Key challenges for the international education sector
1. Key Challenges for the
International Higher Education
Sector
ISANA Annual New Zealand Conference 2009
Professor Nigel Healey
University of Canterbury
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. Where have we come from?
Long term growth in the number of students enrolled outside their country of
citizenship
1975 1980 1985 1990 1995 2000 2006
0.6 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. 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. 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. Where have we come from – demand and per
capita GDP
Source: Price Coopers Waterhouse
7. Where have we come from – demand and
population pyramids
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. 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. 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. Riding the perfect storm – NZ higher education
in 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. Riding the perfect storm – increase in
international 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. 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. 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. Exchange rates: an important driver of NZ
enrolments
2009
Source: Ministry of Education, RBNZ
16. Exchange rates: low end courses more price
sensitive in NZ
Source: Ministry of Education, RBNZ calculations
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. Where are we headed – the IDP vision (1)
Forecast Global Demand for Higher Education
19. Where are we headed – the IDP vision (2)
Forecast Global Demand for International Higher Education
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
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. Where are we headed – the future shape of
international 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. 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. 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
26. 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
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. 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
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. The future for successful internationalisation
of 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. 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