Martyn Jones

Learning the value of education

Martyn Jones

Twenty years on from Tony Blair’s famous ‘education, education, education’ speech, the role of this sector has arguably never been more important.

UN estimates show 103 million young people worldwide lack basic literacy skills, with more than 60% of this number women. Meanwhile, enrolment in primary education in developing countries has improved in recent years to reach 91% but 57 million children still remain out of school.

The UN’s Sustainable Development Goal (SDG) 4 focuses purely on education, with targets to increase enrolment rates, particularly for women and girls, and achieve universal standards of literacy and numeracy. Highlighting the overlapping nature of sustainable goals, education also plays a part in SDG 5 on Gender Equality, 8 on Decent Work and Economic Growth and 10 on Reduced Inequality.

Beyond its sustainable impact, education also makes a great deal of sense financially: UNESCO data state that every $1 invested in education yields $10 in economic returns, which are enviable figures relative to any other sector.

The global market is valued at nearly $5 trillion and given population estimates between now and 2050, particularly the rise of emerging middle classes with a high propensity to spend on education, we expect the sector will continue to grow at a high rate for decades to come.

We look for sub-sectors and companies that benefit from these trends and highlight universities, educational content publishers and education technology companies as ways to access this theme.

Our research into the education value chain has identified academic publishers as particularly attractive. A large growth driver for this industry comes from developing markets where the number of educational institutions and overall spending on resources is increasing significantly.

In China, for example, 8 million will graduate from the country’s universities in 2017, nearly 10 times higher than in 1997 and more than double the number graduating in the US. There is still significant growth potential: numbers from the OECD for 2015 show just 10% of China’s 25 to 64-year-olds with tertiary education, compared to a global average nearing 40%.

Our investments include RELX, a UK and Netherlands-listed company that produces journals, books, databases and tools for research and education. The company has a focus on science, technical and medical subjects and its best-known journals include The Cell, Gray’s Anatomy and The Lancet

RELX Group's Elsevier division publishes 16% of the world’s scientific articles and has a 28% share of high-quality research as measured by the Field-Weighted Citation Impact (FWCI) ratio. Offering the best academic journals is key for universities as they look to maintain their positions, so businesses like RELX can command high pricing power.


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Thursday, December 14, 2017, 12:34 PM