Tertiary education in Colombia : paving the way for reform

A W O R L D B A N K C O U N T R Y S T U D Y Tertiary Education in Colombia Paving the Way for Reform 26289 April 2003 _ --- t _~~~~~~~~~~~~~~~~~~~~~" i_q THE W ~ TH .XE WOL BAN   A W O R L D B A N K C O U N T R Y S T U D Y Tertiary Education in Colombia Paving the Way for Reform THE WORLD BANK Washington, D.C.  Copyright C 2003 The International Bank for Reconstruction and Development / The World Bank 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. All rights reserved Manufactured in the United States of America First printing: April 2003 1 2 3 4 05 04 03 World Bank Country Studies are among the many reports originally prepared for internal use as part of the continuing analysis by the Bank of the economic and related conditions of its develop- ing member countries and to facilitate its dialogues with the governments. 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All other queries on rights and licenses should be addressed to the World Bank at the address above, or faxed to 202-522-2422. ISBN: 0-8213-5466-3 eISBN: 0-8213-5467-1 ISSN: 0253-2123 Library of Congress Cataloging-in-Publication Data has been requested.  CONTENTS Abstract ...................... ix Preface ...................... xi Acknow ledgm ents ............................. .......................... . .x Abbreviations and Acronyms . ..................... xv Executive Snmmary . ..................... xvii 1. The Current Status of the Tertiary Education System in Colombia .1 The Students ........... 2 Characteristics of the Students .2 No Improvements in Equity .3 Female Students Outnumber Males .5 The Providers .6 Legal Status of Providing Institutions .6 Transfer of Credit Between Providers .7 System Governance and Management .8 Quality Assurance .12 Overview of the System .12 Applied Quality Assurance Mechanisms .14 Quality Assurance of Undergraduate Programs .15 An Analysis of the QA System .17 Improvements to Quality Assurance .18 Academic Personnel .19 Q ualifications .........................................................19 Student-Teacher ratio .19 Terms of Employment in the Public Sector .20 Enrollment: Unprecedented Expansion in the mid 1990s .20 Expansion in an International Context .20 Private Sector Dominance in Enrollment .22 Recent Decline in Admission to Tertiary Education .25 Disparities in Regional Enrollment .25 Significant Enrollment in Evening Courses .25 High Graduation Rate .26 Disciplines: Under-Investment in Technical Education .26 Programs: Biased Towards Undergraduate .29 A Struggling Science and Technology Sector .30 Strengths: Centers of Excellence, ICT and the Private Sector .31 Weaknesses: Human Capital, IP Protection and Unequal Funding .31 A Nascent Internationalization of Colombian Tertiary Education .32  IV CONTENTS 2. Economic Issues and Perspectives ......................................... 35 Increasing External Efficiency ............................................ 35 Tertiary Education as a Fuel for Economic Growth ............................. 36 Rising Private Returns to Tertiary Education ................................. 39 Detrimental High Unemployment ......................................... 41 A Segmented Market for Tertiary Education ................................ 42 Funding a Selective and Efficient Public Sector .............................. 44 Public Funding of Tertiary Education ....................................... 44 Directing Public Resources to Its Core Responsibilities ......................... 45 Efficient Utilization of Public Funding ...................................... 48 Providing Incentives in Public Funding ...................................... 51 Filling the Vacancies in the Private Sector ................................... 52 Tuition Based Private Institutions .......................................... 52 Short Term Crisis Reduces Long Term Investments in Education ................. 53 Inadequate Student Aid ................................................. 54 3. Strategies and Recommendations for Tertiary Education in Colombia ........... 59 A Strong But Under-Performing Sector ..................................... 60 Ensure Clear and Progressive Governance .................................... 60 Induce and Assure Quality ............................................... 60 Provide Financing for an Equitable and Expanded Access ........................ 61 Promote Strategic Levels of Education ...................................... 61 Annexes ..63 Annex I. The Colombian Tertiary Education System: Problems and Challenges ...... 67 Annex II. Institutional Analysis of the Tertiary Education Sector ................... 81 Annex III. Quality Assurance in Colombia .................................... 99 Annex IV. Science and Technology: Status and Perspective ....................... 121 Annex V. Colombian Higher Education in the Global Market ................... 149 Annex VI. Economic Perspectives of Tertiary Education ......................... 165 Annex VII. Reforming Student Financial Aid: Issues and Alternatives ............... 181 References .. 197 FIGURES Figure 1: Highest Absolute Expansion among the Wealthiest Quintile ............... 3 Figure 2: The Tertiary Bottleneck ........................................... 4 Figure 3: Females Focus on Soft Disciplines ................................... 5 Figure 4: Private Sector Share Increases with Level of Skill-orientation ............... 7 Figure 5: Accelerated Expansion in the 1990s ................................. 21 Figure 6: Expansion Lead by Private Sector ................................... 24 Figure 7: Tertiary Education in Colombia is Non-governmental ................... 24  CONTENTS V Figure 8: An Accumulated Decline in Entrants of 100,000 since 1997 .25 Figure 9: Enrollments in Day, Evening, and Distance Education .27 Fig ure 10: Social and Societal Sciences Expanded .28 Figure 11: Low Share of Students in Technical Education .28 Figure 12: Strengths and Weaknesses in the Science and Technology Sector .31 Figure 13: Colombia Trails Several LA countries and OECD in Attainment .36 Figure 14: Higher Education; Higher Salary .41 Figure 15: Large Expansion in Supply Unmatched by Demand .42 Figure 16: Oversupply of Private Seats .43 Figure 17: Low Income Students Increasingly Attend Private Institutions .47 Figure 18: Public Sector Dominates in Low Enrollment Regions .47 Figure 19: Ownership Influences Fields of Study .48 Figure 20: Public Universities Spend More on Academic Staff than Private .49 Figure 21: First Time Enrollment Depends Critically upon Disposable Income .54 Figure 22: Decrease in Demand and Coverage of Student Loans .55 Figure 23: Higher real interest rates, Higher default rates and Lower administration costs .56 Figure 11-1: Relations among Institutions in the Higher Education System .85 Figure 11-2: Geographical Levels and Lines of Authority .86 Figure II-3: The accreditation process .94 Figure IV-1: General Performance Indicators .123 Figure IV-2: Technological and Innovation Indicators .125 Figure IV-3: Institutional Regime and Economic Incentives .126 Figure IV-4: Government S&T Expenditures by Science Field in 1995-1999 .130 Figure IV-5: Tax Exemption for Goods for Scientific Activities .131 Figure IV-6: High and Medium-High Technology Manufactures .136 Figure IV-7: Industrial Firms Distribution by Size and Innovation Activities, 1996 . 