is higher education really internationalising?
DESCRIPTION
It is a widely accepted maxim that, like business generally, higher education is internationalising. For many countries, higher education is now a vitally important export sector, with many university campuses attracting international students from around the world. Licensing production, in the form of franchising degree provision to international partners, is beginning to mutate into foreign direct investment as many universities set up campuses in other countries. Driven by advances in information and communication technologies and the growing hegemony of English as the world’s common language, higher education has followed the classic pattern of globalisation so familiar in international business. Or has it? This seminar challenges the orthodox view and offers a different interpretation of developments, offering a different vision for the global higher education ‘industry’ of 2020.TRANSCRIPT
Is higher education Is higher education really really internationalising?internationalising?
Professor Nigel HealeyProfessor Nigel Healey
22ndnd Asia-Pacific Professional Leaders in Education Asia-Pacific Professional Leaders in Education ConferenceConference
July 14, 2006July 14, 2006
OverviewOverview
Universities as international players
The Uppsala Model of Internationalisation
universities as exporters
universities as franchisers
universities as foreign investors: joint vs sole ventures
A business perspective on universities’ internationalisation
An alternative explanation for universities’ internationalisation
The outlook for the future of internationalisation in higher education
Universities as Universities as international playersinternational players
Globalisation seen as a 20th/21st century phenomenon
But…universities ‘born global’ as religious seminaries in 15th century
international staff (and elite student) base
shared common languages: Latin, German, English
scientific inquiry is a collective, international endeavour
Internationalisation of student body on a mass scale is a new phenomenon:
during Cold War, international students part of geo-politics for West
today, there are >2m international students
Universities as Universities as international players (2)international players (2)
Focus of attention today on this aspect of HE globalisation: foreign students studying on a university’s home campus;
and
foreign students studying for the university’s awards on an off-shore campus or by distance-learning (‘transnational education’)
Key question: Is this process ‘globalisation’ as we understand it in a
business context… or something else altogether?
The Uppsala Model of The Uppsala Model of InternationalisationInternationalisation
Sequencing model drawn from the literature on the internationalisation of business: Exporting
Licensing production
Joint ventures
Sole Ventures
How does higher education fit this model?
Collectively sometimes called the ‘third wave’
Universities as exportersUniversities as exporters
Exporting educational services = providing education to foreign students (equivalent to exporting tourism services) by: teaching students on home campus
teaching students through ‘pure’ distance learning’ (ie, without the support of a local agent or campus)
How big is this market?
Universities as exporters Universities as exporters (2): how big?(2): how big?
Table 1: International Students in On-shore Higher Education (millions)
2000 2001 2002 2003% Change 2000-03
Enrolled in All Countries 1.62m 1.65m 1.90m 2.12m 30.6%
Enrolled in OECD 1.52m 1.54m 1.78m 1.98m 29.8%
Enrolled in OECD as % Total 93.9% 93.5% 93.8% 93.3%
Source: OECD Education at a Glance 2005
Universities as exporters Universities as exporters (3): the MESDCs(3): the MESDCs
Table 2: International Students in On-shore Higher Education (2005)
AustraliaNew
ZealandUnited
KingdomUnited States
International Enrolments 163,930 30,674 318,395 565,039
International as % Total 17.7% 14.0% 13.0% 4.0%
Sources: IDP Australia; