ten Years* * Assuming 3% economic growth; UNDP projected populations growth rates; 1:1 ration of economic growth and expenditures on teaching materials

15. 15 Large Growth of Education Expenditures in Certain Regions Source: UNESCO Statistical Yearbook, 1998

16. 16 Focus on Qualifications Testing and Assessments Driver Illustration Technology change:Performance-based & CBT Globalization:Test validity using international labor markets Political Influence:Democracy brings accountability Consolidation:Britain Privatization:Netherlands Demographics:More types of tests for more people Trade:Technical assistance Use of copyrighted items Joint development of new instruments

17. 17 Issues for Private Investors zMarket appears significant zData are problematic zMarkets are fragmented zExperience in developing countries is limited zRegulatory environments may distort markets zPublic authorities need to hear why the commercial provision of goods and services is beneficial for education zMarket appears significant zData are problematic zMarkets are fragmented zExperience in developing countries is limited zRegulatory environments may distort markets zPublic authorities need to hear why the commercial provision of goods and services is beneficial for education