Indicator C2. What proportion of national output is spent on educational institutions?
In 2020, OECD countries spent an average of 5.1% of their gross domestic product (GDP) on primary to tertiary educational institutions. Upper secondary general programmes received 0.6% of GDP, and vocational ones 0.5% of GDP on average. Belgium spent the largest share of its output on vocational programmes at this level, at 1.0% of GDP, but it includes spending from post-secondary non-tertiary education.
Upper secondary vocational programmes receive between 3% (Australia) and 17% (Belgium, the Czech Republic and the Netherlands) of all funding for primary to tertiary educational institutions. Post-secondary non-tertiary programmes, which are often vocational, receive as much as 7% of funding (in Ireland) and short-cycle tertiary as much as 10% (in Canada).
Average government expenditure on education across OECD countries grew by over 65% between 2000 and 2020, while GDP increased at a lower pace (by 59%). In the same period, the number of full-time equivalent students decreased by 5%.
Context
Countries invest in education to help foster economic growth, enhance productivity, contribute to personal and social development, and reduce social inequality, among other reasons. The level of expenditure on educational institutions is affected by the size of a country’s school-age population, enrolment rates, the levels of teachers’ salaries and the organisation of education systems. At primary and lower secondary levels (which correspond broadly to the population aged 6 to 14), enrolment rates are close to 100% in most OECD countries. Changes in the number of students are therefore closely related to demographic changes. This is less the case in upper secondary and tertiary education, when part of the relevant population will have left the education system (see Indicator B1).
In order to account for these issues, this indicator measures the proportion of a nation’s output that is invested in educational institutions. This measure demonstrates the priority given to educational institutions relative to a country’s overall resources. National output is based on GDP, while expenditure on educational institutions includes spending by governments, enterprises, and individual students and their families. This indicator covers expenditure on schools, universities (including on research and development), and other public and private institutions involved in delivering or supporting educational services.
Public budgets are heavily scrutinised by governments and during economic downturns even core sectors like education can be subject to budget cuts. This indicator provides a point of reference, by showing how the volume of funding for educational institutions, relative to national GDP, has evolved over time in OECD countries. In deciding how much to allocate to educational institutions, governments must balance demands for increased funding in areas such as teachers’ salaries and educational facilities with other areas of investment.
Other findings
Between 2019 and 2020, on average across OECD countries, funding for educational institutions from all sources increased by 1.0% at primary and lower secondary levels, by 0.5% at upper secondary and post-secondary non-tertiary level and by 0.3% at tertiary level. The sharpest increases were by 10% or more in Colombia and Lithuania at primary level, 19% in Poland at lower secondary level, 14% in Ireland at upper secondary non-tertiary level and 15% in Lithuania at tertiary level.
Between 2020 and 2021, expenditure on educational institutions increased in most countries with available provisional data and as much as 8% in Slovenia.
In OECD countries, total expenditure per student on educational institutions from primary to tertiary levels averaged 27% of annual GDP per capita in 2020.
On average, after transfers to the private sector, government expenditure on primary to tertiary educational institutions amounts to 4.3% of GDP, while the private sector contributes 0.8% of GDP and non-domestic (international) sources about 0.1% of GDP. Government transfers to the private sector correspond to about 0.2% of GDP on average across OECD countries.
Overall investment relative to GDP
All OECD member and partner countries devote a large share of national financial resources to educational institutions. In 2020, OECD countries spent on average 5.1% of their GDP on educational institutions from primary to tertiary levels (Table C2.1). Expenditure on primary to tertiary educational institutions ranges from 6.6% of GDP or more in Colombia and Norway to 3.4% or less in Ireland, Luxembourg and Romania. Many factors influence countries’ relative expenditure on this measure, including the number of students enrolled, the duration of studies and the effective allocation of funds. Funding also depends on the field of study and programme orientation.
Expenditure on educational institutions by level of education
On average, OECD countries allocate 2.0% of GDP to funding for secondary education. This is much more than is devoted to primary and tertiary education, which account for an average of 1.5% of GDP each (Table C2.1). In 2020, Belgium, Colombia and France devoted 2.6% or more of their GDP to secondary education, the largest share across OECD countries, whereas Canada, Croatia and Ireland devoted 1.3% or less of their GDP to this level of education.
Education funding at upper secondary level may be influenced by programme orientation. On average across OECD countries with available data, a similar share of national resources is spent on general and vocational programmes: 0.6% of GDP on general upper secondary education and 0.5% of GDP on vocational (Figure C2.1). However, this hides large cross-country differences. Chile, New Zealand and the United Kingdom allocate a much larger share to general programmes than to vocational ones, while the opposite is the case in the Czech Republic, Finland and the Netherlands. Such differences are sometimes due to the characteristics of the programmes. For example, Finland’s figures for upper secondary vocational programmes also include some funding for post-secondary non-tertiary education, while in Chile the first two years of upper secondary education consists of general programmes for all students, with students only deciding between general and vocational tracks for the final two years. In Poland vocational programmes at upper secondary level receive more funding than general ones because their theoretical duration is one year longer.
Funding for upper secondary vocational programmes ranges between 3% of all funding for primary to tertiary educational institutions (in Australia) and 17% (in Belgium, the Czech Republic and the Netherlands). A few countries also dedicate resources to post-secondary programmes that are most often – but not exclusively – vocational in nature: Ireland, for example, allocates 7% of education expenditure to post-secondary non-tertiary programmes and Canada devotes 10% of education expenditure to short-cycle tertiary programmes (Figure C2.2).
The share of national resources devoted to educational institutions also reflects the duration and relative size of various programmes. These figures vary widely between countries and depend on the demographic structure of the population (see Indicator C1 for the analysis of expenditure per student by level of education): countries which have experienced relatively low fertility rates in recent decades are more likely to spend a smaller share of their wealth on primary and lower secondary education, because of reduced demand for education at those levels, competing spending priorities and reduced economic incentives to invest in education (Pritchett and Viarengo, 2015[2]). Some countries’ tertiary education systems have lower enrolment rates either because students need fewer years of study to complete a programme or because they enrol abroad. On average across OECD countries, 3.6% of GDP – or 71% of total expenditure on educational institutions – is directed to non-tertiary levels while 1.5% of GDP – or 29% of expenditure – is allocated to tertiary levels (Figure C2.2).
Expenditure per student on educational institutions relative to GDP per capita
Expenditure on educational institutions per student relative to GDP per capita is a measure that compares levels of education funding to national income per person. Since access to education in most OECD countries is universal (and usually compulsory) at lower levels of schooling, the amount of funds available per student as a share of GDP per capita can indicate whether the resources per student are proportionate to a country’s ability to pay.
In OECD countries, total expenditure per student on educational institutions from primary to tertiary levels averaged 27% of annual GDP per capita in 2020. The share of per-capita GDP allocated to education expenditure ranges from less than 15% in Ireland to 33% in the United Kingdom, or 31% if expenditure on research and development is excluded (Table C2.5, available on line).
Countries with low levels of expenditure per student may still be investing relatively large amounts as a share of GDP per capita. For example, Portugal’s expenditure per student at most educational levels and its GDP per capita are both below the OECD average (see Indicator C1), but it spends a larger share of its GDP per capita on education than the OECD average.
Expenditure on educational institutions by source of funds
Governments remain the main source of educational funding in OECD countries. On average, government expenditure on educational institutions from primary to tertiary educational levels (after transfers to the private sector) amounts to 4.3% of GDP, while the private sector contributes 0.8% of GDP and non-domestic (international) sources about 0.1%. Private expenditure on education is supported by government transfers to households (such as scholarships and loans to students for tuition and other fees) and subsidies to other private entities (such as to private companies hosting apprenticeship programmes); the private sector as a whole receives the equivalent of 0.2% of GDP in transfers from government for education on average across OECD countries. Government transfers to the private sector account for 0.3% of GDP or more in Australia, Chile, Korea and New Zealand and reach 0.6% in the United Kingdom (Table C2.3).
