Key Challenges for theInternational Higher Education            Sector ISANA Annual New Zealand Conference 2009           ...
Overview   Where have we come from? – a brief history of the    international higher education sector   Where are we now...
Where have we come from?        Long term growth in the number of students enrolled outside their country of              ...
Where have we come from - demand vs supply   Looking backwards from 2009 – a golden era of growth   The ‘perfect storm’:...
Where have we come from - demand    Drivers of demand for higher education in developing countries     are:       per ca...
Where have we come from – demand and percapita GDP                Source: Price Coopers Waterhouse
Where have we come from – demand andpopulation pyramids
Where have we come from – supply (1)     Why the supply-side response?        Most universities publicly owned or funded...
Where have we come from – supply (2)     Massification challenges traditional view:          private rate of return so h...
Where have we come from – the big players              Student mobility in tertiary education (2006)    %   20   18   16  ...
Riding the perfect storm – NZ higher educationin 2005                            International                     Foreign...
Riding the perfect storm – increase ininternational enrolments to 2005 (2000 = 100)    1000     800     600     400     20...
Where are we now – the global financial crisis                    US housing             Sub-prime  Initial Trigger       ...
Factors influencing demand to study overseas    Cost of study abroad    Ability to pay for tuition and living costs     ...
Exchange rates: an important driver of NZenrolments                                                     2009              ...
Exchange rates: low end courses more pricesensitive in NZ            Source: Ministry of Education, RBNZ calculations
Where are we now – facing a bumpy ride          Cost of study abroad          Ability to pay from savings          Ability...
Where are we headed – the IDP vision (1)      Forecast Global Demand for Higher Education
Where are we headed – the IDP vision (2) Forecast Global Demand for International Higher Education
Where are we headed – demand   Developments on the demand side      Rapid expansion of higher education sector in develo...
Chinese enrolment rates (%)  120  100  80                                                      Primary                    ...
Where are we headed - supply   Fiscal pressure will inevitably lead to deregulation of    domestic fees (with means-teste...
Where are we headed – the future shape ofinternational higher education   US higher education as a model for global highe...
The challenges for New Zealand universities –the starting point      Internationalisation has been rapid and opportunisti...
International student visas by sector2500020000                                                      University15000      ...
The China effect: international visas issued toChina1200010000 8000                                                      U...
Chinese visas as % of total 80 70 60 50                                                               University          ...
Chinese students as % international tertiaryenrolments, 2005     60     50     40     30     20     10      0          Aus...
The challenges for New Zealand universities   Good news:       We have excellent, internationally connected and        b...
The future for successful internationalisationof New Zealand universities    Understand our markets and the changing need...
Conclusions   International higher education has been driven by a    perfect storm of demand and supply   The global fin...
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Key challenges for the international education sector

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Key challenges for the international education sector

