Countries invest in educational institutions mostly because they expect to foster economic growth, productivity and development, among other reasons. However, they do not all invest the same amount. In OECD countries the preferences of public and private agents regarding the proportion of education expenditure relative to GDP are different. In Portugal, for all levels of education combined the expenditure on educational institutions as a percentage of GDP (from public and private sources) was 5,5 in 2005 and 5,8 in 2010, values that, albeit growing, are inferior to those of the OECD average, 5,8 in 2005 and 6,3 in 2010.
Analyzing the expenditure on educational institutions as a percentage of GDP for all levels of education by source of fund in 2010, we verify that private expenditures in Portugal were 0,4% and in OECD average they were 0,9%, and that public expenditures both in Portugal and OECD average correspond to 5,4% of GDP. As a result, the difference comes, mostly, from private expenditure. Notice also, the large public weight on education funding in OECD countries
In fact, many of the OECD countries with the greatest growth in private spending have also had the largest increases in public funding, denoting that private spending tends to complement public investment rather than replace it.
The demand for high-quality education has costs that must be balanced against other demands on public expenditure (health care, justice, social support…) and the overall revenues (mostly fiscal) in order to compensate de deficit originated, especially in the current international economic context.
Indicators such as the presented ones can be affected by financial crises. It is not possible yet to analyze the full extent of the impact of the recent crisis, but it is still interesting to look at the already available data, as the following picture, from “Education at a Glance 2013 – OECD”.
We can see that public expenditure on educational institutions increased while GDP decreased in most of these countries between 2008 and 2010. Nevertheless, when the changes between 2008-2009 and 2009-2010 are analyzed separately the picture is not so positive.
In the period 2008 to 2009, GDP decreased in most countries while public expenditure on educational institutions increased (4% – OECD average). Between 2009 and 2010, while GDP rose in most countries, public expenditure on educational institutions fell in one-third of OECD countries.
This reinforces the trend that the cuts in education budgets observed in one-third of countries in 2010 will also begin to appear in more OECD countries over the next years.
Once more than three-quarters of education expenditure in most countries comes from public sources, we could expect that the downturn in GDP growth would affect public spending on education, yet data show us that the education sector has been relatively protected from early budget cuts.
The effect of the financial crisis on education budgets is more evident in the OECD countries that had substantial budget deficits in 2010 and 2011 (such as Greece, Ireland, Portugal or Spain). In 2011-2012, cuts in education budgets of more than 5% were observed, for instance in Portugal.
Therefore, we cannot forget that these are still first-stage results of the recent economic crisis and that in the next years it is going to be possible to have a clearer and more complete image of these consequences.
Sara Simões #643