Long-term trends in educational expenditure
Long-term trends show an overall increase in education expenditure over time: between 2000 and 2020, expenditure statistics reveal a slow increase in expenditure both as a share of GDP and per student, while the share of government expenditure dedicated to education was relatively stable at least up to 2019. Several factors have influenced the growth of education expenditure over time, including economic growth, demographic change, technological advances, policy reforms, and globalisation. Since 2000, average government expenditure on education in those countries with data for the entire time period grew by over 65% (after adjusting for inflation). Overall government expenditure on all services grew at a similar rate, while GDP increased at a slower pace (by 59%) and the number of full-time equivalent students fell by 5% (Figure C2.3).
The COVID-19 pandemic did not have major consequences for education expenditure on average across OECD countries. In 2020, spending on education continued to grow in line with the trend of previous years, even as GDP fell strongly and other government expenditure increased sharply to address the consequences of the pandemic (Figure C2.3).
Considering more recent periods, with wider data availability, total expenditure on primary to tertiary educational institutions grew most rapidly in Colombia, Hungary and the Republic of Türkiye (by 25% or more) during 2012-16 while in 2016-20 it grew fastest in Bulgaria, the Czech Republic, Romania and the Slovak Republic (Table C2.2). In all these countries, increases in government expenditure drove the overall increase in education funding (Table C2.4, available on line).
Expenditure on educational institutions from all sources has evolved differently across education levels and countries. Between 2012 and 2020, Bulgaria and Romania had highest growth rate in funding for non-tertiary educational institutions while Luxembourg had the fastest growth in funding for tertiary educational institutions. This also corresponds to changes in resourcing between education levels. For example, Luxembourg experienced much faster growth in tertiary expenditure (by 41% compared to 12% for non-tertiary institutions), whereas in Bulgaria, Colombia, the Czech Republic, Israel, the Slovak Republic and Romania it was expenditure on non-tertiary levels which increased strongly, by 40% or more. Meanwhile, funding for tertiary institutions either fell (in Colombia and the Czech Republic) or increased more slowly (by 35% in Bulgaria, 10% in Israel, 19% in Romania, and 22% in the Slovak Republic) (Table C2.2).
Recent changes in educational expenditure
Changes in education expenditure in 2020 were affected not just by the usual factors behind the allocation of government and private funding, such as economic growth and demographic change, but also by unforeseen events such as the recession linked to the COVID-19 pandemic. While GDP shrank by an average 2.4% in real terms across the OECD between 2019 and 2020, total expenditure on educational institutions increased by 1.0% at primary and lower secondary levels, 0.5% at upper secondary and post-secondary non-tertiary levels, and 0.3% at tertiary level (Figure C2.4).
Average growth rates mask large cross-country variations and shifts of resources between education levels within the same country. Changes in funding for primary institutions range from a fall of 13% in Poland between 2019 and 2020 to increases of 10% or more in Colombia and Lithuania. Lower secondary funding fell in a small number of countries (by 13% or more in Italy and Türkiye) but rose by 19% in Poland, the country with the sharpest increase. Expenditure changes on upper secondary and post-secondary non-tertiary educational institutions range from a fall of 11% in Estonia to an increase of 14% in Ireland. The range is even wider at tertiary level: from -17% in Mexico to 15% in Lithuania (Figure C2.4).
Finally, provisional figures for a smaller number of countries indicate that funding for primary to tertiary education increased slightly in 2021, while GDP rebounded after 2020. Expenditure increased in most countries and as much as 8% in Slovenia: increases and decreases in all countries were driven by changes in government expenditure on educational institutions and highlighted a lower growth rate than for GDP overall, except for New Zealand and Slovenia (Table C2.6, available on line).
Expenditure on educational institutions refers to government, private and international expenditure on entities that provide instructional services to individuals or education-related services to individuals and other educational institutions (schools, universities, and other public and private institutions).
