1. The internationalisation of higher education
in New Zealand:
what went wrong and how to fix it?
4:00pm, Thursday, August 7th, 2008
Professor Nigel Healey
University of Canterbury

2. ‘No shrinking violet’ or desperate business
school dean?
UC College of Business and Economics EFTS
2003 2004 2005 2006 2007 2008B 2008F
Domestic 1612 1625 1640 1578 1765 1811 1982
International 540 739 816 618 412 311 338
Total 2152 2364 2456 2196 2177 2122 2320

3. Overview
 From ‘bit’ player to world leader in five years:
explaining NZ higher education’s ‘transformation’
 Why our passive ‘open doors’ business model stopped
working
 Finding our place in the new global higher education
market

4. A world leader in international tertiary
education by 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

5. …from behind the curve – increase in foreign
tertiary 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

6. Explaining the ‘transformation’ (1): motives for
internationalisation
 Altruistic – supporting economic development in the
Third World (eg, ‘Colombo Plan’)
 Geo-political - building geo-political connections and
profile by educating foreign leaders of tomorrow (often
disguised as altruism)
 Talent-seeking – attracting best minds as future
researchers, citizens (eg, Australia’s education-linked
immigration policy, US postgraduates)
 Pedagogic – creating multinational, multicultural
learning environment for the benefit of all students
 Economic – seeking new high-margin customers (often
disguised as pedagogical)

7. Explaining the ‘transformation’ (2): from
altruistic to economic
 Paradox of democratisation of higher education
 Rising participation rates (public policy goal) 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

8. 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

9. Explaining the ‘transformation’ (3): full-cost
international tuition fees
 Advent of full-cost international tuition fees:
 UK, early 1980s
 Australia, mid-1980s
 New Zealand, early 1990s
 Impact skews relative attractiveness of international
vis-à-vis domestic students
 Domestic EFTS: tuition fee* $4301 SAC: $5039
 International tuition fee*: $18,100
 Add to the mix a policy allowing public, non-residential
schools to charge full-cost international tuition fees
*UC undergraduate business degree 2008

10. Explaining the ‘transformation’ (4): the
perfect storm
 For a perfect storm, need the right combination of
supply and demand
 NZ government policy creates supply-side conditions
 Social, economic and political conditions in Asia create
the demand

11. Explaining the ‘transformation’ (5): demand
drivers
 Social + Demographic
 extended family support for children, perceived high value
of education
 demographic pyramids
 Economic
 rapid economic growth drives ability to pay
 economic development puts premium on high-skilled
knowledge workers
 globalisation encourages English language acquisition
 Social, demographic and economic factors grow demand
faster than domestic supply…resulting in
 Political
 governments, critically China, allow excess demand to go
offshore to foreign universities

12. India’s population pyramid

13. …and it once looked as if the demand would
grow for ever…..
Projected demand for
international higher
education
Source: IDP

14. The special features of NZ’s ‘transformation’
 Rapid and opportunistic
 Rational response to unprecedented demand growth, as a result of
public policy change
 Skewed to major growth markets – especially China, Korea
 Unusually large role of key players
 Role of public 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

15. International student visas by sector
25000
20000
University
15000
Polytech
PTE
10000
School
5000
0
2000 2001 2002 2003 2004 2005 2006 2007
Source: Education New Zealand

16. The China effect: international visas issued to
China
12000
10000
8000
University
Polytech
6000
PTE
School
4000
2000
0
2000 2001 2002 2003 2004 2005 2006 2007
Source: Education New Zealand

17. 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

18. Chinese students as % international tertiary
enrolments, 2005
60
50
40
30
20
10
0
Australia NZ UK US
Source: OECD Education at a Glance 2007

19. …leaving NZ universities exposed as perfect
storm dissipates
 Social, demographic and economic drivers still strong…
 …but political forces have shifted
 Huge expansion in domestic capacity:
 Public higher education in China
 Private education in India
 Excess demand heading offshore is being choked off at
source
 And Asian countries moving into export education
themselves for all the usual reasons
 altruistic, geo-political, talent-seeking, pedagogic,
economic

20. Investment in higher education: a Chinese
perspective
 Regular higher education enrolments up from 5.5m in
2000 to 18.9m in 2007
 Total expenditure on education has increased from
253bn RMB (1997) to 981bn RMB 2006)
 Tertiary participation rates now 22% (3.4% in 1990)
 Major investments in elite higher education:
 Project 211
 Project 985
 Project 111

