Economic Policy Review ISSN 1313 - 0544

On Competitiveness of Bulgarian Education *

Author: Svetla Kostadinova / 29.01.2007
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What is competitiveness?

One of the most used definitions is that competitiveness is the ability of a country to achieve sustained high rates of growth in GDP per capita. A similar but more detailed definition, supplied by the OECD, is that competitiveness is the degree to which a nation can, under free trade and fair market conditions produce goods and services, which meet the test of international markets, while simultaneously maintaining and expanding the real incomes of its people over the long-term.

 

Why is education important?

For individuals, education and skills are the most important determinants of employment opportunities and income. Similarly, for any society overall, the skills and entrepreneurship of the human resources available to that society are the single most important factor in determining its economic output, growth and standards of living.

Education is increasingly important to economic performance. It increases individual incomes, and an increase in a country’s average education level positively affects aggregate output. High levels of personal investment in education lead to a number of other personal and social benefits, including increased social inclusion, lower crime, reduced welfare dependence and better health.

Having said that, we can easily examine Bulgarian education competitiveness by perceiving it as a good. In the text below, we will try to assess Bulgarian tertiary education in terms of competitiveness.

Investment – education input

The system of financing education is of great importance. Most countries allocate significant sources to education system. This has different effects depending on the efficiency of the system itself.

Total public expenditure on education as a percentage of GDP

Source: Eurostat

The data shows that Bulgarian state steadily increases funding for education but is still well below European average. Unfortunately, lack of money is not the problem. Increased funding in Bulgaria has not led to increased achievement. Over the past years, per pupil education spending has increased by more than 10% since 1998, but students performance have seen no significant improvement. An international comparative assessment study, prepared by OECD puts Bulgaria on 32 nd place for average reading literacy score with overall result of 430 points whereas the average across countries is 473. Countries like Czech Republic, Russian Federation, Thailand and Greece rank higher.

The other consideration regarding the data is that Bulgarian population is decreasing for years, which is not the case for Europe. Therefore, we cannot justify the increase in public spending for education. On the other hand, the very system of financing of education is based on historical budgeting principle – the funds are calculated based on expenditures for the previous year, which are indexed according to total public revenues. This way, there are no incentives to improve financial performance since almost all expenditures will be financed. Another problem is that there is no equal treatment of state and private school and universities – the litter does not receive funds from the state and therefore there is no competitiveness element between the two systems.

The only visible approach is introducing of voucher system in Bulgaria. This means that the money spent on education now will be in hands of students and they will decide which university to choose. This way, the best colleges and universities (both private and state) will receive more of the state funding and will have the resources to maintain and increase the quality. On the other side, those universities that exist only because of the current system will have three options – to increase the teaching quality, close or merge with other university. The reform will not be full if cuts in administration expenditures are not done. The staff of the Ministry of education is too much for the poor quality of the system that they maintain.

 

Freedom of doing business – establishing of schools

Article 9 of the Law on higher education in Bulgaria stipulates that the Parliament is responsible for establishment, restructuring, renaming and closing universities, as well as branches and departments. In other words, if someone (a company, group of parents, church or foreign university) wants to create a university (or branch) in the country, and be recognized, it would need Parliament approval. This requirement incredibly burdens the freedom of establishment and is a great impediment for competition within the country. Moreover, we should note that this requirement has nothing to do with state financing – it is not bounded by any means with state funding after approval. The only explanation given by lawmakers is that “state knows better”.

Apart from this, different rules and regulations are cumbersome and detract universities from the primary task of educating students. The reasoning is that if taxpayers’ money is spent there should be tight control. The problem is that a great amount of resources – time and staff, is wasted on administration of the system without any significant positive effect.

The role of the state should be to provide with clear rules on provision of information to interested parties – data on curriculum, expenses, timing, lecturers and educational approaches. The rest has be left to the judgment of consumers of their services. The professionalism, knowledge and reputation will serve as the best indicator for the quality and competitiveness of the university.

 

Teachers’ pay and qualification

Teachers’ salaries are always quoted as one of the major reasons why are they not stimulated to improve qualifications and commit strongly to teaching process. In Bulgaria, teachers are paid the average salary in the country. Their pay does not correspond to achievements of students, which is the main problem. In other words, the responsibility of teachers for students’ results does not exist. This does not stimulate quality and even if a state university is performing well it cannot attract more funding from the budget.

