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

1. QS-APPLE Kuala Lumpur 2009
After the “global financial crisis”:
the future of international higher
education
Professor Nigel Healey
Pro-Vice-Chancellor
University of Canterbury

2. After the “global financial crisis”: the
future of international higher education

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. The growth of international higher
education 1975-2006
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

5. Main source regions of international
students
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. 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. What has driven the growth of
international 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. Why do students want to study
abroad?
 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. 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. …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. …students seeking university places
abroad
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. Why do public universities in developed
countries 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. 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. 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. What structural changes were taking
place 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. 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. The changing market dynamics
Iran
Hong Kong
Australia
Malaysia
Bangladesh

18. What short-term impact has recession had on
the 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 government's fiscal resources
 Fall in endowments, alumni giving
 Loss of executive education and other cyclical income
streams
 So increased pressure to recruit international students

19. GDP forecasts for selected developed
countries
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. GDP forecasts for selected developing
countries
Country 2009 2010 2011
China 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. …and deteriorating fiscal outlook post-
stimulus packages in developed
countries
Fiscal expansions post crisis (percent of GDP)
12
10
8
6
4
2
0
US
UK
EU
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Af
Fr
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21
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22. How might the recession impact the
market in the longer term?
 Recessions are cyclical, but the
Source: http://lifeinthenhs.files.wordpress.com/2009/01/recession_cards.jpg
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. The US higher education system as a
model for the future world order?
PhD
schools
Graduate schools
offering masters
degrees
4146 universities and colleges
Source:http://nces.ed.gov/ipedspas/index.asp

24. The future world order
Level of study
PhD study
- global university
Graduate study
- regional university
Undergraduate study
- local university
Student mobility

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