University and Regional Development in Korea

1. University and Regional Developmentin Korea Bong Gun Chung Ministry of Education & HRD, Korea Presentation at World Bank BBL December 18, 2003

2. My Story Goes : What is the Problem? Regional Balance As A National Agenda Three Reform Laws for Balanced Development Some Features of Higher Education in Korea Government Policies for Higher Education Problems of Local Colleges & University Strategy of Univ. Industry Research Cooperation Further Issues and Problems Concluding Remarks

3. Description of the Problem : Shooting the Two Runaway Rabbits  The disparity between Large Capital Area and local cities and provinces are exacerbated.  The problems of local universities, for instance, low quality and lack of students, are compounded by the enlarging disparity between Center and Local. • However, local universities are requested by the government to solve the problem of enlarging disparity by becoming key players for regional innovation system. • Is it possible that the faltering local universities could solve the worsening problems of the local community?

4. Regional Balance for Competitiveness Backdrop of Problem Identification The regional balance issue was chosen as one of the pivotal campaign pledges of President Roh. - The inefficiency of concentration in LCA reaches critical point. - Investment in local area will be profitable in the long run. The powerful Presidential Commission for A Balanced National Development was launched in March 2003. - Local industries combined with the knowledge and skill base of neighboring colleges and universities should be the engine for regional development. - The Commission has designed Regional Innovation System.

5. Disparity between Center&Local % GRDP As of 2001, GRDP of Large Capital Area comprised 47.1% of the total. The GRDP of LCA showed a temporary decrease in mid 1990s, reversed afterward. As of 2001, the local tax revenue of Large Capital Area comprised 58.7% of total. In this regard, the financial independence level of LCA was 84.1%, compared to the national average of 62.9%.

6. Concentration of Population& Wealthin LCA population GRDP MoIR, 2003

7. Concentrated R&D Funds/Manpower R&D public R&D univ R&D private As of 2001, 62.7% of funds, 58.6% of manpower, and 66.7% of R&D institutions are located in Large Capital Area. 67% of university related R&D institutions and 60.1% of students are outside of the LCA, but funds and quality of manpower are not sufficient. MoIR, 2003

8. The Debate on Concentration Effect The concentration of population and industry in the LCA increases the national wealth,while the efficiency of the investment is higher than that of the non-LCA The concentration of population causes the diseconomy of urbanization and localization. There are economy of urbanization and localization, however, it has been decreasing. - The Localized Economy Index of 1982 as 1 decreased to 0.789 in 2001. (Reversed Cost Elasticity to no. of Employed) - The Urbanized Economy Index of 1982 as 1 decreased to 0.759 in 2001. (Reversed Cost Elasticity to Population.)

9. Effects of Brain Drain from Local Concentration in Large Seoul Area (One quarter of Population) Transportation Crime pollution Urbanization Cost Investment concentration Concentration of Power elites Disparity Conflict resource misallocation Weak National competitiveness Hegemony of Universities In LSA Brain drain From local Low real estate price Growing Dependency Weak Local industry Weak Local market Drain of Population capital Chanseok Park, 2003.

10. 3 Laws for A Balanced Development The three presidential commissions for regional development have proposed laws that are titled as “The Ad Hoc Laws for Happiness of Korea.” • The Ad Hoc Law of National Balanced Development • - Regional Councils and Special Budget Account for RIS • The Ad Hoc Law of Decentralization • - extensive delegation of powers of the central government • The Ad Hoc Law for Construction of New Capital • - new Capital at the geographical center of the ROK

11. Scheme for A Balanced Development Balanced Development Goal Developing Poor regions Speciali zation Local univ RHRD Spread Institutions Core Projects Master Plans of 5 Year Balanced Development 5 year Plan Special Budget Account Coordination of Funds Nat’l Council for Balanced Development Regional Council for Innovation Funds& Admin. The ad hoc Law for Balanced Development

12. Scheme for Regional Development NIS: Central Gov’t Venture&New Businesses RIS Upgrade to innovate Knowledge&skill Improvement of Businesses Local Univ. Local Gov’t UIR Upgrade to produce Human Resources Regional Development Local Industries univ. industry research cooperation the key element of RIS Self-sustained Localization

13. Higher Education and Community Higher Education Region skill teaching innovation research service Culture, community OECD (1999) The Response of Higher Educational Institutions to Regional Needs, p.11

