Technical Notes

The level of the public expenditure in education provides a measure of the government's commitment to education. Evaluating how governments in different countries invest in education provides important context for examining how educational participation and outcomes vary between these countries. Investment in education is greatly influenced by supply and demand factors such as demographic structure, enrolment rates, income per capita, and prices for educational resources.

The Measures

Indicator Definition: Total public expenditure on education - New Zealand

Numerator:
Total government expenditure on education for the year.
(Data Source: OECD: Education at a Glance)

Denominator:
Gross domestic product (GDP) for financial year.
(Data Source: Statistics NZ)

Indicator Definition: Total public expenditure on education - International

Public expenditure on education as a percentage of GDP:
(Data Source: OECD: Education at a Glance)

Public expenditure on educational institutions as a percentage of GDP:
(Data Source: OECD: Education at a Glance)

Interpretation Issues

This indicator covers expenditure on schools, universities and other public and private institutions involved in delivering or supporting educational services.

Public expenditure on institutions is not limited to expenditure on instructional services but also includes public and private expenditure on ancillary services for students and families, where these services are provided through educational institutions. At the tertiary level, spending on research and development can also be significant and is included in this indicator, to the extent that the research is performed by educational institutions.

Public expenditure on education includes not only public expenditure on institutions, but also public subsidies to households for living costs (scholarships and grants to students/ households and student loans).

The national resources devoted to education depend on a number of inter-related factors of supply and demand. Many factors influence the relative position of OECD countries on this indicator. For example, OECD countries with high spending levels may be enrolling larger numbers of students, while countries with low spending levels may either be limiting access to higher levels of education or delivering educational services in a particularly efficient manner. The distribution of enrolments between sectors and fields of study may also differ, as may the duration of studies and the scale and organisation of related educational research. Finally, large differences in GDP between OECD countries imply that similar percentages of GDP spent on education can translate into very different absolute amounts per student.

The size of the school-age population in a particular country shapes the potential demand for initial education and training. The larger the number of young people, the greater the potential demand for educational services. Among OECD countries of comparable national income, a country with a relatively large youth population will have to spend a higher percentage of its GDP on education so that each young person in that country has the opportunity to receive the same quantity of education as young people in other OECD countries. Conversely, if the youth population is relatively small, the same country will be required to spend less of its wealth on education in order to achieve similar results.

Although OECD countries generally have little control over the size of their youth populations, the proportion of students participating at various levels of education is indeed a central policy issue. Variations in enrolment rates between OECD countries reflect differences in the demand for education, from pre-primary to tertiary education, as well as the supply of programmes at all levels.