OECD countries spend, on average, the equivalent of 4.9% of their gross domestic product (GDP) (over USD 3.5 trillion in total) on educational institutions from primary to tertiary levels (including tertiary research and development). Iceland, Israel, Norway and the United Kingdom invest over 6% of their national output into education.
Early childhood education, widely seen as a crucial foundation for further learning, receives resources equivalent to 0.9% of GDP on average across OECD countries. In Iceland and Norway around 2% of GDP is dedicated to early childhood education programmes.
The share of GDP dedicated to educational institutions (from primary to tertiary levels) has been broadly stable, at 4.9% between 2015 and 2021 on average across OECD countries. The average hides much cross-country variation: the largest increases occurred in Bulgaria, Chile, Czechia, Hungary and Spain, and the most noticeable decreases in Ireland, Latvia and Mexico. Government expenditure remained stable at 4.1% between 2015 and 2021.
Education at a Glance 2024
Countries invest in education for various reasons: to enhance productivity and foster economic growth, contribute to personal and social development, or reduce social inequality, among other objectives. The proportion of a country’s output (based on GDP) invested in educational institutions provides a measure of the priority given to education relative to a country’s overall resources. This measure changes over time as influencing factors change. Real GDP fluctuates, rising in periods of expansion and falling during economic downturns. The number of students also varies, mostly shaped by demographic changes in the case of primary and lower secondary education (where enrolment is near universal in OECD countries) and by changing participation patterns in higher levels of education (see Chapters B3 and B4). In addition, the cost of delivering education also evolves, as teachers’ salaries and the organisation of schools and classrooms, among other factors, change over time.
This chapter starts by providing a picture of the overall investment in educational institutions, measured as expenditure as a share of GDP, and explores how it has changed. It then focuses specifically on government expenditure on educational institutions. This area receives particular attention because public policies can directly affect government spending and economic fluctuations can profoundly affect it.
In some countries, the balance of investment between tertiary education and lower levels of education has changed. For example, between 2015 and 2021, Bulgaria, Estonia, Israel, the Slovak Republic and Sweden saw increased investment of at least 5% in primary to post-secondary non-tertiary education, relative to GDP, while the amount spent on tertiary institutions fell. The opposite happened in Austria and the United Kingdom, where funding shifted towards tertiary education.
Early childhood education received more funds from government sources, as a share of GDP, in 2021 than in 2015 on average across OECD countries. The greatest increases were in Croatia, Germany, Japan and Lithuania.
Private sources play a much more important role in funding tertiary education, relative to government sources, than at lower levels. On average, private sources of funding amount to 0.3% of GDP for primary to post-secondary non-tertiary institutions, with a similar percentage for tertiary institutions. In contrast, government funding amounts to 3.2% of GDP for primary to post-secondary non-tertiary institutions, well above the 1.0% of GDP that governments spend on tertiary institutions.
OECD countries spend, on average, 4.9% of their GDP on educational institutions from primary to tertiary levels, including research and development (R&D). Across all OECD countries, a total of over USD 3.5 trillion (converted using purchasing power parities) was spent on educational institutions in 2024 – if one dollar was equal to one second, that would amount to 111 thousand years.
The countries investing the largest shares of their national output into education from primary to tertiary level include Iceland, Israel, Norway and the United Kingdom (all above 6% of GDP). Figure C2.1 shows expenditure as a share of GDP broken down into different levels of education across OECD countries. The level and distribution of expenditure is affected by a country’s demographic mix, enrolment rates and teachers’ salaries. The organisation of the education system also matters – longer programmes at a particular level mean more investment at that level, all other things being equal. On average, OECD countries spend the equivalent of 3.4% of their GDP on primary to post-secondary non-tertiary education. Primary education takes up the largest share in nearly all countries, amounting to 1.4% of GDP on average, with spending on lower and upper secondary education equal to 1.0% of GDP each.
Tertiary education (including R&D conducted in tertiary institutions) accounts for expenditure equivalent to 1.5% of GDP on average across OECD countries. The level of investment at this level is shaped by enrolment patterns (enrolment rates in tertiary education vary widely across OECD countries), the types of programmes pursued by students (shorter, applied programmes or longer, research intensive programmes), the mix of fields of study and the extent of the research activities conducted in tertiary institutions. Investment in tertiary education is highest in relative terms in Chile (2.4% of GDP), followed by the United States (2.3%) and the United Kingdom (2.1%). A considerable share of investment in tertiary education is directed to research activities. Excluding R&D, 1.0% of GDP is spent on tertiary institutions on average across OECD countries (Table C2.1).
Investment in early years is widely recognised as crucial for building strong foundations for learning in schools. On early childhood education, however, the country coverage of the data is weaker than for other levels of education (eight OECD countries do not report expenditure data for early childhood education, even though they provide data for other levels of education). One difficulty is that the data concern programmes that fit the ISCED framework in that they have an intentional education component. For example, this requires educational activities at least 2 hours per day and 100 days a year (for further details see Chapter B1 and (OECD, 2018[1]). In practice, it is often hard to separate the educational and childcare components in early childhood education and care (ECEC) provision for young children. The intensity of programmes also varies widely across countries (see Box C1.1 for further details), making cross-country comparisons difficult.
On average, among OECD countries with available data, countries invest 0.9% of their GDP in early childhood education programmes. The countries that invest most at this level are Iceland (2.0%), Norway (1.9%) and Sweden (1.7%). Another issue with data comparability is that investment in early childhood education will appear lower in countries where primary education starts at an earlier age (5-year-olds, for example, are in primary school in some countries and in pre-primary education in others). Measuring spending on 3-5 year-olds makes it possible to compare countries’ expenditure on young children, regardless of where they draw the line between early childhood education and primary education. On average, OECD countries spend 0.6% of their GDP on education for 3-5 year-olds. The highest levels of expenditure are in Iceland (1.1%), Israel, Norway and Sweden (0.9%) (Table C2.1).
Figure C2.2 shows how expenditure on primary to tertiary education changed between 2015 and 2021. Overall, education expenditure relative to GDP remained stable over this period at 4.9%, with considerable variation across countries. It increased most strongly in Bulgaria, Chile, Czechia, Hungary and Spain, and fell most noticeably in Ireland, Latvia and Mexico.
In some countries, there has been a shift in the balance of investment between tertiary education and lower levels. For example, in Bulgaria, Estonia, Israel, the Slovak Republic and Sweden, investment in primary to post-secondary non-tertiary education rose by over 5% between 2015 and 2021, while spending on tertiary education fell relative to GDP (Table C2.2). This is largely driven by changes in the number of students enrolled in tertiary education and lower levels. The opposite happened, for example, in Austria and the United Kingdom, where there was a relative shift towards spending on tertiary education. In these countries there was an increase in both the number of tertiary students and the amount of spending per full-time equivalent student (see Table C2.3).
On average, government expenditure on educational institutions (primary to tertiary levels) is equivalent to 4.2% of GDP (these refer to “final funds”, after transfers from government to the private sector, mostly households) (Table C2.3). The equivalent of 0.8% of GDP comes from private sources. In the context of primary and secondary education, that predominantly includes contributions from households (students and their families) in the form of tuition fees, payments for canteen costs etc. Other private sources contribute a larger share of the funding at tertiary level where, alongside contributions from households, private entities such as firms and non-profit organisations play a greater role (see Tables C3.1 and C3.2 in Chapter C3). The highest levels of government expenditure – at least 5% of GDP – are found in several Nordic countries (Denmark, Finland, Iceland, Norway and Sweden), as well as Belgium, Costa Rica, Israel and South Africa. At the other end of the scale, government sources in Ireland, Japan and Romania contribute the equivalent of less than 3.0% of GDP (Table C2.3).
Government spending on early childhood education – defined here as programmes that fit the ISCED framework – varies greatly (with data missing for several countries). The highest levels, in terms of the share of GDP, are in Iceland, Norway and Sweden, all dedicating over 1.5% of their GDP to this level. Relatively limited government funds are dedicated to early childhood education in Ireland, Japan (0.1% of GDP) and the United Kingdom (0.2% of GDP) (Table C2.4, available online).
Private sources play a much more important role, relative to government sources, in tertiary education than at primary to post-secondary non-tertiary levels. On average, before transfers, private sources of funding amount to the equivalent of 0.3% of GDP for primary to post-secondary non-tertiary institutions, with a similar proportion for tertiary institutions. In contrast, government funding amounts to 3.2% of GDP for primary to post-secondary non-tertiary institutions, well above the 1.0% of GDP that governments spend on tertiary institutions on average (Table C2.3).
Transfers from government to the private sector play a major role at tertiary level, so it is helpful to distinguish between initial funds (before transfers) and final funds (after transfers) to identify nuances in expenditure patterns. In the United Kingdom, for example, total funds spent by the private sector on tertiary education amount to the equivalent of 1.1% of GDP before transfers, but after government transfers this rises to 1.6% of GDP. Similarly, in Australia, the equivalent of 0.9% of GDP originates from the private sector initially, rising to 1.2% after transfers. Government transfers to the private sector are also relatively large in Chile, Ireland, Korea, and New Zealand, where they represent over 0.2% of GDP (Table C2.3).
On average across OECD countries with available and comparable data for 2015 and 2021, government expenditure on educational institutions from primary to tertiary levels stayed stable at 4.1% of GDP, while real GDP increased by 15% over the same period. Within these figures, however, several countries have seen major changes. The largest increases occurred in Bulgaria (where government expenditure increased from 2.3% of GDP to 3.0%) and in Czechia (from 3.2% to 4.0% of GDP). At the same time, government spending fell considerably in Argentina (from 5.2% to 4.0% of GDP) and Latvia (from 4.3% to 3.4% of GDP) (Table C2.4, available on line).
On average, early childhood education (excluded from Figure C2.3because of limited country coverage), received more funds from government sources as a share of GDP in 2021 (0.8%) than in 2015 (0.7%). The greatest increase occurred in Croatia (rising from less than 0.1% to 0.6% of GDP) (Table C2.4, available online).
Changes in government expenditure as a share of GDP, are shaped by changes in both real GDP and enrolment patterns. Figure C2.3 shows how government expenditure on educational institutions changed between 2015 and 2021, alongside changes in GDP and the number of students in primary to tertiary education. The patterns of change vary considerably across countries. Some countries (e.g. Bulgaria, Croatia, Hungary, Korea) now devote a greater share of their GDP to government spending on educational institutions than they did in 2015, even though the number of students fell by at least 5% and real GDP grew over this period. Many other countries have combined real GDP growth with an increasing share of GDP invested in education and rising student numbers (15 countries). In Costa Rica, Latvia, Lithuania, Poland and Portugal, growth in real GDP and falling student numbers have led to a decrease in the share of GDP dedicated to government expenditure on educational institutions. In contrast, 11 countries have seen decrease in the share of GDP dedicated to educational institutions, combined with growth in real GDP and an increasing number of students (Table C2.2 and Table C2.4, available online).
Expenditure on educational institutions refers to government, private and international expenditure on entities that provide instructional services to individuals or education-related services to individuals and other educational institutions (schools, universities, and other public and private institutions).
Initial government spending includes both direct government expenditure on educational institutions and transfers to the private sector and excludes transfers from the international sector. Initial private spending includes tuition fees and other student or household payments to educational institutions, minus the portion of such payments offset by government subsidies. Initial non-domestic (international) spending includes both direct non-domestic expenditure for educational institutions (for example a research grant from a foreign corporation to a public university) and international transfers to governments.
Final government spending includes direct government purchases of educational resources and payments to educational institutions. Final private spending includes all direct expenditure on educational institutions (tuition fees and other private payments to educational institutions), whether partially covered by government subsidies or not. Private spending also includes expenditure by private companies on the work-based element of school- and work-based training of apprentices and students. Final non-domestic (international) spending includes direct non-domestic payments to educational institutions such as research grants or other funds from non-domestic sources paid directly to educational institutions.
Government transfers to households and other private entities for educational institutions include scholarships and other financial aid to students, plus certain subsidies to other private entities. Therefore, they are composed of government transfers and certain other payments to households, insofar as these translate into payments to educational institutions for educational services (for example fellowships, financial aid or student loans for tuition). They also include government transfers and some other payments (mainly subsidies) to other private entities, including subsidies to firms or labour organisations that operate apprenticeship programmes and interest subsidies to private financial institutions that provide student loans, etc.
Direct government expenditure on educational institutions can take the form of either purchases by the government agency itself of educational resources to be used by educational institutions or payments by the government agency to educational institutions that have responsibility for purchasing educational resources.
Direct private (from households and other private entities) expenditure on educational institutions includes tuition fees and other private payments to educational institutions, whether partially covered by government subsidies or not.
Expenditure on educational institutions as a percentage of GDP at a particular level of education is calculated by dividing total expenditure on educational institutions at that level by GDP. Expenditure and GDP values in national currency are converted into equivalent USD by dividing the national currency figure by the purchasing power parity (PPP) index for GDP. The PPP conversion factor is used because the market exchange rate is affected by many factors (interest rates, trade policies, expectations of economic growth, etc.) that have little to do with current relative domestic purchasing power in different OECD countries (see Annex 2 for further details).
Expenditure per student on educational institutions relative to GDP per capita is calculated by dividing expenditure per student on educational institutions by GDP per capita. In cases where the educational expenditure data and the GDP data pertain to different reference periods, the expenditure data are adjusted to the same reference period as the GDP data, using inflation rates for the OECD country in question (see Annex 2).
All entities that provide funds for education are classified as either governmental (public) sources, non-governmental (private) sources or international sources, such as international agencies and other foreign sources. The figures presented here group together domestic government and non-domestic expenditure for display purposes. As the share of non-domestic expenditure is relatively small compared to other sources, its integration into government sources does not affect the analysis of the share of government funding.
Not all funding for instructional goods and services occurs within educational institutions. For example, families may purchase commercial textbooks and materials or seek private tutoring for their children outside educational institutions. At the tertiary level, students’ living expenses and foregone earnings can also account for a significant proportion of the costs of education. All expenditure outside educational institutions, even if publicly subsidised, is excluded from this chapter. Government subsidies for educational expenditure outside institutions are discussed in Chapter C4.
A portion of educational institutions’ budgets is related to ancillary services offered to students, including student welfare services (student meals, housing and transport). Part of the cost of these services is covered by fees collected from students and is included in the chapter.
Expenditure on educational institutions is calculated on a cash-accounting basis and, as such, represents a snapshot of expenditure in the reference year. Many countries operate a loan payment/repayment system at the tertiary level. While public loan payments are taken into account, loan repayments from private individuals are not, and so the private contribution to education costs may be under-represented.
For more information please see the OECD Handbook for Internationally Comparative Education Statistics 2018 (OECD, 2018[1]) and Education at a Glance 2024 Sources, Methodologies and Technical Notes (https://doi.org/10.1787/e7d20315-en) for country-specific notes.
Data refer to the financial year 2021 (unless otherwise specified) and are based on the UNESCO, OECD and Eurostat (UOE) data collection on education statistics administered by the OECD in 2023 (for details see Education at a Glance 2024 Sources, Methodologies and Technical Notes (https://doi.org/10.1787/e7d20315-en). Data from Argentina, China, India, Indonesia, Saudi Arabia and South Africa are from the UNESCO Institute of Statistics (UIS).
Data from Table X2.1 are used for the computation of expenditure as a share of GDP. Data from Table X2.2 are used for the computation of expenditure as a share of GDP per capita, and to transform expenditure in constant 2015 prices and in equivalent USD converted using PPPs.
References
[1] OECD (2018), OECD Handbook for Internationally Comparative Education Statistics 2018: Concepts, Standards, Definitions and Classifications, OECD Publishing, Paris, https://doi.org/10.1787/9789264304444-en.
Cut-off date for the data: 14 June 2024. Any updates on data and more breakdowns can be found on the OECD Data Explorer (http://data-explorer.oecd.org/s/4s).
Direct expenditure within educational institutions, by level of education
Note: See under Chapter C2 Tables section for StatLink and Box C2.1 for the notes related to this Table.
Final source of funds, constant prices, by level of education
Note: See under Chapter C2 Tables section for StatLink and Box C2.1 for the notes related to this Table.
By level of education
Note: See under Chapter C2 Tables section for StatLink and Box C2.1 for the notes related to this Table.
Table C2.1. Expenditure on educational institutions as a percentage of GDP (2021)
1. Primary education includes pre-primary programmes. The category "All secondary" refers to upper secondary education only, as data on lower secondary education are included in primary education.
2. Post-secondary non-tertiary figures are treated as negligible.
3. Upper secondary vocational programmes include lower secondary vocational programmes.
4. Data do not cover day care centres and integrated centres for early childhood education.
Table C2.2 Trends in expenditure on educational institutions as a percentage of GDP and change in GDP (2015 and 2021)
Columns showing data for early childhood education, primary, lower secondary, upper secondary, and post-secondary non-tertiary education are available for consultation on line (see StatLink).
1. Primary education includes pre-primary programmes.
2. Upper secondary vocational programmes include lower secondary vocational programmes.
Table C2.3 Expenditure on educational institutions as a percentage of GDP, by source of funds (2021)
Some levels of education are included in others. Refer to "x" code in Table C2.1 for details.
1. Primary education includes pre-primary programmes.
2. Figures are for net student loans rather than gross, thereby underestimating public transfers.
Data and more breakdowns are available on the OECD Data Explorer (http://data-explorer.oecd.org/s/4s).
Please refer to the Reader's Guide for information concerning symbols for missing data and abbreviations.