With governments recognising the link between education and economic competitiveness, education standards are rising globally. Increased prioritisation of primary and secondary education is translating into rising uptake of tertiary education in many economies. The number of people with higher education globally rose from 518 million in 2005 to 704 million in 2013, with 24% of the latter amount being concentrated in the top 100 largest metropolises worldwide. To put this into perspective, these metropolises accounted for just 11% of the global population in 2013.
World’s Most Educated Cities: Share of Population Aged 15+ Years with Higher Education 2013
Source: Euromonitor International
Urban Economies Benefit from Widening Recognition of Education
The world’s largest cities are seeing a boom in their uptake of higher education. In 2013, people with higher education accounted for 21% of population aged 15+ years in the top 100 largest cities globally, up from 18% in 2005. This proportion was considerably higher than the corresponding global average, which comprised 10% in 2013 (up from 8% in 2005).
People in cities are more willing to invest in education than rural inhabitants. In 2013, 90 out of the top 100 largest metropolises registered higher per capita expenditure on education than their respective countries, with this being a result of better education opportunities, higher income levels and better employment opportunities often found in large cities. In addition, the rising number of primary and secondary education pupils and focus by developing countries’ governments on making education compulsory by law, as well as implementing literacy campaigns, are translating into growth in tertiary education student numbers, who are often allured by better employment opportunities in major cities after graduation. These trends are increasing the skills and labour productivity of urban workforces, hence raising their personal incomes and living standards, which is ultimately good news for consumer goods companies and retailers operating in cities.
Education Spend to See a Rise in the Developing World
In 2013, the top 10 cities in terms of the proportion of the population (aged 15+ years) possessing a higher education degree were located in developed economies (see the chart above), which is perhaps not surprising given that their service-oriented economies are highly dependent on workforce skills. The share of gross value added (GVA) originating from the tertiary sector reached as much as 93% in Washington-Baltimore and 82% in Stockholm in 2013.
Yet, governments in many emerging countries are investing heavily in education, recognising it as a vital factor in the transition towards becoming a service-based, innovative economy, which is the aim of most emerging markets. The expected surge in demand for education in many emerging markets will also encourage private education institutions to step in where public education providers are struggling to keep pace with demand. For example, the Indian Government passed the Foreign Educational Institutions (Regulation of Entry and Operations) Bill in 2010 to permit more foreign teaching institutions in India.
Forecast Rise in Real Per Capita Consumer Expenditure on Education by Region 2013-2020
Source: Euromonitor International
Spending on education is expected to rise steeply in many developing markets over the coming years. In per capita terms, Eastern Europe and Asia Pacific are about to see the most pronounced increases in real per capita consumer expenditure on education, at 42% and 32% (at 2013 prices), respectively, over 2013-2020 (compared to a global average of 26%). In Eastern Europe, St Petersburg and Novosibirsk are forecast to see the biggest rises of around 65% each. Meanwhile, Asia Pacific metropolises will lead the global growth in education spend, as 12 out of the top 15 metropolises with the most rapid surges in real per capita spending on education globally between 2013 and 2020 are anticipated to be in Asia Pacific, with actual growth ranging from 60% in Delhi to 92% in Wuhan (at 2013 prices). Cities, where consumer spending on education is rising fast, can expect more opportunities for education providers, labour productivity improvements and, thus, increasingly attractive environments for business investments.