Version 2.1 Higher Education and the Demands of the New Economy in Latin America Simon Schwartzman Background paper for the World Bank’s report on “Closing the Gap in Education and Technology”, Latin American and Caribbean Department, 2002 Table of contents Table of contents.................................................................................................i List of Tables and Figures.................................................................................iv I - Summary................................................................................................1 II - Higher education and the new knowledge societies ..........................4 The roles of knowledge in the new economy ............................................4 The roles of higher education ..................................................................11 Mass higher education and the distribution of competencies ..................12 The different functions of higher education.............................................15 III - The evolution of higher education in Latin America.......................18 Expansion of demand and institutional differentiation............................18 The new students......................................................................................19 The transformations of traditional Latin American universities..............23 The new academic profession..................................................................24 Growth and differentiation in the private sector......................................28 The new challenges: access, finance, equity, governance and control ....30 IV - Responsiveness of national higher education systems to presumed needs: the evidence. .................................................................................................33 i Mexico .....................................................................................................34 Historical development ........................................................................34 Growth and Segmentation....................................................................34 The labor market for graduates............................................................36 Supply and demand..............................................................................39 Efficiency.............................................................................................40 Queuing................................................................................................43 Policies for reform: noises and silences...............................................45 Chile.........................................................................................................46 Historical development ........................................................................46 Growth and Segmentation....................................................................47 The labor market for graduates............................................................48 Supply and demand..............................................................................49 Efficiency.............................................................................................53 Policies for reform ...............................................................................55 Colombia..................................................................................................56 Historical development ........................................................................56 The labor market for graduates............................................................57 The demand for higher education ........................................................57 Efficiency and queuing ........................................................................60 Policies.................................................................................................62 Brazil........................................................................................................63 Historical development ........................................................................63 Segmentation........................................................................................63 The labor market for higher education.................................................65 ii Supply and demand..............................................................................66 Efficiency and queuing ........................................................................69 Policies.....................................................................................................74 Peru ..........................................................................................................75 Historical background..........................................................................75 Growth and segmentation ....................................................................76 The labor market for graduates............................................................79 External efficiency: adjustment to the labor market............................79 Internal efficiency ................................................................................81 Policies.................................................................................................83 V - Graduate education and research .....................................................83 VI - Summary and Proposals...................................................................91 Higher education and innovation.............................................................91 The findings .............................................................................................92 The quality issue ......................................................................................93 Institutional autonomy .............................................................................94 The moral hazard of credentialism ..........................................................95 The regulation of the private market: absolute and relative quality. .......96 Issues of management, new technologies, links with the market, internationalization and differentiation................................................................97 Demand, supply and the roles of government in higher education..........99 VII - Reference List ..................................Error! Bookmark not defined. iii List of Tables and Figures Table 1 – United States, Employment by major occupational groups, 2000-2100. ......7 Table 2 – Latin America, selected countries, economic growth and occupations.........8 Table 3 – Latin America: some characteristics of occupational strata, 1997 ................8 Table 4 - The determinants of national innovative capacity........................................10 Table 5 – The Innovation Orientation of National Industry Clusters ..........................11 Table 6 – United States: bachelor, master and doctor’s degrees, 1997-1998..............13 Table 7 – Changing patterns of higher education graduation in the United States......14 Table 8 – Latin America, students enrolled and graduation from higher education by fields of knowledge......................................................................................................15 Table 9 – Political discourses in higher education: utility in the market and the advancement of knowledge..........................................................................................16 Table 10 – The expansion of higher education in Mexico...........................................19 Table 11 – Latin America, gross rates of enrollment in tertiary education 1990-1997 ......................................................................................................................................20 Table 12 – Latin America, distribution of higher education students by socioeconomic levels ............................................................................................................................21 Table 13 – Brazil, social characteristics of higher education students, 1992-1999.....21 Table 14 – Brazil, characteristics of the alumni from the University of São Paulo ....22 Table 15 – Expenditures in higher education public institutions, selected Latin American countries. .....................................................................................................25 Table 16 - Expenditures in higher education public institutions, selected countries and years .............................................................................................................................25 Table 17 – Some characteristics of the academic profession in selected countries.....27 Table 18 – Development of private higher education in Latin America, 1985-1995..29 Table 19 - Mexico, enrollment in higher education by governance, 1950-2000.........35 Table 20 – Mexico, higher education institutions by type and affiliation ...................36 Table 21 – Mexico, occupation and income of persons with higher education, 1991- 2000..............................................................................................................................38 iv Table 22 – Mexico: increases in income for holders of undergraduate and graduate degrees .........................................................................................................................38 Table 23 – Mexico, enrollment in higher education by fields of knowledge and segments.......................................................................................................................39