137 Figure IV-8: FDI, excl. Oil .138 Figure IV-9: FDI in Knowledge-Based Industries and Services .139 Figure IV-10: Composition of Traditional and Non-traditional Export .139 Figure IV-11: Human Resources .140 Figure IV-12: Composition of University Students, 1996 .141 Figure IV-13: Information Infrastructure .142 Figure IV-14: Publications in Science Citation Index .143 Figure IV-15: Colombian Contribution to Selected Scientific Databases .143 Figure IV-16: Patent Applications in Colombia .144 Figure IV-17: Patent Applications in Innovation by Scientific Field .144 Figure V-1: Colombia Co-authorship Patterns .158 Figure V-2: Patterns of Co-authorship, USA, Latin America and Europa .162  VI CONTENTS Figure V-3: Patterns of Co-authorship between Proficient, Developing, and Lagging Countries . ......................................... 163 Figure VI-1: Significant Improvements in Human Capital over the Last 70 years ........ 167 Figure VI-2: Rising Wages to Workers with Tertiary Education ..................... 169 Figure VI-3: Private Returns to Schooling by Level .............................. 170 Figure VI-4: Highly Educated Seems Unemployed .............................. 173 Figure VI-5: High Youth Unemployment Explains the Abnormal Unemployment Level ....................................... 173 Figure VI-6: Supply and Demand of Seats in Higher Education ..................... 175 Figure VI-7: Oversupply of Private Seats (Number of Vacant Seats) .................. 175 Figure VI-8: Tertiary Enrollment Is Strongly Dependent upon the Level of Income ..... 176 Figure VI-9: Relative Increase in Tertiary Enrollment Applies to all Income Levels ...... 179 Figure VI-10: Labor Market Inefficiencies and Recession has Led to Abnormal High Unemployment ........................................... 179 Figure VI- 11: Unemployment Rates by Age ..................................... 180 TABLES Table 1: Characteristics of the Urban Student Population ........................ 3 Table 2: Tertiary Education Institutions in Colombia, by Legal Status .............. 6 Table 3: Institutions by Function, Legal Nature and Regulatory Framework .......... 9 Table 4: Colombian QA Mechanisms by Unit of Analysis and Stage of Development .14 Table 5: Colombia; a High Performer in the Region, but Average Compared to OECD Countries ..................................... 21 Table 6: Coverage by Region ............................................. 26 Table 7: Low Production of PhDs ......................................... 29 Table 8: Human Capital; The Main Obstacle to Private Innovation ................ 39 Table 9: Urban Labor Market Indicators by Level of Education (2000) ............ 40 Table 10: Public Funding to Education (1990-1999) ........................... 44 Table 11: Resources for Public Universities (1992-2000) ........................ 45 Table 12: Tertiary Education Costs and Inputs ................................ 50 Table 13: Tuition for Undergraduate in Private Institutions (1999) ................ 53 Table I-1: Coverage .................................................. 68 Table 1-2: Competitiveness Around the Year 2000 .............................. 70 Table 1-3: Platform of Advanced Knowledge, 1997-2000 ........................ 71 Table 1-4: Higher Education Indicators Around 1995 ........................... 72 Table I-5: Financing Higher Education Institutions by Function ................... 79 Table II-1: Institutions by Function, Legal Nature and Regulatory Framework ......... 83 Table II-2: Academic Character ............................................. 87 Table 11-3: Type of Degrees Offered ......................................... 88 Table II-4: Institutions in Higher Education by Department and Origin .............. 89  CONTENTS VII Table 11-5: Comparison of the Functions of DES and ICFES ....9................. g0 Table 11-6: Gross and Net Enrollment by Educational Level, 2000 .................. 92 Table 11-7: Decision-Making Levels in Central Government ....................... 95 Table 111-1: Growth of Coverage in Tertiary Education .......................... 100 Table 111-2: Tertiary Education Institutions in Colombia, by Legal Status, 1999 ....... 103 Table 111-3: Colombian QA Mechanisms by Unit of Analysis and Stage of Development ................................... 106 Table IV-1: Institutional Framework of NIS in Colombia ......................... 127 Table IV-2: Government Investments in S&T, by Institution ...................... 129 Table IV-3: Government Investment in S&T .................................. 129 Table IV-4: Economic Structure ................................... 133 Table IV-5: Structural Composition of Colombian Industry by Knowledge Intensity ........................................... 135 Table IV-6: Limitations To Innovation ....................................... 135 Table IV-7: Value Added of High and Medium-High Technology Industries .......... 135 Table IV-8: Private Participation in Funding of R&D, 1993-1997 .................. 137 Table IV-9: Strengths and Weaknesses of Colombian NIS ......................... 145 Table V-1: Students Going Abroad by Destination, ICETEX, 2000 ................ 154 Table VI-1: Slow down in Schooling and the Relative Rise of Highly Skilled Labor ................................................. 167 Table VI-2: Large Differences in Earnings due to Education ...................... 168 Table VI-3: Rate of Returns by Education Level ................................ 178 Table VII-1: 50 Year Trends in Number of Beneficiaries under ICETEX .............. 185 Table VII-2: ICETEX Interest Rates and Other Indices, 1991-2001 ................. 186 Table VII-3: ICETEX Sources of Funds, 2000 .................................. 187 Table VII-4: Default Experience of ICETEX, 1996-2001 ......................... 189 BOXES Box 1: Tertiary Education Reform in Chile ................................. 23 Box 2: Brain Drain in Colombia: The Loss of Highly Advanced Human Capital ..... 37 Box 111-1: Core Elements of Quality Assurance ............................... 101 Box III-2: The United Kingdom Quality Assurance Agency: How the Academic Review Works .102 Box 111-3: "Provao," the Brazilian Experience with a National Graduation Examination ............................... 105 Box 111-4: Chile's Program for Quality Improvement ........................... 113 Box IV-1: National Innovation System (NIS) ............................... 122 Box IV-2: Centers of Excellence ............................... 128 Box IV-3: Possible Clustering in Chemical Industry ............................ 136 Box V-1: European Research Area (ERA) ............................... 