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. The role of the private sector: India (1)
 Challenge for India:
 411m people in the 6-24 age group (40% of total)
 India has a number of elite national institutions:
 7 Indian Institutes of Technology (IITs)
 6 Indian Institutes of Management (IIMs)
 3 Indian Institutes of Information Technology (IIITs)
 19 Central Universities
 Indian School of Mines, Dhanbad
 …but only 338 public universities and 12% gross
participation rate (7% official participation rate)

23. The role of the private sector: India (2)
 India cannot afford public investment in higher
education:
 urgent demand for expansion in secondary education (only
60m of 170m primary students progress to secondary
schools)
 Indian government does not have the financial resources
to invest in the way that China can
 India has encouraged private sector to invest:
 75% of HEIs in India now private; 90% of colleges in
engineering, IT and management private
 Over the last 10 years, huge expansion in private sector
provision
 Many private providers using distance/on-line learning to
leverage scarce resources, exploit economies of scale

24. Private sector in Asia-Pacific
 Japan, South Korea, Taiwan, Taipei, Indonesia, and the
Philippines
 up to 80% students are in private institutions
 China
 1200 private institutions
 Vietnam
 12% of students in private institutions
 Malaysia
 691 private colleges and universities and 4 foreign
university campuses

25. So what went wrong?
 Popular explanations:
 Bad publicity
 High exchange rate
 Competition from Australia – particularly for immigration market
 Economics 101:
 Unexpectedly rapid supply-side response in Asia, choking off
demand
 Over-exposed to single market
 New competition – from Europe (Bologna), Asian export
education, from spread of English as a medium of instruction
 Undeveloped strategies to cope with changing demand, increasing
competition

26. Can we fix it?
 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

27. Asia-Pacific Top 40 (THE WUR 2007)
16 Australian National University
17 University of Tokyo
18 University of Hong Kong
25 Kyoto University
27 University of Melbourne
31 University of Sydney
33= University of Queensland
33= National University of Singapore
36 Peking University
38= Chinese University of Hong Kong
40 Tsinghua University

28. So what can be done? – Earnestness 101
 Understand our markets and the changing needs
 Understand our competitors
 Build long-term relationships built on mutual benefit, not
quick one-way gain
 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
 Align immigration policy (talent-seeking) and education

29. So what can be done? - Pragmatism 101
 What do foreign students want?
 Can we profitably give them what they want, in ways
that fit with our educational mission and tradition?
 What do they want?
 Internationally portable (benchmarked, accredited)
qualifications that guarantee a high rate of return on their
investment – global graduate employability
 English medium of instruction
 Multinational/multicultural learning environment
 Membership of global alumni network

30. So what can be done? - Pragmatism 101
 Internationally portable qualifications:
 A coherent set of Bologna/US compliant Bachelors-
Masters-PhDs qualifications which facilitate student
mobility
 Clear position on T-people qualification structures –
general UG to specialist PG or vice-versa?
 Postgraduate coursework masters, especially in business
and other professional areas – major growth area
 US-style, scaleable PhD programmes, aimed at satisfying
the ballooning demand for academically qualified faculty in
Asia

31. So what can be done? - Pragmatism 101
 English medium of instruction
 √
 Although foreign language provision in NZ universities
declining
 Contrast multilingual abilities of European and Asian
graduates with NZ, UK and US

32. So what can be done? - Pragmatism 101
 Multinational/multicultural learning environment
 High % international students on campus ≠ multinational
learning environment
 Integration and leveraging diversity in classroom key
 Student and faulty exchange militate against passive client
status of international students
 Challenge staff out of comfort zones by international
experiences
 Reach out to local ex-patriot communities

33. So what can be done? - Pragmatism 101
 Membership of global alumni network
 Traditional strength of US and major business schools
 Kiwi Ex-patriots Association (KEA) – Professor David Teece
(Berkley)
 Importance of network externalities
 “Alumni most important stakeholders”

34. Conclusions
 New Zealand internationalisation was:
 Unintended product of a public policy change
 Driven by developments in China
 Mediated by agents, mainly into schools
 Rapid, unmanaged and unsustainable
 Finding our position in the new global higher education
market requires:
 Understanding the changes taking place
 Long-term relationship building
 And especially, educational products and ‘after-sales
support’ services which meet market needs