Initial government spending includes both direct government expenditure on educational institutions and transfers to the private sector and excludes transfers from the international sector. Initial private spending includes tuition fees and other student or household payments to educational institutions, minus the portion of such payments offset by government subsidies. Initial non-domestic (international) spending includes both direct non-domestic expenditure for educational institutions (for example a research grant from a foreign corporation to a public university) and international transfers to governments.
Final government spending includes direct government purchases of educational resources and payments to educational institutions. Final private spending includes all direct expenditure on educational institutions (tuition fees and other private payments to educational institutions), whether partially covered by government subsidies or not. Private spending also includes expenditure by private companies on the work-based element of school- and work-based training of apprentices and students. Final non-domestic (international) spending includes direct non-domestic payments to educational institutions such as research grants or other funds from non-domestic sources paid directly to educational institutions.
Government transfers to households and other private entities for educational institutions include scholarships and other financial aid to students, plus certain subsidies to other private entities. Therefore, they are composed of government transfers and certain other payments to households, insofar as these translate into payments to educational institutions for educational services (for example fellowships, financial aid or student loans for tuition). They also include government transfers and some other payments (mainly subsidies) to other private entities, including subsidies to firms or labour organisations that operate apprenticeship programmes and interest subsidies to private financial institutions that provide student loans, etc.
Direct government expenditure on educational institutions can take the form of either purchases by the government agency itself of educational resources to be used by educational institutions or payments by the government agency to educational institutions that have responsibility for purchasing educational resources.
Direct private (from households and other private entities) expenditure on educational institutions includes tuition fees and other private payments to educational institutions, whether partially covered by government subsidies or not.
Expenditure on educational institutions as a percentage of GDP at a particular level of education is calculated by dividing total expenditure on educational institutions at that level by GDP. Expenditure and GDP values in national currency are converted into equivalent USD by dividing the national currency figure by the purchasing power parity (PPP) index for GDP. The PPP conversion factor is used because the market exchange rate is affected by many factors (interest rates, trade policies, expectations of economic growth, etc.) that have little to do with current relative domestic purchasing power in different OECD countries (see Annex 2 for further details).
Expenditure per student on educational institutions relative to GDP per capita is calculated by dividing expenditure per student on educational institutions (see Indicator C1) by GDP per capita. In cases where the educational expenditure data and the GDP data pertain to different reference periods, the expenditure data are adjusted to the same reference period as the GDP data, using inflation rates for the OECD country in question (see Annex 2).
All entities that provide funds for education are classified as either governmental (public) sources, non-governmental (private) sources or international sources, such as international agencies and other foreign sources. The figures presented here group together domestic government and non-domestic expenditure for display purposes. As the share of non-domestic expenditure is relatively small compared to other sources, its integration into government sources does not affect the analysis of the share of government funding.
Not all funding for instructional goods and services occurs within educational institutions. For example, families may purchase commercial textbooks and materials or seek private tutoring for their children outside educational institutions. At the tertiary level, students’ living expenses and foregone earnings can also account for a significant proportion of the costs of education. All expenditure outside educational institutions, even if publicly subsidised, is excluded from this indicator. Government subsidies for educational expenditure outside institutions are discussed in Indicator C4.
A portion of educational institutions’ budgets is related to ancillary services offered to students, including student welfare services (student meals, housing and transport). Part of the cost of these services is covered by fees collected from students and is included in the indicator.
Expenditure on educational institutions is calculated on a cash-accounting basis and, as such, represents a snapshot of expenditure in the reference year. Many countries operate a loan payment/repayment system at the tertiary level. While public loan payments are taken into account, loan repayments from private individuals are not, and so the private contribution to education costs may be under-represented.
For more information please see the OECD Handbook for Internationally Comparative Education Statistics 2018 (OECD, 2018[3]) and (OECD, 2023[1]), Education at a Glance 2023 Sources, Methodologies and Technical Notes, for country-specific notes.