156   ABSTRACT Education is a major instrument for economic growth and poverty reduction. Rapid changes in technology, globalization and economic reforms are creating dramatic shifts in the structure of economies and labor markets throughout the world. The challenges of the future lie with con- fronting traditional limitations within a rapidly changing environment. This transformation has already occurred in advanced economies and increasingly so in Latin America. Colombia's great challenge is how to become an active member of this new global society, the information and knowledge society. These changes imply that the role of tertiary education must also shift. While tertiary educa- tion's traditional role has been to train students for employment through the transmission of knowl- edge and by providing basic research, it must add to these tasks the training of adaptable workers and supporting the continued expansion of knowledge. An enhanced tertiary education sub sector enabled to respond to society's increasing needs for high quality human capital must count on dynamic capacity for monitoring and evaluation, and disseminate to all stakeholders information about tertiary education its opportunities and costs, and include information about labor market perspectives; it must cater for students from all groups of the society by promoting greater equity in access to university and technical tertiary education and training; and finally it must diversify and provide flexible academic credit transfer mechanisms between tiers of tertiary education and institu- tion, in this context the country must see itself within a global framework and stimulate internaliza- tion of its system. A completely diversified system would include good quality technical and short cycle programs as well as post graduate programs of high standard. This sector study, Tertiary Education in Colombia: Paving the Wayfor Reform, suggests poten- tial strategies and recommendations that would move the Tertiary Education sector forward by pro- viding the flexibility to become more responsive to demands from society, from students, and from the labor-market. The first chapter of the study describes the current tertiary education system. This chapter pres- ents analysis on the individuals who take part in the system: the students (users), providers and the academic personnel. Further, the chapter examines the governance and management of the system within an institutional and stakeholder analysis, which includes specific sections on the quality assur- ance system, disciplines and programs offered by the system. Finally, this chapter investigates link- ages between the tertiary education and science and technology within Colombia, and linkages between national tertiary education institutions and international providers. The second chapter provides an economic perspective to tertiary education in Colombia. It pres- ents the growing economic importance of tertiary education and the skills it provide for economic progress. Further, it examines the functioning of the market for tertiary education and argues that the country faces two main obstacles to expansion: rationed number of available places and stifled demand in private higher education. The third and final chapter contains strategies and policy recommendations that support the Government's policy by focusing upon four core issues: (i) ensuring clear and progressive gover- nance, (ii) inducing and assuring quality, (iii) promoting strategic levels of education and fields of study, and (iv) providing finance for equitable and expanded access. ix   PREFACE The Government of Colombia is examining options for improving the higher education sector Tover the next decade. As part of that process, the World Bank, at the behest of the Govern- ment, undertook an assessment of the state of tertiary education and made recommendations on how its funding, governance, structure, and scope could be reformed to better meet the needs of the country and the challenges it will face in a global market economy. In the first phase of the assessment, consultation with the Government and the tertiary edu- cation institutions themselves identified two key issues that were impacting the growth and devel- opment of the sector: (i) coverage was sub-optimal and demand for equitable access to tertiary education was increasing due to the substantially expanded pool of eligible students graduating from secondary school; and (ii) current graduates from tertiary institutions were not sufficiently meeting labor market demands for a highly trained and flexible workforce due to low quality programs and the inadequate output of graduate and post-graduate degree holders in fields important to national development.' In phase two, a number of studies were carried out in order to produce a series of background papers focusing on issues identified as important for the growth and development of tertiary educa- tion in Colombia. The purpose was to move towards operationalizing the substantial knowledge base which has been created about Colombian tertiary education over the last decade. The paper, Colombian Tertiary Education in the Context of Reform in Latin America, by Jose-Joaquin Brunner, analyzes the underlying causes behind the underdevelopment of Colombia's higher education sys- tem, the challenges it is currently facing and the transformations and policies that could be imple- mented to forge the necessary changes. Martha Laverde has addressed the systems institutional set- up in: Institutional Assessment of the Tertiary Education Sector, which details how poor governance and the lack of a long term vision for the sector have resulted in duplication of responsibilities in the governing units and a lack of clarity in their roles. The concern about quality in tertiary education and the mechanisms in place to ensure quality in Colombia are discussed in the fourth paper Qual- ity Assurance in Colombia, by Robin DePietro-Jurand and Maria-Jose Lemaitre. The challenges for Colombia's national innovation system could not be underestimated. In Science and Technology: Sta- tus and Perspectives, Natalia Agapitova, Lauritz B. Holm-Nielsen and Goga Vukmirovic demonstrate that while all of the essential elements of an innovation system are present in the country, due to a lack of finance, a poor scientific base, and limited labor competencies, the national innovation sys- tem is substantially underdeveloped and incoherent. The marketplace for knowledge is global. How does Colombia fare in this market? Over the last decade, foreign institutions have begun to play an ever expanding role in the Colombian market for higher education, migration of Colombian gradu- ates (brain drain) is on the rise, and globalization in general posing a challenge to Colombian higher education. These issues are discussed in the paper Colombian Higher Education in the Global Mar- ket, by Isabel Cristina Jaramillo, Patricia Garcia and Andreas Blom. The economic opportunities are dealt with in Economic Perspectives of Higher Education by Andreas Blom and Thomas Hansen who investigate two central markets surrounding higher education in Colombia: the market for higher education itself and the labor market for workers with higher education. Finally, the seventh paper by Arthur Hauptman, Reforming Student Financial Aid in Colombia: Issues and Alternatives exam- ines the student aid structure in Colombia and recommends principles to guide its reform. The seven background papers may be found in the Annexes to this report. A two-day policy workshop held on the 30-31 of January 2002 in Bogota, Colombia, was the third phase of the assessment process. The workshop, hosted by ASCUN in collaboration with DNP 1. The impact of the half century civil war in Colombia cannot be discounted as a major factor shaping the society and impacting on an individual's and a family's decision to invest in tertiary education. This issue is addressed in the main text of this report. xi  XII PREFACE and MEN, brought together a working group, led by the former Minister of Education Mr. Francisco Jose Mera Lloreda, of selected high-level Colombian policy makers and