The Oxford Symposium 2014: ‘BRICs and the Quality gap – how to overcome it’

The Oxford Symposium 2014: ‘BRICs and the Quality gap – how to overcome it’ Rehan A. Khan Managing Director, Abbott India Limited 29th August 2014

Executive Summary BRIC economies are important globally: • BRICs will contribute 37% of global growth in 2011-16, increasing their share of global economic output from 19% to 23% • Developed nations critically depend on manpower from BRICs in sectors such as IT However, there exists a gap in quality of higher education in BRICs: • Only 2 BRIC universities in Top 100 of the 2011-12 Times Higher Education Rankings • Gross Enrolment Ratio for higher education in Brazil, India, China <34% while in US >80% • Fewer number of articles/1000 inhabitants: <0.2 for BRICs while >1.1 for US and UK This quality gap can be overcome by using 3 key levers effectively: • Policy: ensure growth across both, ‘elite’ and ‘mass’ educational institutions • Ecosystem: build higher educational infrastructure, strengthen linkage with industry and invest in cutting edge research • Technology:use technological innovations to improve access to higher education 1 2 3

BRICs are important globally BRICs will contribute 37% of global growth in 2011-16: this will increase their share of global economic output from 19% to 23%1 BRICs make up nearly 40% of world population with a rising middle class that has an increased purchasing power2 At Abbott Labs, we see emerging markets such as BRICs, contribute to 40% of our sales: we expect that to grow to nearly 50% by 2015 • 1The BRICs: propping up the global economy, International Business Report 2012, Grant Thornton • 2 CIA World Fact Book

However, there exists a gap in quality of higher education in BRICs In scientific publishing (2011), India has the lowest no. of articles/1000 inhabitants1 In terms of Relative citation index (2008-10), BRIC nations score below 911 1.57 141 137 1.14 91 69 65 51 0.20 0.18 0.12 0.04 • Only 2 universities (Peking and Tsinghua universities in China) in the top 100 from BRICs in the Times Higher Education Rankings in 2011-12 • US had 51 and UK 12 in the top 100 respectively • The Higher education Gross Enrolment Ratio in Brazil, India and China was below 30% while it was 83% for the US and 57% and for UK2 • 1A Norwegian perspective on higher education in the BRICS countries; University of Oslo, 5 Dec 2013 • 2 UNESCO Global Education Digest 2010: Comparing Education Statistics Across the World. Data from 2008 (India 2007)

This quality gap is due to 3 reasons: shortage of quality faculty, lack of adequate funding and insufficient R&D Harvard Business School IIM Ahmedabad Global Ranking (FT 2014) 1 30 Shortage of quality faculty $40,000 Average faculty salary $200,000 5x 1 Total Faculty 90 265 3x Lack of adequate funding Endowment size $3 Billion $3 Million 1000x 2 $16,000 Student fees per year $60,000 4x Primary sources of funding Government Fees, Endowment, Industry Insufficient Research and Development <$1 Mn Spend on Faculty Research ~$110 Mn 100x 3 Global Ranking in Research (FT 2014) 1 97 • Note: $1 = INR 50; Source: Google

This quality gap can be overcome by using 3 key levers • Build higher educational infrastructure and invest in cutting edge research • Ensure growth across both, ‘elite’ and ‘mass’ educational institutions Ecosystem Policy Technology • Use technological innovations to improve access to higher education

BRICs spend less on higher education publicly and have a wide quality gap between elite and mass institutions Public expenditure on higher education1 • BRICs have focused on improving quality in only few elite institutions, resulting in a wide quality gap with mass institutions • Underlying assumption is that few high quality graduates are sufficient for economic growth % of GDP 2.6 1.3 0.9 • A Stanford research study2 found that BRICs focus on investing in elite colleges whereas majority students attend mass colleges • In 2009, 85% of total undergraduates in China and 96% in India matriculated from mass institutions 0.7 0.6 0.5 • BRICs have moved from a free or subsidized public education model to a higher fee-based public and private systems • 1 World Bank statistics on Higher Education • 2 University Expansion in a Changing Global Economy: Triumph of the BRICS?; Stanford University Press; Martin Carnoy et al