14. Some Features of Higher Education in Korea • Rapid Expansion, particularly since 80’s • Heavily dependent on private resources • Low level of investment in faculty and facilities • Hierarchy among colleges and universities

15. Rapid Expansion 2000 Total Tertiary Enrollments 1600 600 500 1200 Entrants (1,000) 400 Total Enrollments (1,000) Entrants Total 800 300 200 Univ. 400 100 200 Jr. College 0 0 1990 1967 1971 1975 1981 1985 1995 From Chun Shik Woo, 2002

16. Increase in Enrollment Rapid increase since 1990 in colleges and universities 2000 2000 Korea: Statistical Yearbook of Education, each year USA: Digest of Education Statistics 2001, NCES, Table 185 Japan: White Paper, MEXT, Heisei 13th year

17. Reasons for the Rapid Expansion High Rate of Return in Socioeconomic, Cultural, and Psychological Terms Demand on college graduates accompanied by economic growth  Changes in the Control Policy of the Government - The 1981 Graduation Quota System with 130 percent Admission - The 1994 Ease of Control on New Establishment based on the principle of free entry to market

18. Private Universities in Korean H.E. Large share of Private Universities Source: KEDI, MoE&HRD, Statistical Yearbook of Education, 2003, p. 604

19. Relative Proportions of Public&Private Expenditure on Tertiary Education EAG, 2003, OECD, p. 220

20. Expenditure for Higher Education An international comparison % of GDP, 2000 OECD, EAG 2003, p.208

21. Sources of finance for H.E. Dependent on tuition & fees

22. Number of Students per Professor Year 2002 Jinwha Chung, KIET, 2003

23. Number of Pupils per Teacher Year 1999 Hyunsook Yu, KEDI, 2001, p.17

24. Competitiveness of Korean H.E. Competitiveness of higher education World Competitiveness Yearbook, each year, IMD Transfer of knowledge between univ and industries World Competitiveness Yearbook, each year, IMD

25. SWOT Analysis of H.E. in Korea Strength Opportunity Government support Knowledge based econ Lifelong learning era High level of enrollment R&D capacity potent Weakness Threats Environment Lack of specialization Evaluation system Government control Isolated from Industry Recruitment crisis Pressure to open market

26. Government Policy for H.E. Quality Control Practices by per-student Indices - The approval of new establishment is usually made when the criteria of land, building, and faculty are met. Control of Enrollment Quota - The Ministry of Construction and Transportation, not the MoE&HRD is authorized to approve the increase of the colleges and universities in LCA. Provision of Financial Resources - Various types of earmarked budgets are provided by different government ministries to induce changes and reforms in universities. Specialization of Schools - The MoE&HRD has been trying to introduce the specialization of colleges and universities such as research, education, and vocational training.

27. Quality Control by Indices The minimum criteria for establishing univ. In order to secure the financial stability of schools, all private universities are mandated to possess the property for profit that is equal to the total amount of the annual revenue.

28. Comparison of Increase in Schools Educational Statistics, KEDI, 1981, 2002 For the purpose of population control the increase of universities in LCA is half of those in the local area.

29. Financial Resources for H.E. MoE&HRD Operation&capital For public univ Unit: trillion Korean Won, 2000 1.3 Facilities Equipment Research fund etc 2.4 Operation Capital Research funds etc General purpose 2.5 1.1 Special purpose Brain Korea 21 Engineering Int’l manpower Education reform etc Gov’t Gov’t total 3.3 Other ministries Operation&capital For public univ 0.34 3.3 Basic science Model univ Research ctr Science Res Ctr Engineering RC Regional RC Specialized Res Techno Park Tech Incubator Ctr New tech venture Heath/Medicine R etc Gov’t R&D fund 0.9 MoIC 0.8 Research funds etc MoST Outer- Univ. fund MoIR 0.53 MoAF 1.1 Source: Hyunsook Yu, KEDI, 2001 MoHS MoL 0.3 0.1 Private sector Private fund In-Univ fund In-Univ.