tertiary education actors, rec- tors, faculty and students, a panel of international policy experts, and Bank staff. The main objective of participants was to engage in a dialogue for change, based on a realistic assessment of where Colombian higher education should be heading. The fourth and final phase of the assessment was the production of this report, Colombia: Ter- tiary Education Paving the Way for Reform, which discusses the ways Colombia might address the main issues confronting its tertiary education system. The first section of the education sector work describes the current tertiary system. The second section provides an economic perspective and argues that the country faces two main obstacles to expansion: rationed number of available places and stifled demand in private higher education. Further, it makes a case for reforming and enlarging the current financial aid program for students in order to stimulate the demand for tertiary educa- tion and to induce equitable access. The third and final section contains strategies and policy recom- mendations, which would enable Colombia's tertiary sector to respond to the needs of the country with increased equitable access to more relevant education of good quality.  ACKNOWLEDGMENTS this report was inspired by numerous stimulating interactions with Colombian friends and col- Tleagues who over the years carefully introduced us to the Colombian society and higher educa- tion system. In this respect special thanks are due to the following current and former Bank col- leagues Clemencia Chiappe, Himelda Martinez, Carmen Perez, Carlos Rojas, and Eduardo Velez. The task team is grateful to Eduardo Aldana, Jose Joaquin Brunner and Isabel Cristina Jaramillo for their knowledgeable and substantial contributions to this report. We would also like to express gratitude to the many colleagues and people involved with the sector, who have encouraged and offered constructive critique of the work. Individuals and institutions have been united in their desire to improve access to a modernized tertiary education system of good quality. We would specifically like to mention a few and ask for apologies from all the others who deserve to be mentioned as well: Juan Carlos Del Bello, Galo Burbano Lopez, Jorge Hernan Cardenas, Hernan Jaramillo, Maria-Jose Lemaitre, Hugo Lopez, Gabriel Misas, Galo Armando Burbano Lopez. Luis Enrique Orozco, Eduardo Posada, and Jamil Salmi. A special word of thanks for the presentations, conversations, feedback and comments received from all the participants-rectors, students, professors, politicians, academics, the press and other interested parties-of the two-day workshop in Bogota on January 30-31, this wealth of inputs have greatly benefited the report. We are especially grateful to ASCUN, in collaboration with DNP and MEN, for having organized such a successful workshop. The study would have been impossible without the collaboration and information supplied by Ministry of Education, DNP, ICFES, ICETEX, COLCIENCIAS, CNDM and CNA. In particular, the team would like to thank Francisco Reyer, ICFES, William Zamudio and Jose Luis Acero, ICETEX, and Julio Jimenez, German Arenas and Edgar Baldion, DNP for providing invaluable statistics for this study. Finally, we wish to emphasize the continued collaboration of the Government of Colombia, especially the support of the Minister of Education, Mrs. Cecilia Maria Velez and the former Minister of Education, Mr. Francisco Jose Mera Lloreda and the Director of DNP, Mr. Santiago Montenegro, and the former Director of DNP, Mr. Juan Carlos Echeverry. The report was prepared under the overall guidance of Olivier Lafourcade (Country Director), Ana-Maria Arriagada (Sector Director), Marito Garcia (Education Sector Manager) and Mark Hagerstrom (Sector Leader). The peer reviewers for this sector study were Eduardo Velez Bustillo, William Experton and Carlos Eduardo Velez. David de Ferranti Vice President Isabel Guerrero Country Director Ana Maria Arriagada Sector Director Mark V. Hagerstrom Sector Leader Task Team: Lauritz Holm-Nielsen Task Team Leader Martha Laverde Education Specialist Samia Benbouzid Team Assistant Robin de Pietro-Jurand Consultant Andreas Blom Economist xiii   CURRENCY EQUIVALENTS Currency Unit = Colombian Peso 2,820 = US$ 1.00 (Exchange Rate Effective: December 17, 2002) FISCAL YEAR ACADEMIC YEAR (AY) WEIGHT AND MEASURES January 1-December 31 February-November Metric system ABBREVIATIONS AND ACRONYMS ASCUN Asociaci6n Colombiana de Universidades CIDEIM Centro Internacional de Entrenamiento e Investigaciones Medicas CIB Centro de Investigaci6n Biol6gicas CIF Centro Internacional de Fisica CNDM Comisi6n Nacional de Doctorados y Maestrias CESU Consejo Nacional de Educaci6n Superior CNA Consejo Nacional de Acreditaci6n COLCIiENCIAS Instituto Colombiano para el Desarrollo de la Ciencia y la Tecnologia COLFUTURO Fundaci6n para el Futuro de Colombia DANE Departamento Administrativo Nacional de Estadistica DES Direcci6n de Educaci6n Superior DNP Departamento Nacional de Planeaci6n ECES Examenes de Calidad de la Educaci6n Superior FEDESAROLLO Fundaci6n para la Educaci6n Superior y el Desarrollo FNG Fondo National de Garantias FODESEP Fondo de Desarrollo de Educaci6n Superior GOC Government of Colombia GDP Gross Domestic Product ICFES Instituto Colombiano para el Fomento de la Educaci6n Superior ICETEX Instituto Colombiano de Credito Educativo y Estudios Tecnicos en el Exterior ICT Information and Communication Technology IDB/IADB Inter-American Development Bank IP Intellectual Property HE Tertiary Education LA Latin America LAC Latin America and the Caribbean MEN Ministerio de Educaci6n Nacional NIS National Innovation System OECD Organization for Economic Cooperation and Development RCI Red Colombiana de Cooperaci6n Internacional SNIES Sistema Nacional de Informaci6n de la Educaci6n Superior S&T Science and Technology UNESCO United Nations Educational, Scientific and Cultural Organization USA United States of America USD Dollars, United States of America xv   EXECUTIVE SUMMARY E ducation is a major instrument for economic growth and poverty reduction. Rapid changes in technology, globalization and economic reforms are creating dramatic shifts in the structure of economies and labor markets throughout the world. These changes imply that the role of tertiary education must also shift. While tertiary education's traditional role has been to train students for employment through the transmission of knowledge and by providing basic research, it must add to these tasks the training of adaptable workers and supporting the con- tinued expansion of knowledge. An enhanced tertiary education sub sector enabled to respond to society's increasing needs for high quality human capital must count on dynamic capacity for moni- toring and evaluation, and disseminate to aH stakeholders information about tertiary education its opportunities and costs, and include information about labor market perspectives; it must cater for students from all groups of the society by promoting greater equity in access to university and technical tertiary education and training; and finally it must diversify and provide flexible academic credit transfer mechanisms between tiers of tertiary education and institution, in this context the country must see it self within a global framework and stimulate internalization of its system. A completely