In India, this quality gap between elite and mass institutions will have significant adverse impact in the long run • ~500,000 students appear for ~10,000 seats in the IITs of which 50%2 go abroad for further studies • IIT alumni rank in the top 10 for starting new companies globally IITs are renowned globally • India has the 3rdlargest education system in the world but majority is medium-low quality 600universities 35,000colleges 68%universities 73%colleges • Medium or Low quality1 Alumni founded companies receiving VC funding since 2010 • Academically bright students get admitted to subsidized institutions that are of high quality, such as the Indian Institutes of Technology (IITs) • Majority of remaining students join lower quality institutions that have higher fees, especially in technical and professional education • With a severe shortage of quality higher education institutions, India now faces the challenge of educating nearly 30% of its 1.1 billion population • Higher education policy needs be used as a lever by BRICs to ensure equitable access to quality higher education • 1 Research by Christ University , Bangalore, India and The Indian Express Group • 2 Toward World-Class Status? The IIT System and IIT Bombay; N Jayaram • 3 Source: Pitchbook

BRICs suffer from poor institutional infrastructure in higher education High student faculty ratios (India at 23:1, Brazil at 17:1 while US at 13:1) 1 BRIC higher educational infrastructure does not allow imparting quality education Disproportionately high % of students studying Science and Engineering (>35% in India vs. <20% in US) 2 Lack of innovative teaching delivery methods that leverage technology and peer-to-peer learning 3 Limited or low financial support infrastructure 4 Lack of international faculty, students and partnerships 5 • Source: • 1. UNESCO Global Education Digest 2010: Comparing Education Statistics Across the World. Data from 2008 (India 2007) • 2. UGC; “Humanities or STEM? Looking at the Most Popular Majors for US Students”, Jan 11, 2012, Joshua Wright • 3. EY Report – 40 million by 2020: Preparing for a new paradigm in Indian Higher Education, 2009

‘University-Industry’ ecosystems in developed economies have created game changing innovations University-Industry systems have pushed research and innovation, fuelled by industry backed investment and influx of intellectual resource from universities • ‘Silicon Valley’ is a Technology ecosystem in California • Stanford, U C Berkeley and Cal Tech have promoted cutting edge research • Revolutionary technology firms such as Facebook, Google, Yahoo and Cisco were built here • Cambridge, UK has a Biotech ecosystem • University of Cambridge has promoted rapid scientific research by setting up infrastructure & attracting investors • Over 100 Biotech and Pharma majors are based in science parks at St John’s College, Trinity College and surrounding areas

The Boston-Cambridge area in Massachusetts has a robust Biomedicine ecosystem Hospitals Universities Research Institutions Skilled human capital ScientistsDrug developers Entrepreneurs Students Funding Biomedicine startups Big Pharma Large Biotech Healthcare IT

BRICs need quality higher educational infrastructure: Indian School of Business (ISB) is one such example in India • ISB started with a vision to be an internationally top-ranked, research-driven, independent management institution, that grooms leaders for India and the world • McKinsey designed the strategy and brought together leading corporate leaders and academicians as founders, faculty and potential recruiters 2014 1996 • Quality global faculty Ranked at 30thin the Financial Times Global MBA Rankings for 2014 • Over 100 visiting faculty each year from leading universities across the world û Leading corporates across Banking, Consulting and Technology are recruiters 5200 Alumni 32 Countries • Alumni network Diverse Distinctive Fast Growing • Source: ISB Website

