Education is the great equalizer. But access to quality learning has been far from equitable, resulting in severe disparities in wealth, economic growth and advancement across the world. This is what the Morgan Stanley Research report, “Innovators Drive Opportunity in a Fragmented $8 Trillion Market” talks about.
Morgan Stanley Research thinks technology will help close the gap over the next decade. In the process, analysts estimate that it could transform the vast and diffuse global education industry to an $8 trillion market by 2030 from $6 trillion in 2022, with consolidation, scale and efficiency more likely than growth to drive value.
“Education is experiencing the biggest evolution since the printing press was invented in the 15th century,” says Stephen Byrd, Morgan Stanley’s Global Head of Sustainability Research. Persistent high inflation has taken a toll in nearly every corner of the economy, and education spending is no different. Byrd expects private and public spending on education to drop from 5.9% of global gross domestic product in 2022 to 5.3% in 2030.
Kindergarten to class 12 is the largest and fastest-growing segment in education and is expected to reach $4.3 trillion in spending by 2030, or roughly 4% annual growth from 2022, to claim 54% of total education spending. The key growth drivers are likely to be expected population growth in emerging markets; resiliency and pricing power in the private segment; and higher spending on after-school and complementary learning, such as tutoring and English-language teaching.
Higher education is the second-largest education segment and one that offers significant opportunities for growth in the lower- and middle-income countries, which is expected to help it reach $2.4 trillion in education spending by 2030 at an annual growth of 3.5%. But as technology brings more affordability and access, the advance of online learning could add deflationary pressures to college tuition and limit the growth potential of spending in the segment.
As private capital accounts for a greater share of total education spending, Morgan Stanley anticipates an emphasis on education technology (edtech), which refers to the combination of IT tools and education practices to facilitate both in-classroom and remote learning. In particular, edtech can lower costs for global education. As such, analysts expect edtech to grow at a faster pace than the overall education sector, from $250 billion in spending in 2022 to $620 billion in 2030, supported by increased internet access, a rise in technology adoption and the high scalability of edtech business models.