30. Specialization of Colleges&Universities High level professional Medium level professional Field technician Bottom Up allocation 2,637 (31%) 3,965 (46%) 1,980 (23%) 3,150 (37%) Local univ RIS Local voc college specialization Univ Industry Res Cooperation Brain Korea 21 Project 5,432 (63%) Scholarship for engineering /science student Voc coll tailored curriculum Top down allocation basics Specialization LCA univ Voc coll in LCA specialization Local Brain Korea 21 Unit : 0.1 bil Korean Won, 2004

31. Specialization of schools Specialization that schools want to be in future Survey from 107 engineering colleges, including 11 polytechs KIET, 2002 (from Jung Jin Wha, 2003)

32. Current State of Local Universities Problems Wide Spread Unpopularity - As of 1999, 62.5 percent of the top 5 percent of Korean SAT enter the universities in LCA of which accommodation ratio to the total is 32.5 percent. Increasing Vacancy - The under-recruitment of LCA schools is 1.5% compared to that of 7.5 in local areas.Increasing numbers of local universities are losing students. Low Level of Employment Rate - In mid 90’s the employment ratio of LCA schools was 70.9% compared to 57.0%. After the foreign currency crisis, they were 60.8% and 56.0%.

33. Current State of Local Universities Causes of the Problem • Socioeconomic Gap between LCA and Locals Enlarged • Concentration of Decent Jobs in LCA • Top Down Fragmented Projects by Central Government • Lack of Leadership in Regions for Univ. and Industry • Low Investment in Local Colleges and Universities • Easy Approval of Establishment of Universities

34. Shooting the Two Rabbits Reinforcing Univ. Industry Research Cooperation • Customer Oriented Education & Training • R&D for Production Technology Innovation • Technology Transfer and Advice to Firms • Assistance to Incubate New Businesses Successful UIRC brings in regional development

35. Univ. Industry Research Cooperation Diagnosis of Problems Insulation between Univ. and Industries - Univ. : academicism and supplier centeredness - Industry : distrust on the competency of univ. Problems in Funding System and Practice - insufficient amount with irregularity - coordination among different funding sources - researcher’s needs rather than those of industries - equipment for research rather than manufacturing

36. Problems of C&I in Engineering College

37. Complaints by Firms on Univ Education 75% Creativity education 87% Practice&field education 72% Curriculum update 68% Field experience of faculty 70% Diverse instructions Federation of Korean Industries, 2002. 12

38. Univ. Industry Research Cooperation Factors for Success from Case Studies Geography - Universities that are located inside industrial complex - Campuses that are clusterized for industries Equipped with High Quality Facilities - Attractive to neighboring industries to participate Openness of the Universities - Exchange of personnel between univ and industries - Curriculum tailored to the needs of industries - Emphasis on the technology that industries demand

39. Highlights of New UIR Cooperation Fostering UIR-centered Universities - select & concentrate on 10 Hub Universities for UIR School Enterprise in Public Universities - sales of the goods and services produced in classes Campus Head Quarter for UIR Cooperation - control all UIR related activities, programs, funds Reward System for Professors - favors in faculty evaluation, Patent fees Curriculum Development by Business Requests - specialized departments and courses

40. Issues and Problems Survival of the Fittest Funds are concentrated to selected local universities. How many weak ones should perish? Ironically, balanced development causes inequality. Insufficient Resources The budget increase for local universities are incremental, so that the funds should be concentrated rather than spread to more AMAP. Inefficient Coordination at Center & Local The Ministries insist on funding of their own respective programs at schools. Waste and duplication are likely at the center and local.

41. Issues and Problems Reverse Discrimination to LCA The schools in Large Seoul Area are disadvantaged due to the special support to the local ones as the total amount of funds are limited. Hegemony Conflicts in Local Community Deans, presidents, mayors, governors will compete for RIS leadership Insufficient incentives for firms to participate The policy measures for UIRC are tilted to univ compared to individual firms to take part in the cooperative relationship.

42. Issues and Problems • Value conflict in reinforcing UIRC • Job stability of faculty unfavorable to UIRC The job stability and the inflexible labor market of Korean professors are likely to be unfavorable to UIRC as they are not motivated to seek for out-bounding activities.

43. Some Facts about UIRC What companies benefit from UIRC MoE&HRD, 2003 How companies enter UIRC % MoIR, 2003

44. Concluding Remarks Policy makers should always keep in mind that : “Isn’t UIRC Panacea to the complicated problems of the deteriorating local universities and the disparity between center and local?” What should you do if it shouldn’t be one?

45. Thank you!