Ashoka University is another example of quality higher educational infrastructure that is developing in India Academic flexibility: students can pursue multidisciplinary programs such as Computer Science & Entrepreneurship or Economics & Finance Needs-blind: allows better access to quality higher education for meritorious but financially challenged students • Fellows from Ashoka University’s Flagship program, Young India Fellowship, have started their own ventures, work in leading corporates such as McKinsey and Abbott, and study in leading universities such as Oxford and Stanford • Ashoka University is a not-for-profit that provides Liberal Arts and Sciences education in India • It has been founded by successful Indian entrepreneurs, industrialists and academicians • It has tie-ups with leading global universities such as University of Pennsylvania, University of Michigan and Sciences Po • “We are aspiring to be world class and we will • do everything to make that happen”. – Co-founder, DrPramathSinha (ex Partner, McKinsey and Founding Dean, ISB) • Source: AshokaUniv Website

Access to quality higher education is a serious issue in BRICs; technology is the only cost effective solution In BRICs, significant population lives in areas with poor connectivity and finding access to quality higher education is challenging However, with increasing internet penetration (~30% by 2015), Massive Open Online Courses (MOOCs) is an innovative way to combat this issue of access MOOCs allow people an option of quality learning online from professors in leading universities across the world at a very nominal cost The largest MOOC providers – Coursera, Udemy, Udacity, and EdX – offer free tuition, supplied by universities, to hundreds of thousands of students at a time • Source: Financial Times, Moocs growth? Head for India, Nov 15, 2013

EdX was one of the first MOOC platforms and is governed by MIT and Harvard • How it works Variety Learning Flexibility Peer-to-peer • Expand access to education for everyone • Enhance teaching and learning on campus and online • Advance teaching and learning through research Courses with flexible schedules that can be taken on the go Learning through tools, videos and game-like labs such as the ‘3D virtual molecule builder’. Subjects such as Science, Art and Technology, from leading professors worldwide Social learning from peers around the world • edX has 3 goals • Courses and Faculty 200+ 400+ 100,000+ courses in many areas of study, including humanities, math, computer science, physics faculty and staff teaching courses and discussing topics online certificates proudly earned by edX students • Source: EdX website

MOOCs have become popular in emerging markets such as India • Emerging markets with a young aspirational population and growing internet penetration are a real market for MOOCs • In nations with few high quality colleges, the opportunity to learn from a Harvard professor is immense • For example, unique visitor numbers increased between May and August in 2013 by 5% in India Majority of Indian visitors to MOOC websites are young Total unique Visitors, By Country, By Age Group, July 2013 ~50% US visitors are under 34, with 27% of its population that age ~80% India visitors are under 34, with 35% of its population that age 0.8 Million 0.23 Million Total= 1 Million 100% Age 65+ Age 45-54 Total Unique Visitors growth Age 55-64 Age 35-44 80% Age 45-54 > 150% Age 25-34 Age 35-44 60% 101-150% 40% 51-100% Age 25-34 Age 15-24 0-50% 20% Age 18-24 <0% Age 13-17 0% US India • Source: The Parthenon Group

However, MOOCs need to overcome language and employability barriers to become successful A limiting factor for MOOCs is language as MOOCs are currently primarily in English and therefore, more accessible to India’s population than other BRICs Another limiting factor is that employers currently don’t recognize MOOC as a relevant degree for employability MOOC platforms will have to examine students and that could involve investment in physical centers in foreign lands With translation into Portuguese or Mandarin, MOOCs market could explode in other BRICs • Source: Financial Times, Moocs growth? Head for India, Nov 15, 2013

1 • Could Oxford setup satellite campuses in BRICs? • Could Oxford partner with BRIC universities where part education is completed at Oxford? 2 3 • Could Oxford share its leading faculty with more BRIC universities? What is the way forward? The quality gap in higher education in BRICs can be improved by : • Policy: ensure growth across both, ‘elite’ and ‘mass’ educational institutions • Ecosystem:build higher educational infrastructure, strengthen linkage with industry and invest in cutting edge research • Technology: use technological innovations, such as MOOCs, to improve access to higher education So, what can Oxford do to help?

Rehan.Khan@abbott.com Rehan Abbas Khan FirstPenguin1

The Oxford Symposium 2014: ‘BRICs and the Quality gap – how to overcome it’