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After the global financial crisis the future of interantional higher education


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The market for international higher education has been growing rapidly, with an estimated 2.5m students studying outside their home country. This growth has been driven by excess demand for higher education in developing countries spilling over into the universities of the developed world. The picture was starting to change by the middle of the decade, as Asian nations invested heavily in their domestic higher education sectors and the spread of English-medium instruction and the harmonisation of degree structures led by the Bologna process began to make the international higher education market more contestable. The current “global financial crisis” has disproportionately impacted the two largest exporters of higher education, the US and the UK, both of which are struggling with recession and ballooning fiscal deficits. This presentation explores the ways in which the GFC may accelerate recent trends and lead to a reshaping of the international higher education landscape.

QS Asia-Pacific Professional Leaders in Education (QS-APPLE) 5th Annual Conference, University of Malaya/Universiti Kebangsaan Malaysia, Kuala Lumpur, November 2009

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After the global financial crisis the future of interantional higher education

  1. 1. QS-APPLE Kuala Lumpur 2009After the “global financial crisis”:the future of international higher education Professor Nigel Healey Pro-Vice-Chancellor University of Canterbury
  2. 2. After the “global financial crisis”: thefuture of international higher education
  3. 3. Overview  What has driven the growth of international higher education?  What structural changes were taking place before the global financial crisis?  What short-term impact has recession had on the market for international higher education?  How might the recession impact the market in the longer term?
  4. 4. The growth of international highereducation 1975-2006 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
  5. 5. Main source regions of internationalstudents North America and Sub- Latin Western Saharan Unspec- Asia America Europe Africa ified Total 1055459 168231 499923 217971 250314 2191898 48.2% 7.7% 22.8% 9.9% 11.4% 100.0% Source: UNESCO Global Education Digest 2009
  6. 6. Main host countries of international students (% of enrolments) Student mobility in tertiary education (2006) %Source: OECD Education at a glance, 2008 20 18 16 14 12 10 8 6 4 2 0
  7. 7. What has driven the growth ofinternational higher education? Some longer-term perspectives….. The world’s elites are mobile and willing to pay for the best education Governments have sought to attract international students:  To support economic development (eg, Colombo Plan)  For geo-political ends (to build alliances with future political leaders)  To increase inflow of skilled migrants Universities have sought the most talented students, especially for postgraduate research programmes …..but these factors do not explain the rapid growth if international higher education in recent decades
  8. 8. Why do students want to studyabroad? Drivers of demand for higher education in developing countries:  population demographics  per capita GDP growth  income distribution (‘size of middle class’)  knowledge economy Domestic higher education sector expansion too slow… …so unsatisfied demand by those with the ability to pay “spills over” into universities in the developed world GDP growth fuels both demand and ability to pay
  9. 9. Population demographics plus… Tertiary school-age population China India Nigeria 140,000,000 120,000,000 100,000,000 80,000,000 60,000,000 40,000,000 20,000,000 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: UNESCO; Economist Intelligence Unit
  10. 10. …growing household income equals… Number of households w ith annual income > US$25,000 (nominal) 25,000,000 China 20,000,000 India 15,000,000 Nigeria 10,000,000 5,000,000 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: Economist Intelligence Unit
  11. 11. …students seeking university placesabroad 350,000 Total international students China 325,000 Total international students India 300,000 Total international students Nigeria 275,000 250,000 Estimated number of international students enrolling in undergraduate and postgraduate study in 225,000 Australia, Canada, France, Germany, Japan, New 200,000 Zealand, United States, United Kingdom 175,000 150,000 125,000 100,000 75,000 50,000 25,000 0 1999 2000 2001 2002 2003 2004 2005 2006 Source: Economist Intelligence Unit; National Statistical Offices
  12. 12. Why do public universities in developedcountries want international students?  Paradox of democratisation of higher education  Rising participation rates lead to budgetary pressures on taxpayer subsidies to higher education….  …falling per capita subsidies to universities…  …introduction of (politically regulated) domestic tuition fees  As resources squeezed, taxpayer subsidies for international students first to go  full-cost international tuition fees introduced  full-cost fees make international students more financially attractive than domestic students
  13. 13. Tertiary Gross Enrolment Rates (2006) United States 82% New Zealand 80% Australia 73% United Kingdom 59% Malaysia 29% China 22% Indonesia 16% India 12% Vietnam 9% (2000 latest data) Source: UNESCO Global Education Digest 2008
  14. 14. The “perfect storm”  Rapid growth in demand for international higher education from developing countries, as demand for places exceeds growth in capacity of domestic universities meets  Supply-side response by universities in developed world, to expand international enrolments for financial motives
  15. 15. What structural changes were takingplace before the global financial crisis?  On demand-side  Major expansion of higher education in developing countries – both quantity and quality improvements  Growing market sophistication (eg, league tables)  On supply-side  Bologna – standardisation of degree structures, English medium instruction, new competitors  Growing fiscal pressures leading to more countries seeking international students  Other countries entering market for geo-political reasons
  16. 16. Perfect storm abating  Growth in demand for international higher education starting to slow from some source countries…  …and changing from undergraduate to postgraduate as domestic universities expand  On supply-side, market more competitive  new entrants (Europe)  source countries become competitors
  17. 17. The changing market dynamics Iran Hong Kong Australia Malaysia Bangladesh
  18. 18. What short-term impact has recession had onthe market for international higher education?  On the demand-side  Recession has been concentrated on developed countries, especially UK and US  Main source countries in Asia relatively unaffected  On the supply-side, universities in developed countries under pressure from:  Pressure on governments fiscal resources  Fall in endowments, alumni giving  Loss of executive education and other cyclical income streams  So increased pressure to recruit international students
  19. 19. GDP forecasts for selected developedcountries Country 2009 2010 2011 France -2.36% 1.52% 2.77% Germany -5.30% 0.91% 2.50% United States -2.73% 0.90% 1.76% United Kingdom -4.39% 0.34% 1.47% Singapore -3.33% 4.10% 4.31% Australia 0.73% 1.96% 3.30% Japan -5.37% 1.68% 2.38% Source: IMF World Development Indicator
  20. 20. GDP forecasts for selected developingcountriesCountry 2009 2010 2011China 8.50% 9.03% 9.74%India 5.35% 6.42% 7.28%Indonesia 3.99% 4.75% 5.00%World -2.32% 2.25% 3.39% Source: IMF World Development Indicator
  21. 21. …and deteriorating fiscal outlook post-stimulus packages in developedcountries Fiscal expansions post crisis (percent of GDP) 12 10 8 6 4 2 0 US UK EU ng a in dia Au ia n ly lia da ce y e lob ica u t nd l in ta pa an a ss Ita or Ne stra an na Ch In Sp to ala r ap Ja Ru m Af Fr Ca al er Ze h G 21 Si w So G
  22. 22. How might the recession impact themarket in the longer term? Recessions are cyclical, but the Source: current recession… …will have lasting impact on universities in developed countries …intensify competition for international students …highlight/accelerate the changing world order …increase the relative strength/attractiveness of Asian universities
  23. 23. The US higher education system as amodel for the future world order? PhD schools Graduate schools offering masters degrees 4146 universities and colleges Source:
  24. 24. The future world orderLevel of study PhD study - global university Graduate study - regional university Undergraduate study - local university Student mobility
  25. 25. Conclusions  International higher education has grown rapidly due to “perfect storm” of factors  Structural changes mean this pattern of development is changing  The recession will cause short-term disturbances, as developed universities react to fiscal stress  In the longer term , it may serve to accelerate structural change to a new world order