Data refer to the financial year 2020 (unless otherwise specified) and are based on the UNESCO, OECD and Eurostat (UOE) data collection on education statistics administered by the OECD in 2022 (for details see (OECD, 2023[1]), Education at a Glance 2023 Sources, Methodologies and Technical Notes, Data from Argentina, China, India, Indonesia, Peru, Saudi Arabia and South Africa are from the UNESCO Institute of Statistics (UIS).
The data on expenditure for 2000 to 2021 were updated based on a survey in 2022-23 and adjusted to the methods and definitions used in the current UOE data collection. Provisional data on educational expenditure in 2021 are based on an ad-hoc data collection administered by the OECD and Eurostat in 2022.
References
[1] OECD (2023), Education at a Glance 2023 Sources, Methodologies and Technical Notes, OECD Publishing, Paris, https://doi.org/10.1787/d7f76adc-en.
[3] OECD (2018), OECD Handbook for Internationally Comparative Education Statistics 2018, OECD Publishing, Paris, https://doi.org/10.1787/9789264304444-en.
[2] Pritchett, L. and M. Viarengo (2015), “The State, Socialisation, and Private Schooling: When Will Governments Support Alternative Producers?”, The Journal of Development Studies, Vol. 51/7, pp. 784-807, https://doi.org/10.1080/00220388.2015.1034109.
Cut-off date for the data: 15 June 2023. Any updates on data can be found on line at: https://doi.org/10.1787/eag-data-en. More breakdowns can also be found at: http://stats.oecd.org, Education at a Glance Database.
Table C2.1. Total expenditure on educational institutions as a percentage of GDP (2020) |
|---|
Direct expenditure within educational institutions, by level of education |
 |
Note: : See StatLink and Box C2.1 for the notes related to this Table. |
Source: OECD/UIS/Eurostat (2023). For more information see Source section and Education at a Glance 2023 Sources, Methodologies and Technical Notes (OECD, 2023[1]). |
Table C2.2. Change in total expenditure on educational institutions and change in GDP (2012, 2016 and 2020) |
|---|
Final source of funds, index of change (2015=100, constant prices), by level of education |
 |
Note: : See StatLink and Box C2.1 for the notes related to this Table. |
Source: OECD/UIS/Eurostat (2023). For more information see Source section and Education at a Glance 2023 Sources, Methodologies and Technical Notes (OECD, 2023[1]). |
Table C2.3. Total expenditure on educational institutions as a percentage of GDP, by source of funds (2020) |
|---|
By level of education |
 |
Note: See StatLink and Box C2.1 for the notes related to this Table. |
Source: OECD/UIS/Eurostat (2023). For more information see Source section and Education at a Glance 2023 Sources, Methodologies and Technical Notes (OECD, 2023[1]). |
Table C2.1 Total expenditure on educational institutions as a percentage of GDP (2020)
1. Data on early childhood education and care and all ISCED levels combined are available on line (see StatLink).
2. Primary education includes pre-primary programmes.
3. Post-secondary non-tertiary figures are treated as negligible.
5. Upper secondary vocational programmes include lower secondary vocational programmes.
7. Data do not cover day care centres and integrated centres for early childhood education.
Table C2.2 Change in total expenditure on educational institutions and change in GDP (2012, 2016 and 2020)
1. Primary education includes pre-primary programmes.
Table C2.3 Total expenditure on educational institutions as a percentage of GDP, by source of funds (2020)
Some levels of education are included with others. Refer to "x" code in Table C2.1 for details.
1. Primary education includes pre-primary programmes.
4. Figures are for net student loans rather than gross, thereby underestimating public transfers.
For more information see Definitions, Methodology and Source sections and Education at a Glance 2023 Sources, Methodologies and Technical Notes (OECD, 2023[1]).
Data and more breakdowns are available in the Education at a Glance Database (http://stats.oecd.org/).
Please refer to the Reader's Guide for information concerning symbols for missing data and abbreviations.