  1. 1. Key Challenges for theInternational Higher Education Sector ISANA Annual New Zealand Conference 2009 Professor Nigel Healey University of Canterbury
  2. 2. Overview  Where have we come from? – a brief history of the international higher education sector  Where are we now? – the implications of the GFC  Where are we headed? – the outlook for the international higher education sector  The coming challenges for New Zealand universities
  3. 3. Where have we come from? Long term growth in the number of students enrolled outside their country of citizenship1975 1980 1985 1990 1995 2000 20060.6 M 0.8 M 0.9 M 1.2 M 1.3 M 1.9 M 2.9 M Source: OECD Education at a glance, 2008
  4. 4. Where have we come from - demand vs supply  Looking backwards from 2009 – a golden era of growth  The ‘perfect storm’:  rapid growth in the demand for international higher education from developing countries and  supply-side response from higher education providers in developed countries – especially the Main English- Speaking Destination Countries (MESDCs)
  5. 5. Where have we come from - demand  Drivers of demand for higher education in developing countries are:  per capita GDP growth  income distribution (‘size of middle class’)  knowledge economy  population demographics  Domestic higher education sector expansion is constrained…  …so unsatisfied demand by those with the ability to pay “spills over” into universities in the developed world  Rapid GDP growth fuels both demand for higher education and the ability to pay
  6. 6. Where have we come from – demand and percapita GDP Source: Price Coopers Waterhouse
  7. 7. Where have we come from – demand andpopulation pyramids
  8. 8. Where have we come from – supply (1)  Why the supply-side response?  Most universities publicly owned or funded; private universities mostly not-for-profit  Higher education is heavily regulated and central part of government policy  Traditional view of higher education:  higher education = a ‘public’ (technically ‘merit’) good  therefore higher education historically publicly subsidised, tuition free in many countries  foreign students - geo-political/development motives  Problem: higher education is a ‘superior good’, participation rates have increased from 5% in 1960 to 50% in OECD today
  9. 9. Where have we come from – supply (2)  Massification challenges traditional view:  private rate of return so high, no practical need for public subsidies  public subsidies lead to regressive distribution of income  governments have had to reduce real value of public subsidies as participation has increased  UK, Australia and UK first movers in introduction of tuition fees  but domestic fees still regulated, even though public subsidies inadequate  fees for international student deregulated first  differential incentive to recruit international students  Government policy has encouraged recruitment of international students to cross-subsidise research and domestic students
  10. 10. Where have we come from – the big players Student mobility in tertiary education (2006) % 20 18 16 14 12 10 8 6 4 2 0 Source: OECD Education at a glance, 2008
  11. 11. Riding the perfect storm – NZ higher educationin 2005 International Foreign (non-resident) (non-citizen) Australia 17.3% 20.6% New Zealand 17.0% 28.9% UK 13.9% 17.3% Switzerland 13.2% 18.4% France 10.8% - Germany - 11.5% USA 3.4% - OECD average 6.7% 7.6% Source: OECD Education at a Glance 2007
  12. 12. Riding the perfect storm – increase ininternational enrolments to 2005 (2000 = 100) 1000 800 600 400 200 0 ali a NZ UK rland ance any U SA CD str ze Fr erm OE Au wit G S Source: OECD Education at a Glance 2007
  13. 13. Where are we now – the global financial crisis US housing Sub-prime Initial Trigger downturn mortgage losses Pre-Conditions Booming credit markets New structured credit products Uncertainty about extent and location of risk Impacts De-leveraging Movement to safe liquid assets
  14. 14. Factors influencing demand to study overseas  Cost of study abroad  Ability to pay for tuition and living costs  from savings  by borrowing  by students working in host country  part-time while studying  full-time on graduation  Willingness to pay for tuition and living costs  Uncertainty  Public security  racism exacerbated by recession
  15. 15. Exchange rates: an important driver of NZenrolments 2009 Source: Ministry of Education, RBNZ
  16. 16. Exchange rates: low end courses more pricesensitive in NZ Source: Ministry of Education, RBNZ calculations
  17. 17. Where are we now – facing a bumpy ride Cost of study abroad Ability to pay from savings Ability to pay by borrowing Ability to pay – jobs in host country Ability to pay – jobs on graduation Willingness to pay – uncertainty Public security
  18. 18. Where are we headed – the IDP vision (1) Forecast Global Demand for Higher Education
  19. 19. Where are we headed – the IDP vision (2) Forecast Global Demand for International Higher Education
  20. 20. Where are we headed – demand  Developments on the demand side  Rapid expansion of higher education sector in developing countries  Projects 211, 985, 111 in China  Private sector providers in Asia, especially India  New technologies and on-line learning  Growing consumer sophistication (QS-THES/Jiao Tong)  Growth in demand for international higher education from spillover may slow  Source markets likely to shift from undergraduate to postgraduate
  21. 21. Chinese enrolment rates (%) 120 100 80 Primary Junior Secondary 60 Senior Secondary 40 Tertiary 20 0 1990 1995 2000 2005 2006 Source: China Education Yearbooks
  22. 22. Where are we headed - supply  Fiscal pressure will inevitably lead to deregulation of domestic fees (with means-tested student support) in first movers (UK, Australia, NZ)  reduces attractiveness of international students  Late movers – Continental Europe and Asia – forced to introduce domestic fees, charge full-cost international fees  Bologna and spread of English as a medium of instruction  New competitors in export education market, including many former source countries
  23. 23. Where are we headed – the future shape ofinternational higher education  US higher education as a model for global higher education  6,000 colleges and universities offering bachelors’ degrees  Only state universities and major private schools offer masters degrees  Only elite schools offer PhDs  Only rich and talented (scholarships) mobile at undergraduate level  Mobility increases at masters and PhD level  Model for the future at global level?
  24. 24. The challenges for New Zealand universities –the starting point  Internationalisation has been rapid and opportunistic  Rational response to unprecedented demand growth as a result of public policy  Skewed to major growth markets – especially China, Korea  Unusually large role of key players  Role of state schools as feeders to universities  Role of agents in bringing international students to NZ schools  Unplanned and (initially) unwilled expansion of numbers in universities  International offices not geared up to managing, and later sustaining, international numbers  Resistance to institutional adaptation to support internationalisation
  25. 25. International student visas by sector2500020000 University15000 Polytech PTE10000 School 5000 0 2000 2001 2002 2003 2004 2005 2006 2007 Source: Education New Zealand
  26. 26. The China effect: international visas issued toChina1200010000 8000 University Polytech 6000 PTE School 4000 2000 0 2000 2001 2002 2003 2004 2005 2006 2007 Source: Education New Zealand
  27. 27. Chinese visas as % of total 80 70 60 50 University Polytech 40 PTE 30 School 20 10 0 2000 2001 2002 2003 2004 2005 2006 2007 Source: Education New Zealand
  28. 28. Chinese students as % international tertiaryenrolments, 2005 60 50 40 30 20 10 0 Australia NZ UK US Source: OECD Education at a Glance 2007
  29. 29. The challenges for New Zealand universities  Good news:  We have excellent, internationally connected and benchmarked universities  5 of 8 (62.5%) of NZ universities in THE Top 500  Universities multinational, multicultural environments  Bad news:  Global faculty shortage – salaries falling behind  Rising oil prices, environmental awareness may erode multinational staff and student base  The Bologna effect  Asian universities upgrading capabilities very fast
  30. 30. The future for successful internationalisationof New Zealand universities  Understand our markets and the changing needs  Understand our competitors  Build long-term relationships built on mutual benefit, not quick one-way gain  Our differential advantage must be as a research-led, postgraduate player  Celebrate and embrace internationalism  NZ small trading economy, need to be internationally connected to knowledge economy  Integrate international students – networks of the future  Use student exchange to create genuinely multinational learning environment  Ensure curriculum is internationally benchmarked
  31. 31. Conclusions  International higher education has been driven by a perfect storm of demand and supply  The global financial crisis has stalled growth  Demand and supply factors are realigning to make the future different from the past  New Zealand universities has stumbled into internationalisation – surviving in tomorrow’s global market requires vision and commitment

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