diversifies system would include good quality technical and short cycle programs as well as post graduate programs of high standard. Tertiary Education in Colombia Today Colombia has a long and rich tradition in Tertiary Education in Latin America. Over the last decade enrollment in tertiary education mushroomed resulting in coverage expanding from nine per- cent to sixteen percent. This development was part of an evolution towards massification, diversifi- cation and modernization of the tertiary education landscape. In the end of the 1990s, Colombia experienced its worst economic performance in over 60 years. GDP decreased from an average of 3-4 percent during the first half of the 1990's to -4.5 percent in 1999. In spite of showing signs of economic recovery, the increases in unemployment and poverty arising from the economic crisis continue to pose serious threats to the welfare of the poor and vulnerable. The crisis has also had a xvii  XVIII EXECUTIVE SUMMARY negative impact on enrollment at all levels of education. In 1996 and 1998, enrollment of 7-11 year olds from the poorest families declined from 87.3 percent to 83.2 percent respectively while enrollment rates of 12-17 year olds fell from 66.3 percent to 64.6 percent in 1998. Tertiary Education, which had been expanding throughout the 1990's, also saw a decline in the number of new entrants from a high of 256,672 in 1997 to 207,246 in 1999, a decline of 19 percent. These economic and social difficulties are compounded by the costly conflicts with the guerrillas and other violent elements in Colombia (World Bank, 2001). The Students. In Colombia, as is true almost everywhere in the world, coverage rises with income. Although the education system expanded in the 1990s, the inequality in access to tertiary education didn't improve. The largest gains in coverage occurred in the fifth quintile where net coverage rose from 23 percent to 40 percent. However, the highest growth rate took place among the first quintile, where the number of students expanded by 170 percent. Yet, less than six percent of the 18-24 year-olds attending Tertiary Education are from the first quintile. The fundamental reason for inequalities at the tertiary level is inequality in the basic education system. However, the status quo in inequality in access to tertiary schooling has a negative impact on inequality in the future, as the high pecuniary gains from tertiary education imply that the existing difference in access translates into high income inequality in the future. Improving access to Tertiary Education for lower and middle-income groups is therefore an important remedy to mitigate future inequalities. The Providers. The Colombian Tertiary Education system is diverse in that it consists of both public and private institutions in both the university and non-university tiers. Diversity allows choice and responsiveness to varying needs and circumstances. There are four types of tertiary education institutions each with its own unique role: Universities, University Institutions, Technological Institutions, and Technical Training Institutions. While the universities serve as teaching institutions, they also serve the community and provide basic research useful to their field and/or their country. Non-university institutions complement universities in that they provide courses that respond flexibly to the demands of the labor market and have lower per student costs. Eighty-six percent of students enrolled in Tertiary Education attend universities and university institutions while the remaining 14 percent are enrolled in technological and technical training institutions. System Governance and Management. The current regulatory framework in Colombia is a blend of the old school of thought, in which the role of the government was to control tertiary institutions, and the new school, which supports autonomy with accountability in universities and government regulation and oversight of non-university institutions. Four external factors were found to impact on governance: (i) changes in the labor market, specifically, the demands for technology and the speed with which the technology changes, require that workers have the skills to select, adapt, and apply existing technologies properly and remain active, lifelong Icarners; (ii) changes in the demand for tertiary education which is expected to rise as the proportion of youth attending and completing secondary school continues to climb; (iii) the fiscal crisis in Colombia, which has resulted in both a serious drop in the demand for university places and to fiercer competition among institutions to win available students; and (iv) the violence in Colombian society which has brought about intolerance and social disintegration and has led to frequent shutdowns, interruption of classes, and a hostile atmosphere in universities that is not conducive to learning or to the spread of democratic values. With respect to management, the two greatest obstacles to effective management in Colombian Tertiary Education are regulatory bodies with overlapping functions, resulting in duplication of functions and programs and confusion both within the governing organizations and the tertiary institutions, and the lack of a coherent sector plan to efficiently guide the sector's development.  EXECUTIVE SUMMARY XIX Quality Assurance. There are a number of different agencies and mechanisms, all trying to ensure quality in some aspect of Colombian Tertiary Education. While not all of the mechanisms can be considered strictly quality assurance mechanisms by international standards, the accreditation system in Colombia has stimulated improvements in participating programs and institutions. The types of quality assurance mechanisms in use run the gamut from simple registration of programs to full-fledged accreditation of excellence. While progress has been made in quality assurance there are two primnary underlying problems: the number of accredited programs is quite small and there seem to be several entities with similar mandates, or one institution attempting to carry out many different functions. What is necessary are improvements that provide some measure of organization to the different quality assurance mechanisms so that institutions and their programs move along a continuum that promotes increasing levels of quality and an increasing sense of institutional commitment with quality. Teaching Personnel. The student-faculty ratio in public institutions for 1997 was 17, which is relative low compared to other countries of the region, considering faculty do very little research and consulting. Yet their unions continuously battle for reduced teaching loads. In private universities the student-faculty ratio is much higher at 74 students for each full-time faculty member resulting in an average class size of 47. Classes this large tend to restrict students to taking a passive role in learning limited to note taking, memorization, and repetition, and except for a few notable exceptions, most faculty in private universities do not conduct research. The qualifications of the academic staff have improved over the last 14 years with nine out of ten teachers currently holding graduate credentials. However, only two percent of staff have a postgraduate diploma and in 2001, the Tertiary Education system produced only 16 graduates with PhDs. Given the low output in Colombia of PhDs, the