OECD Study Says that Markets Fail to Increase Innovation in Education

A new study published by the Organisation for Economic Co-operation and Development (OECD) has found that markets in education do not lead to innovation in teaching and curriculum. It finds that it is government intervention which is more likely to create improvements.

Based on evidence reviewed in this analysis, it appears that there is no direct causal relationship between leveraging quasi-market mechanisms of choice and competition in education and inducing educational innovation in the classroom. In fact, the very causal direction is in question in view of the fact that government intervention, rather than market forces, has often led to pedagogical and curricular innovation. [p.45]

Many governments around the world, including in Australia, have adopted pro-market reforms in education designed to increase choice and competition between schools. The policies include increased choice of school, decentralised governance giving schools greater operational freedom, self-governing schools in the public sector, reduced regulation of schools, reporting school results, government funding of private schools and sanctions against under-performing schools.

The idea behind promoting market forces in schooling is that the threat of losing students and funding will cause schools to innovate more to improve their effectiveness. This idea is also behind the Rudd Government’s approach to extend the role of the market by publishing school results.

The report synthesises evidence on innovations in more market-driven education systems in over 20 OECD and non-OECD countries. It examined the impact of market-based policies on innovation in school organisation, such as the organisation of work between teachers and in school administration, school marketing, teaching practice and curriculum.

The report found that the evidence about competition and choice in education does not support the theory. Indeed, it seems to suggest that choice and competition tends to promote uniformity rather than innovation and an emphasis on marketing rather than educational change.

Markets in education have contributed to a diversity of school options in many local communities. However, this diversification appears in many cases to be based on social characteristics of student intake which creates a hierarchical ordering of schools, rather than substantively different, curricular and pedagogical approaches.

The evidence presented by the report indicates that there is a largely unrecognized tendency of standardisation and emulation created by markets in education that appear to counteract the ability of choice and competition to encourage innovation and diversification. Schools often compete for a certain type of student based on socio-economic background and they standardise their teaching and curriculum to attract these students.

Researchers in a number of countries have reported trends toward more traditionalist approaches to education where market reforms have been adopted. What is taught in schools tends to remain relatively constant.

Market reforms in school education appear to be more successful in creating innovations in school marketing and management than in generating new classroom practices.

…the area where competitive incentives generated by these reforms appear to have sparked the most innovation is in terms of marketing. [p.23]

Schools made efforts to present themselves as middle-class institutions in appealing to middle-class parents: for example, publicising discipline policies and school uniforms, and employing educational consultants. There has also been an emphasis on professionally produced school prospectuses and other promotional material. In some countries, promotional practices have emerged, including radio, television, and cinema advertising, with both teachers and administrators often expected to take on promotional efforts.

While the reforms have promoted changes in school organisation, these have had little impact on classroom practice. The report notes that there is a significant literature demonstrating a weak association between school governance and classroom practice.

The study says that it is far from clear that market forces such as increased autonomy, competition and choice have led to improved school outcomes, which would indicate that educational innovations are occurring. The evidence of improved academic outcomes is mixed, and improvements in academic performance may result from factors other than market incentives such as professional efforts, technocratic knowledge, policy alignments, or funding.

Furthermore, it might be expected that nations with more market-like systems would outperform countries where the state plays a more direct role in educational provision if markets played a key role in educational improvement. However, this does not seem to be the case.

Some countries such as Sweden that have more fully embraced markets have seen their scores on international tests remain in the middle of the distribution or even decline somewhat, relative to other nations without vouchers. Meanwhile, more regulated systems such as that in Singapore have continued to perform well above the norm.

The study concludes:

…there does not appear to be an obvious correlation between the use of competitive quasi-markets and academic improvements indicating innovation. [p.28]

Federal and state education ministers in Australia would do well to review their pro-market policies in the light of this new study.

Trevor Cobbold


Christopher Lubienski 2009. Do Quasi-Markets Foster Innovation in Education? A Comparative Perspective. Education Working Paper No. 25, Directorate for Education, Organisation for Economic Co-operation and Development, Paris, August. Available at this link

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