OECD (2000)

ANNEX 3
INDICATOR B1: Educational expenditure relative to gross domestic product
General notes
Notes on methodology
• Reference period
Statistics on educational expenditure relate to the calendar year 1997. GDP consumer price deflators from the
OECD National Accounts database are used to adjust the data on expenditure where the national financial year does
not coincide with the calendar year. In order to make this adjustment, the data on educational finance are multiplied
by the ratio of GDP price levels between the calendar year for which data are published and those of the preceding
calendar year, in proportion to the fraction of the national financial year that overlaps with the previous calendar year.
(see Annex 1) The following two limitations of the use of such deflators should be recognised: i) The adjustments
relate to changes in the general (GDP) price level but not to the price level for educational services. The assumption
is made that educational costs are measured in terms of national income forgone so that a GDP price index is justified
(the alternative would be to express costs in terms of volume of resources spent on education by means of a price
index that is specific to the education sector). ii) No allowance has been made for real growth in educational expenditure
(increases in excess of inflation or smaller increases) that might have taken place during the corresponding
period of adjustment. It would only be possible to take real growth into account retrospectively. Nevertheless, the
adjustment for inflation does eliminate one significant source of non-comparability of expenditure figures.
For countries for which GDP is not reported for the calendar year, GDP is estimated as: w t-1 (GDP t - 1 ) + w t (GDP t )
with w t and w t-1 being the weights for the respective portions of the two calendar years.
• Calculation of estimates in Charts B1.3 (B), (C) and (D)
Chart B1.3 (B), (C) and (D) show shifts in educational expenditure that would be expected if participation by
children in a country’s education were at the OECD average level. The expected enrolment for a given country; is calculated
as follows: let POP (i,k) be the population in country i at age k and AER (k,l) the OECD average enrolment rate
at age k at level of education l. The expected enrolment is then calculated as .
The expected difference in expenditure for country I at level l, as shown in Charts B1.3 (B), (C) and (D), is calculated
as EX (i,l)*(EE (i,l)/RE (i,l))-EX (i,l), with RE (i,l) representing the observed enrolment at level l at country i. The
OECD average enrolment rate is calculated using data from countries for which enrolment data by single year of age
are available. EX (i,l) represents the expenditure relative to GDP for country i at level l.
• Calculation of index in Table B1.2
Table B1.2 show the change in expenditure for educational services between 1990 and 1996. All expenditure
reported for 1990 was expressed in 1996 constant dollars, adjusted to the price level of 1996 using the private consumer
price index (see Annex 2).
Notes on specific countries
Coverage
29
∑
EE() i = POP(, i k)* AER( k,)
l
k = 5
Australia: Educational expenditure excludes payments to private vocational education and training institutions;
open learning courses; and payments to two private universities. Private expenditure for pre-primary institutions is
not included.
Belgium (Flemish Community): Research expenditure is included only if covered by funds provided by the Community
authorities responsible for education. Research funds from other public and private sources are excluded.
Transfers and payments to the private sector at the central government level include only scholarships and grants.
Czech Republic: Data from the Ministry of Defence and the Ministry of Internal Affairs are not included.
Denmark: The allocation of expenditure on early childhood, primary and lower secondary education is estimated
on the basis of the corresponding enrolments. Research expenditure are excluded at the tertiary level with
the exception of research on education/teaching.
© OECD 2000
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