country could experience a crisis in terms of meeting their staffing needs with adequately qualified academics, thus reducing the quality of teaching and research. Unprecedented Expansion. While tertiary enrollment in Colombia is wvell below other countries in the region, it has outperformed many of its neighbors when it comes to the magnitude of the increase in coverage. During the last decade, coverage surged 150 percent; only Chile has performed better in the region. However, between 1997 and 2000 the number of new entrants to tertiary education declined by 19 percent corresponding to a total decline of over 100,000 students. This decline was in all likelihood due to the severe economic recession that struck Colombia in 1998. The economic downturn both stifled families' ability to pay fees for Tertiary Education and reduced the state's available resources for public Tertiary Education. The private sector has been most responsive to the increased demand for Tertiary Education, accounting for almost 67 percent of total enrollment and 40 percent of enrollment in evening and night courses. During the 1990's enrollment in the private sector grew at a rate of 25 percent per year, compared to an expansion rate of just 10 percent per year in the public sector. The slower growth in the public sector can be attributed to both the lack of resources necessary for expansion, an inappropriate incentive structure, and the lack of a cohesive policy framework to govern the sector and move it towards improved efficiency. Colombia has unbalanced enrollment and under-invests in both Technical and Graduate Education. The share of students enrolled in the social sciences is higher in Colombia thani in Latin America in general. In 1996, less than 15 percent of students at the Master's level were enrolled in the natural sciences, engineering, and agricultural sciences, compared to 37 percent for the region. The opposite is the case for the social sciences, in which 73 percent of graduate students in Colombia are enrolled, compared to a regional average of 37 percent. For undergraduates the pattern is the same: 27 percent of Colombian undergraduates are enrolled in technical programs, while the regional average is 43 percent. In 2001, of the approximately 10,000 programs offered  XX EXECUTIVE SUMMARY in Tertiary Education 4,496 were graduate programs and 47 were PhD programs. However, only six percent of total enrollment is in graduate and post-graduate programs and most of that, 77 percent, is provided in private institutions at the "Specialization" level. Struggling S(7TEducation. The Science and Technology (S&T) sector in Colombia has several strong points: (i) Centers of excellence have been established utilizing both national and multilateral resources and, in accordance with international best practice, ftunding has been distributed by awarding block-grants to research through competitive mechanisms; (ii) the level of investment in information and communication technology (ICT), compared to its regional competitors, is impressive in Colombia with a well developed information infrastructure fast approaching the G7 level; and (iii) the Colombian private sector is technologically well developed with a value added of high and medium-high industries at seven percent of GDP, almost equal to that of the average OECD country. However, the production of knowledge-based industry declined 20 percent since 1994 and 9 out of 10 firms in the largest knowledge-based industry cite lack of advanced human capital as the primary obstacle for innovation. Internationalization of Colombian Tertiary Education. Internationalization allows institutions to engage in collaboration and other activities, which help to improve the quality of tertiary education and position society better in the globalization process. Attempts at internationalization in Colombia have been fragmented in the absence of a well-defined policy framework. Although some universities have developed the internationalization culture, many have been timid in their efforts to overcome their parochialism despite an enabling legal framework. A clear political commitment is needed from the Government and from the tertiary education institutions themselves, in order to break the relative isolation of Colombian tertiary education and for the country to fully benefit from progress made elsewhere. Economic Issues and Perspectives The value of tertiary education for both society and for individual has continued to increase over the last two decades. The economy therefore stands to gain considerably from an expansion of ter- tiary education. Colombia faces two main obstacles to expansion: a rationed number of seats in the low-fee charging public universities and stifled demand in tuition-based private education. There seems to be room for improved internal efficiency in the management of public institutions. This could be spurred through provision of incentives to efficient management. Improving External Efficiency. The productivity of workers with tertiary education has risen considerably over the last decade due to adjustment of the Colombian economy, including deepened integration into the world economy and technological progress. Still, only 11 percent of Colombian workers have attended some form of tertiary education-compared to 24 percent of the labor force in industrialized countries-significantly undermining the country's competitiveness. In addition, Colombia faces another problem-that of brain drain. While no exact figures are available, a survey of obstacles to innovation carried out by the National Department of Planning identified human capital as the predominant barrier to technological progress in the country. The private benefits of tertiary education are high. Workers with tertiary education earn 275 percent more than the average worker and more than 6.5 times the wage of a worker with no education. The private returns to each year of tertiary education reached 22 percent in 2001, which more than double of the returns found in developed countries. These data indicate that reversing the decline in entrants into tertiary education could yield substantial benefits to individuals and to society. A Segmented Marketfor Tertiary Education. The private benefits from tertiary education are substantial and have increased over the last several years. While demand for tertiary cducation has grown, supply has surpassed demand. Public tertiary education continues to be in strong demand,  EXECUTIVE SUMMARY XXI outstripping supply and leading to rationing in the market for public tertiary education. The opposite is true for high-fee charging private education, where supply exceeds demand. This suggests a distinct segmentation of the market for tertiary education, where households clearly distinguish between the low fee-charging public sector and the high-fee charging private sector. Expansion could, hence, occur either by expanding supply in the public sector or through stimulation of demand in the private sector. Funding a Selective and Efficient Public Sector. Faced with a surging number of secondary graduates wanting to enter state institutions, public institutions in Colombia have responded by diversifying their revenue base through the introduction of tuition to accommodate more students. The speed with which demand for advanced education occurred outstripped the government's capacity to finance