All those in charge of the tertiary education, from professors to administrators, must be held accountable for their actions and decisions. Given the nature of institutions of higher education, those in power at universities operate with a certain degree of autonomy. Teachers are free to instruct in any given way that they might like, oftentimes neglecting the needs of their students, and instead giving quick, meaningless lectures and then return to their latest book or paper. Administrators, too, display sometimes astonishing lack of foresight when it comes to running a school. They fail to manage resources appropriately, and do not establish sensible priorities. As a result, students end up graduating with a relatively low level of skills and are forced to take jobs that are less than meaningful.

The solution is binding teachers’ pay to results that can happen by introducing voucher system. This way the money will follow the student and will be a reward for good done job.

 

Quality – students’ employment prospects after graduation – education output

The very nature of higher education is to provide with greater opportunities in the job market. If we examine the chances of one graduate in employment, we can assess the quality and added value of imputed efforts and funds. On the other hand, this is not one-way process – the labor market has to have the potential to “accept” the newcomers. According to many studies, the labor market in Bulgaria has potential for enlarging and EU accession will be additional factor for such development. Recent economic reforms (lowering the rate of social security contributions, privatization, etc.) create favorable environment for entrepreneurship where education and knowledge can help people in achieving success.

Unemployment rates of the total population by level of education (population aged 25 to 59)

%

2000

2001

2002

2003

2004

2005

 


Secondary education

EU (25 countries)

8.0

7.6

8.0

8.2

8.4

8.1

Bulgaria

13.8

17.3

15.9

11.2

1 0.2

8.1

 

 

Tertiary education

EU (25 countries)

4.4

3.9

4.3

4.6

4.8

4.6

Bulgaria

6.4

8

7.7

6.4

5.3

4

Source: Eurostat

The indicators show the "probability" of being without a job for those who would like to have one, broken-down by level of education. The indicators provide a measure of difficulties that people with different levels of education have to face in the labor market and offer a first idea of the impact of education in reducing the chances of being unemployed.

Unfortunately, in Bulgaria the most of the university instruction is delivered in a manner as it was generations ago. There are many reasons for that but among most important are teachers’ pay that is not correlated to students knowledge, lack of direct participation of students in curriculum formation, continuous increase of state financing to universities that is not related to results, impossibility of establishing closer cooperation between the business and the university, etc. All these provide current students with a diploma that does not correspond strictly to knowledge.

 

Relevance to reality - education does not go in line with economic changes

Without a strong core curriculum, students lack the most basic knowledge about the world in which they live. Often, t he elements of university curricula designed to acquaint students with the major areas of learning had become devalued and very irrelevant to business needs and expectations. On the other hand, great shares of students receive very specialized education that cannot be utilized for employment. The profile of the long-term unemployed in the country shows significant number of university people with specific knowledge.

Bulgarian economy is still in a process of transition – the privatization is undergoing, the government is trying to stimulate economic activity and secure more friendly business environment. In this situation, we need entrepreneurs and resourceful people and universities should intermediate the process. Of course, this cannot happen without involvement of the business itself, which is already happening in Bulgaria.

 

Bulgarians’ assessment of Bulgarian education

According to Eurostat, the number of Bulgarian students enrolled aboard increases over the years. The figure is very tentative since some of the emigrants are just using this path to secure their stay in host country. Nevertheless, it clearly describes the trend of Bulgarians who can afford or receive scholarship to leave the country. This is by no means explicit indicator of the preferences of some of consumers of Bulgarian education. In terms of competitiveness, this indicator shows that Bulgarian education is losing position and this process is unlikely to change if radical reform towards quality is not introduced.

 

Mobility of students

Source: Eurostat

 

Recent survey on universities’ quality worldwide done by Spanish council for higher education shows that only 3 Bulgarian universities are ranked – one state financed and two private. Sofia University is ranked on 1 291 place, American University takes 2 570 place and New Bulgarian University is ranked 2 928 th.

The conclusion is obvious – full autonomy on curriculum, equality in financing through voucher system, privatization of state universities and business participation is the only way in achieving higher quality and competitiveness of education in Bulgaria.