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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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QS-APPLE Kuala Lumpur 2009QS-APPLE Kuala Lumpur 2009
After the “global financial crisis”: After the “global financial crisis”: the future of international higher the future of international higher
educationeducation
Professor Nigel HealeyProfessor Nigel HealeyPro-Vice-ChancellorPro-Vice-Chancellor
University of CanterburyUniversity of Canterbury
After the “global financial crisis”: the After the “global financial crisis”: the future of international higher educationfuture of international higher education
OverviewOverview
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?
The growth of international higher The growth of international higher education 1975-2006education 1975-2006
Source: OECD Education at a glance, 2008
Long term growth in the number of students enrolled outside their country of citizenship
19750.6 M
19800.8 M
19850.9 M
19901.2 M
19951.3 M
2000 1.9 M
2006 2.9 M
Main source regions of international Main source regions of international studentsstudents
AsiaLatin
America
North America
and Western Europe
Sub-Saharan Africa
Unspec-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
Main host countries of international Main host countries of international students (% of enrolments)students (% of enrolments)
Student mobility in tertiary education (2006)
0
2
4
6
8
10
12
14
16
18
20
%
Sou
rce
: O
EC
D E
duca
tion
at a
gla
nce
, 20
08
What has driven the growth of What has driven the growth of international higher education?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
Why do students want to study Why do students want to study abroad?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
Population demographics Population demographics plusplus……
Tertiary school-age population
0
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
140,000,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
China India Nigeria
Source: UNESCO; Economist Intelligence Unit
……growing household income growing household income equals…equals…
Number of households with annual income > US$25,000 (nominal)
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
China
India
Nigeria
Source: Economist Intelligence Unit
……students seeking university places students seeking university places abroadabroad
0
25,000
50,000
75,000
100,000
125,000
150,000
175,000
200,000
225,000
250,000
275,000
300,000
325,000
350,000
1999 2000 2001 2002 2003 2004 2005 2006
Total international students ChinaTotal international students IndiaTotal international students Nigeria
Source: Economist Intelligence Unit; National Statistical Offices
Estimated number of international students enrolling in undergraduate and postgraduate study in Australia, Canada, France, Germany, Japan, New Zealand, United States, United Kingdom
Why do public universities in developed Why do public universities in developed countries want international students?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
Tertiary Gross Enrolment Rates (2006)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
The “perfect storm”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
What structural changes were taking What structural changes were taking place before the global financial crisis?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
Perfect storm abatingPerfect 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
The changing market dynamicsThe changing market dynamics
Australia
Hong Kong
Malaysia
Bangladesh
Iran
What short-term impact has recession had on What short-term impact has recession had on the market for international higher education?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
GDP forecasts for selected developed GDP forecasts for selected developed countriescountries
Source: IMF World Development Indicator
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%
GDP forecasts for selected developing GDP forecasts for selected developing countriescountries
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%
Source: IMF World Development Indicator
World -2.32% 2.25% 3.39%
21
……and deteriorating fiscal outlook and deteriorating fiscal outlook post-stimulus packages in developed post-stimulus packages in developed countriescountries
0
2
4
6
8
10
12Fiscal expansions post crisis (percent of GDP)
How might the recession impact the How might the recession impact the market in the longer term?market in the longer term?
Recessions are cyclical, but the 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
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The US higher education system as a The US higher education system as a model for the future world order?model for the future world order?
Source:http://nces.ed.gov/ipedspas/index.asp
4146 universities and colleges
Graduate schools offering masters
degrees
PhD schools
The future world orderThe future world order
Level of study
Student mobility
Undergraduate study
- local university
Graduate study
- regional university
PhD study
- global university
ConclusionsConclusions
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