it, thus encouraging the growth of private institutions to ease pressures on the public purse and to satisfy demand. With a thriving private sector, the public sector can now focus on tasks that benefit society and which private sector providers are unwilling to assume. The public institution serve their purpose by offering courses in under-served regions of the country and in disciplines of perceived high social value. It will be through a strengthened redirection of public resources towards areas whcre the social value exceeds the private value, that public institutions would best serve their mission. Efficient Use of Public Futnding. To serve the country in the best way, the public sector not only has to prioritize strategic areas of high social value, but also has to educate students efficiently. Colombia invests only 4% of GNP in education, which is low; however, the relative funding for tertiary education in Colombia-16 percent of the total education budget-is in line with international best practice (15-20% range). In an international comparison, the Colombian university system lies at the high end of the cost scale, 105 percent of GDP per capita, when comparing per student cxpenditure. This is partially driven by higher unit costs in the public universities, which spends 29 percent more per student than private universities. One year in a public university costs Col$4.2m compared to the unit costs of Col$3.3m in a private university. The cost-difference is linked to a difference in spending patterns. State run universities spend 42 percent of their budgets on salaries to academic staff compared to 34 percent in the private universities. The internal efficiency of the public sector could be spurred by introducing performance based funding. Fillin,g the Vacancies in the Private Sector. The private sector offcrs courses that are affordable and available only to well-off segments of the population and therefore should not be considered a panacea to the production of advanced human capital in Colombia. Tuition levels in private institutions vary according to institution and type. Universities charge the highest yearly fee, followed by the newer University Institutions. The least expensive tertiary option is the Technical Training Institutions which charge less than half the fee of universities. An accommodation of the high demand for tertiary education through an expansion of technologically oriented courses would reduce the required investment burden by more than a half. This kind of diversification of tertiary education has only recently taken hold in Colombia where enrollment in technical education is about 14 percent, low by modern standards. Short Term Crisis Reduces Long Term Investments in Education. The short-term economic disruption Colombia is experiencing will have serious, permanent repercussions on the future earnings of those who exit the education system, since these individuals are less likely to re-enter. Therefore, declines in human capital will be a factor holding back economic progress in the country. Since a shortfall in disposal income is the prime culprit behind the decline in entrants into tertiary education, one policy remedy would be to increase access to financial aid. An extensive student loan scheme in Colombia could have shielded long term investments in  xxii EXECUTIVE SUMMARY human capital from the short-term economic crisis, perhaps averting the decline in the number of secondary school graduates who chose not to enter tertiary education. Moreover, and perhaps more importantly, a deferred payment scheme could have permitted academically able graduates from secondary schools to continue onto tertiary education regardless of family income. Currently, the overall aid structure in Colombia is biased towards the middle class because a large proportion of the aid provided is devoted to credit rather than to scholarships, and because in order to receive a loan, students must secure the signatures of two guarantors. Consequently, low-income students receive relatively little in the way of aid. International evidence has shown that loans are often insufficient by themselves in financing tertiary education for students from the lowest income groups. Scholarships-awarded on the basis of both financial need and academic merit-are needed to attract those students. Strategies and Recommendations for Tertiary Education in Colombia The challenges of the future lie wvith confronting traditional limitations wvithin a rapidly changing environment. This transformation has already occurred in advanced economies and increasingly so in Latin America. Colombia's great challenge is how to become an active member of this new global society-the information and knowledge society which integrates technological and profes- sional networks, platforms for improved innovative capacity, flexible labor markets and demand driven life-long-learning systems. This sector study suggests potential strategies and recommenda- tions that would move the Tertiary Education sector forward by providing the flexibility to become more responsive to demands from society, from students, and from the labor-market. The strate- gies and recommendations support the Government's policy as it was recently stated by focusing upon four core issues: (i) ensuring clear and progressive governance, (ii) inducing and assuring quality, (iii) promoting strategic levels of education and fields of study, and (iv) providing finance for equitable and expanded access. Colombia could: Ensure Clear and Progressive Governance: * Create an effective institutional arrangement for designing and implementing Tertiary Edu- cation policies centered on existing agencies. Induce and Assure Quality: * Allow the creation of private accrediting bodies accredited by the CAN, Consejo Nacional de Acreditacion or other national agency. * Establish a new framework for accreditation that relies less on Input-based Criteria. * Keep, but clarify and revise the quality accreditation system. Promote Strategic Levels of Education: * Expand enrollment in technical and technological courses. * Increase the availability and quality of postgraduate training, especially at the Doctoral level that provides both faculty training and upgrading as well as training for higher level human resources in fields of national priority. Provide Financing for an Equitable and Expanded Access: * Reform the current student aid scheme. * iDesign a system of scholarships for the very poor-those in the lowest two quintiles. * Implement performance based funding of public institutions that would reward high- performing, quality public institutions.  