Investment in education discussed at the Gaidar Forum (VIDEO)

Within the 10th Gaidar Forum, a business breakfast of Forbes magazine focusing on priorities, motives and problems of investment in education in Russia was held. Expert discussed criteria of return on such investment and influence of private investment on the development of educational system as a factor of state competitiveness. 

Moderator of the discussion Nikolay Uskov, Editor-in-Chief of Forbes Russia, noted that, although the education effectiveness is key for national security and the most important resource in development of civilization, the contribution of educational sector to GDP is 3.6%. In the context of the global statistics, the private investment sector in Russia is insignificant yet, compared to, for example, USA, where private investment in a student make up almost 2/3 of the total expenses on him/her. The total volume of the philanthropic sector in Russia makes up RUB 340–460 billion, and, meanwhile, it is still not clear how much of this sector is spent on education. 

The moderator set the major issues for discussion: ‘Motivation of the state and private individuals: what is the difference and where are their common points?’, ‘What impedes the private money inflow to the education system?’, ‘Why do we need private educational institutions?’ 

Vladimir Uzun, cohost of the breakfast, President of the Prosveshcheniye Management Company JSC, noted that the underlying motive of investment in education is not the profit, but rather improvement of the quality of children’s education, addressing the existing problems in the educational environment. It is suggested to consider establishment of a closed unit investment trust to bring together the best practices of the modern education as an effective mechanism for return on money invested in the long run, due to the nature of the educational field. It could make it possible to create a network of educational organizations that now are independent and have no centralized support. Such a network would enjoy higher standards of education and could attract small companies and private investment to the educational environment. 

Olga Vasilyeva, Minister of Education of the Russian Federation, emphasized that an approach to the investment in education in Russia should be formed based on the integrated support of the entire education system. One-time support of regions in construction of schools cannot satisfy the need for formation of history of a single country. Private investors may play the role that was performed by the state, for instance, in 1930s, having invited for 7 years the greatest foreign scholars to train Russian colleagues. Another example of system approach to formation of effective educational environment, according to Olga Vasilyeva, may be Quantorium. 

Social entrepreneur Ruben Vardanyan noted that now education is the key competitive competence of a region. Economic development of regions and business success now depend on development of eco-system consisting of four factors: the need for creation of competitive education for a gifted person, establishment of a platform for his/her fulfilment, support of his/her children, provision of his/her safety and medical support. On the other hand, development of free and affordable online education may deprive a student of experience, wisdom, environment and socialization provided by a teacher. Ruben Vardanyan emphasized the need for changing the attitude to the profession of a teacher and the importance to bring back the respect for him/her. 

Petr Aven, Chairman of the Board of Directors of Alfa-Bank, stressed that exactly the gratitude for his teachers is the major motivation for him to invest millions of dollars in education. He noted that there is no priority of the public benefit, such as investment in education, no moral atmosphere for it, although it should be a standard of conduct. Petr Aven believes that we do not have to place private schools in opposition to public schools, but we should strive to create more special schools, elite public schools, for enrolment to which talent matters rather than money. 

Entrepreneur and philanthropist Vadim Moshkovich emphasized that USD 200 million investment in the project of schools for gifted and motivated children Letovo is a moral imperative. When such a school is built in every region with support of private business, then it would be possible to build a correct vertical structure for adaptation of a child for high school and professional activities through system planning of his/her development trajectory. The school is also ready to share experience in formation of standards of professional retraining of teachers to form non-academic skills. 

Founder of Charitable Foundation DAR Nikita Mishin noted that investors do not expect return on capital expenses amounting to RUB 1 billion in the New School, on the assumption that after some time the school will achieve operational payback. Nikita Mishin considers diversity in the educational field to be a highly desirable result of joint efforts of the state and private business. One of topics for development in this field may be the need to invest in schools for children of foreign specialists attracted to Russia. 

Viktor Kharitonin, Chairman of Pharmstandard Holding Board of Directors, noted that companies, such as Pharmstandard, Biocad, are ready to spend tens of millions of dollars on corporate education. Such education is business, while the investment in it is often measured not by money, but rather by the effect brought by trained people and future employees, when it comes to attraction of pupils and students. 

Participant of the business breakfast concurred that establishment of independent funding institutions, i.e. endowments, guarantees stability of philanthropic activities of certain people. In particular, an endowment guarantees long-term funding of a school, as, according to the law, only accrued interest on the total amount of the foundation can be spent. For example, now, the endowment of Letovo school covers just a third of expenses, and, in order to achieve the goal to rank among Top 10 schools of the world, Letovo needs a foundation of US$ 0.5 billion in 5 to 10 years.

Generally, the participants concurred that public financing addresses large-scale tasks of mass education, large-scale private financing of the educational sector addresses its own tasks, including corporate, and the endowment - its tasks. Based on Rybakov Foundation, a platform of RUB 356 million was created to support schools to establish own endowments. The largest endowments in Russia are considered the foundations of Skoltech, Letovo school and endowments of MGIMO universities and the European University.

A representative of Skoltech noted that today the economy of knowledge is not created and not being created in Russia. Outflow of specialists is enormous, that is why the state is investing in education to sustain foreign economies. The task of investment in education shall be performed inseparably with the task of applicability of resources. 

Vladimir Mau, Rector of RANEPA, noted that students of the Presidential Academy began to consider education as investment and the demand for complex programs is much higher than for simpler. Meanwhile, just 15 years ago there was demand for a diploma as a result of cash injection. When speaking about investment in education, we should not look for direct patterns of growth and guarantees of economic growth, time efficiency of investment depends on the type of education we invest in. 

Representatives of online education noted that, on the one hand, the concept of life-long education does not guarantee high salary for founders of online schools, as they are competing with social media and entertainment portals. That is why, small private fast businesses can turn the public attention to the education faster than large structures. On the other hand, Maksim Spiridonov, Director General of Netology-Group Educational Holding, forecasted that the next large-scale digital company to be established in the world shall be an educational company. That is, there is a chance for investment to create a leader that, in 10-15 years, would have some market share, become a profitable business and play both in the online and offline markets in Russia.

10th Gaidar Forum Organizers:

The Russian Presidential Academy of National Economy and Public Administration (RANEPA);
The Gaidar Institute for Economic Policy (Gaidar Institute);
The Association of Innovative Regions of Russia (AIRR).

The general partners of the Gaidar Forum are Gazprom and Gazprombank; strategic partners include Prosveshcheniye publishing house, Coca-Cola, Pharmstandard group, the Russian Textbook Corporation, SANOFI, Novartis, Johnson & Johnson, Russian Railways, MSD, and Mastercard; EY, Cisco and Russian Direct Investment Fund are partners. This discussion’s partners are Philips, Cherkizovo and RVC.

The general information partners of the Gaidar Forum include the Rossiya 24 TV channel, Forbes global media company, RBC and TASS news agencies. The official information agency is Rossiya Segodnya. The general radio partner is Business FM. The strategic information partners are Kommersant Publishers, the RT TV channel, Interfax and Gazeta.RU. The main information partners are Profil weekly, FederalPress news agency, and Invest Foresight online magazine. The international information partners are Sputnik and Cision. Other media partners include PRIME news agency, Rossiyskaya Gazeta, RNS news agency, Radio Ekho Moskvy, News.Ru,, Parlamentskaya Gazeta, the PRO BUSINESS TV channel, Strategia magazine, AK&M, BRICS, Ekonomika i Zhizn weekly, National Banking Journal, Expert Tatarstan magazine, the Smart Country information platform, Financial One, Naans Media, and the Public Administration scientific political journal.

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