Educational expenditure indicators help to show what, how and where financial resources are directed to education. Every year, governments, private companies, students and their families make decisions about the financial resources invested in education. These investments are made with the well-established idea that expenditure on education enhances labour productivity by improving the skills of the workforce (Mallick, Das and Pradhan, 2016[1]) which might affect economic growth and social development. Therefore, analysing various aspects of educational finance helps clarify the efforts made by countries in education as well as its possible impact on future national economic and social perspectives. In addition, the search for effective financial policies in education requires evaluating educational expenditure of a country’s education system in light of other countries.

Annual expenditure per student on primary to tertiary educational institutions provides an assessment of the investment made in each student. In 2020, the average annual spending per student from primary to tertiary education in OECD countries as a whole was around USD 12 500. But this average masks a broad range of spending across OECD countries. Annual spending per student ranged from around USD 3 200 in Mexico and USD 4 500 in Colombia to over USD 26 800 in Luxembourg (Table C1.1). The drivers of expenditure per student vary across countries and by level of education: in Luxembourg, for example, low ratios of students to teaching staff and high teachers’ salaries at primary and secondary levels (see Indicator D3) are reflected in high levels of expenditure per student. In contrast, Colombia has one of the highest ratios of students to teaching staff, which tends to drive costs down (see Indicator D7). These differences can also be attributed to the diverse levels of Gross Domestic Product (GDP) and national wealth, with Colombia and Luxembourg representing the opposite ends among OECD countries (see Indicator C2).

All OECD member and partner countries devote a large share of national financial resources to educational institutions. In 2020, OECD countries spent on average 5.1% of their GDP on educational institutions from primary to tertiary levels (Table C2.1). Expenditure on primary to tertiary educational institutions ranges from 6.6% of GDP or more in Colombia and Norway to 3.4% or less in Ireland, Luxembourg and Romania. Many factors influence countries’ relative expenditure on this measure, including the number of students enrolled, the duration of studies and the effective allocation of funds. Funding also depends on the field of study and programme orientation.

The largest share of funding on primary to tertiary educational institutions in OECD countries comes from government sources, although private funding is substantial at the tertiary level. Within this overall OECD average, however, the shares of government, private and international (non-domestic) funding vary widely across countries. In 2020, on average across OECD countries, 84% of the funding for primary to tertiary educational institutions came directly from government sources and 15%from private sources. In Finland and Romania, private sources contribute 2% or less ofexpenditure on educational institutions whereas they make up over one-thirdof educational expenditure in Chile. International sources provide a very small share of total expenditure on educational institutions. On average across OECD countries, they account for 1%of total expenditure, reaching 4% in Estonia (Table C3.1).

In 2020, total government expenditure on primary to tertiary education as a percentage of total government expenditure for all services averaged 10% in OECD countries. However, this share varies across OECD and partner countries, ranging from around 6% in Hungary to nearly 16% in Chile (Table C4.1).

The four factors determining salary costs per student affect the value in different ways. The impact of the first factor, teachers’ salaries, is direct: higher salaries lead to higher salary costs. The other three factors affect it by changing the number of teachers needed, assuming that the number of students enrolled is constant. If instruction time increases or teaching time decreases, more teachers must be hired to keep class sizes constant. Similarly, more teachers would be needed to reduce class sizes while keeping everything else constant. Although linked, theoretical class sizes do not directly reflect statutory class sizes (see Methodology section).