I THE CURRENT STATUS OF THE TERTIARY EDUCATION SYSTEM IN COLOMBIA C olombia has a rich tradition in Tertiary Education in Latin America dating back over a cen- tury. For years, the privilege of attaining Tertiary Education was reserved for the wealthy and secondary school served primarily as preparation for Tertiary Education. The second half of the twenties century have seen fundamental changes in Colombian society and in the context of the Colombian Tertiary Education sector. * Continued and progressive development of primary and secondary education have produced a substantially expanded pool of candidates for tertiary education. These potential students and their families-believing in the right to equal opportunities-expect the State to secure access to quality, Tertiary Education. * The emergence ofa global, knowledge-based economy became a driving force behind Tertiary Education reform. The demands of the labor market for technology and the speed with which technology changes, required-and requires now even more-a growing pool of flexible workers that have the skills to select, adapt, and apply existing technologies and remain active, lifelong learners. * Thirty-eigbtyears of civil war have brought about intolerance and social disintegration and have, within the universities, led to frequent shutdowns, interruption of classes, and a hostile atmosphere that is not conducive to learning nor to the spread of democratic values. The government and Tertiary Education institutions have responded forcefully to these challenges with the passing of Ley 30 in 1992 that reinvigorated the sector and established the foundation for the unprecedented expansion in enrollment. In the mid 1990s, tertiary education institutions mush- roomed resulting in coverage expanding from nine percent to 16 percent. This development was part of an evolution towards massification, diversification and modernization of the tertiary education landscape. However, as in the case of most Tertiary Education systems, the experience of rapid growth an-d increasing heterogeneity brought awareness that quality was declining and that equity remained an issue.  2 COUNTRY STUDY The sector's structural weaknesses following rapid expansion were compounded by the worst economic recession in Colombia in over 60 years, which culminated in 1999, with an economic retraction in GDP of-4.5 percent. While recent figures show a modest recovery in 2000 and 2001, the decline influences nearly all other areas of the economy. The gains that were made in terms of poverty reduction since the 1970s have been partially lost. The crisis has also had a neg- ative impact on education at all levels. The National Planning Department estimates that enroll- ment of 7-11 year old children from the poorest families declined from 87.3 percent in 1996 to 83.2 percent in 1998. In Tertiary Education, the crisis resulted in a most unfortunate reversal from an increase in entrants to tertiary education to a decline amounting to 100,000 students during the three years of crisis and perhaps a decrease in the quality and relevance of programs as well. In tertiary education, the main task for the government has been to continue strengthening its role in Tertiary Education as a strategic provider, clear regulator and facilitator. To succeed in this endeavor, Colombia will need to establish a coherent policy framework for the Tertiary Education sector. The report recognizes the high competence and commitment of every stakeholder in the sector and the effectful steps taken in the past. If the critical appraisal that now follows dwells dispropor- tionately on the shortcomings of the sector, it does so with the intention of moving the sector for- ward for the benefit of the sector's current and future participants. As a partner in the sector, the World Bank seeks-through this report-to provide analysis to the sector's stakeholders in order to contribute to the forging of a consensus for a long term, coherent policy framework, without which policy initiatives are unlikely to achieve their objectives. Implementation of such a policy framework would be an important step towards accommodating the ever increasing demand for skills of the Colombian population and of the economy and foster a more socially cohesive, peaceful and eco- nomically prosperous Colombian society. The Students The foremost beneficiaries of the tertiary education system are the students. This section dis- cusses the characteristics of the student population and their background with a special focus on equity. Despite being the prime recipients of tertiary education, many systems are not designed to deal with this civil constituent. But it is a well-known fact that failing to accommodate the interests of students can severely damage the functioning of an entire Tertiary Education system.2 In Colombia, La Ley 30 de 1992 obligates every Tertiary Education establishment to assure that the students hold "democratic representation" in the management of institutions. Recent inspections by ICFES of selected institutions revealed that one in five institutions failed to comply with this requirement. Characteristics of the Students Available data of students between 18 and 25 years old living in the ten largest metropolitan areas reveal a diverse student population (Table 1) where females outnumber males and over 25 percent of all students work besides studying. In general, students who work assume more than just part- time positions, with the average number of hours worked approximately 34. Such large amounts of time spent earning an income inevitably reduces the effort put into the learning process and hence the value of the investment. The high share of students working testifies to the high costs of studying in Colombia. Such high costs imply that family income plays a dominant role for access to Tertiary Education. 2. In 1999 in Mexico UNAM, the largest university of the country (270,000 students), was closed down for almost a year by a student strike in response to a proposed tuition fees increase from a few dollars to 140 dollars a year. Source: World Bank (2001).  TERTIARY EDUCATION IN COLOMBIA 3 TABLE 1: CHARACTERISTICS OF THE URBAN STUDENT POPULATION (compar-ed to the population of 18-25 year olds) Hours worked Wage per week Female Employed (only workers) (only workers) Students 54.2% 25.7% 98,719 34.0 Others 53.9% 47.0% 123,261 46.1 Source: Encuesta National de Hogares, September 2000, DANE. No Improvements in Equity Equity can mean different things, for example: (i) a reasonable degree of equality of opportunity to participate in Tertiary Education, and (ii) a fair balance between paying the costs of and obtaining the benefits from Tertiary Education. Figure 1 presents Tertiary Education coverage by quintile. As is common for all Tertiary Educa- tion systems, coverage rises with income. In 1992, before the major expansion of the tertiary educa- tion system, coverage grew moderately with income. Approximately two (2) percent of the relevant age-cohort from the poorest quintile was enrolled in a tertiary education institution compared to 20 percent for the best-off quintile. As the education system expanded in the 1990s, the inequality in access to tertiary education grew in absolute terms. The largest gains in coverage occurred in the fifth quintile where net coverage rose from 23 percent to 40 percent. However, relative to the start- ing point, the highest growth rate took place among the poorest, the first quintile, where the num- ber of students expanded by 170 percent. Yet, less than six percent of the 18-24 year-olds from the first quintile attend Tertiary Education institutions. Urban household data show that the economic recession in the late 1990s effected enrollment among all income groups. However, coverage among the low-income groups suffered the most. FIGURE 1: HIGHEST ABSOLUTE EXPANSION AMONG THE WEALTHIEST QUINTILE (National Coverage by Quintile, 1992 and 1997) 0.5 0.4 - &0.3 - i1992 L.- 1997 0.1 - 0 1 2 3 4 5 Quintiles Source: World Bank (2001) based on Encuesta de Hogares from DANE  4 COUNTRY STUDY IL~ ~~~W 04 I.l 1IlXa-I \ illJ>.:, r - - iii rti.ChAi'T> jin i'J WA'p r- I~: