Improve education to reach high income status in Europe and Central Asia

The countries of Europe and Central Asia have achieved remarkable success in providing universal access to education. The region boasts high enrollment rates, with students completing an average of 12.6 years of primary and secondary schooling—just shy of the maximum of 14 years. Even more notable, 40% of young adults graduate from universities, outpacing the global average of 31%.

High Enrollment, Declining Quality

Despite high access and attainment levels, the region’s academic performance is slipping. Nowhere is this more evident than in the drop in standardized test scores, such as the Program for International Student Assessment (PISA), which assesses the abilities of 15-year-olds globally. Over the past decade, math scores across Europe and Central Asia have plummeted by the equivalent of losing a full year of schooling. These trends are particularly alarming because they jeopardize the region’s future workforce and economic potential.

As we point out in our latest ECA Economic Update, this downward trend in quality will have dire consequences. Without immediate action to reverse the decline—especially in higher education—countries of the region will not be able to achieve their aspiration of reaching high-income status in the next generation or two.

The Education Dilemma

Among the factors behind the decline in education quality are weaker social pressure to invest more and better in education, insufficient spending on school infrastructure, inadequate teacher training, and outdated curricula. Many schools in Europe and Central Asia lack access to modern resources like laboratories and digital learning tools. Limited adequate professional development opportunities for teachers often perpetuate traditional, lecture-based teaching methods that fail to engage students and foster critical thinking skills.

One of the most pressing issues is the effectiveness of Vocational Education and Training (VET). Almost 45% of upper-secondary students in the region and as many as 80% in some countries are channeled early in their school careers into VET. While VET programs are often touted as a viable pathway to enhance employability, particularly for students from disadvantaged backgrounds, the evidence suggests a more problematic reality. Despite the ambitions, these programs often fail to equip students with the necessary skills to thrive in a rapidly evolving job market. This disconnect raises concerns about the efficacy and long-term impact of such programs in fostering upward mobility and reducing inequality.

The picture is even gloomier at the university level. The quality of higher education is lower than what would be expected given the quality of basic education in the region (see Figure). Obtaining diplomas trumps receiving knowledge or skills. In the Times Higher Education global rankings, only one university in Europe and Central Asia is ranked among the top 100 and only nine among the top 500. “Academic capture,” with universities prioritizing political or business interests over academic excellence, inadequate funding, the proliferation of tertiary institutions, outdated curricula, and a lack of modern infrastructure are among the top reasons for the poor quality of tertiary education.

The low quality of higher education is particularly worrisome for a middle-income region like Europe and Central Asia. To achieve high-income status, countries must transition from a technology adoption to an innovation-led growth model. For this to happen, countries need to have world-class higher education institutions. As people with higher education are more likely to be innovators, the poor quality of university education poses an existential crisis to the region’s long-term growth prospects.

The Quality of Higher Education in Europe and Central Asia Is Low When Compared to the Quality of Basic Education

Sources: Demirgüç-Kunt and Torre (2022); World Bank Human Capital Index Database. 

^{Note: This graph plots, for every country with available data, the quality of higher (vertical axis) against the quality of basic education (horizontal axis). The grey straight line shows the predicted quality of higher education conditional on the quality of basic education. The dashed horizontal line indicates the region’s average quality of basic education, and the dashed vertical line indicates the average quality of higher education. The quality of basic education is proxied by the country’s average harmonized test score (HLO score) from the World Bank Human Capital Index Database. The quality of higher education is proxied by the aggregate university quality score (Demirgüç-Kunt and Torre 2022).} 
 

What Can Be Done?

There are cost-effective interventions to reverse the decline in the quality of basic education. Among them are the provision of information on the educational system to parents, principals, teachers, and students; supporting teachers with strengthened training and structured pedagogy; and teaching at the right level – i.e., targeting teaching instruction by learning level, not grade. Raising the prestige of the teaching profession and bringing in younger and more motivated teachers is essential. But stronger reforms may be needed, including a revamp of VET systems. This should include raising the age of selection and emphasizing closer collaboration between the industry and educational institutions. If VET systems cannot deliver the skills that students will need in a dynamic labor market, it is better to reconsider their size and format altogether.

Improvements in the quality of higher education can only come from better management, focus on merit, and greater accountability. These include increased reliance on competitive grants, enhanced competition for students and faculty, and regular assessments. Universities are also more productive when they are both more autonomous and face more competition. Merging research institutes with universities in countries where they are separated will help bring research closer to teaching and help bolster quality.

A high-quality education system, particularly at the tertiary level, is paramount to fostering innovation and driving economic growth. The best time to act on these crucial reforms in ECA was a decade or two ago. The second-best time is now.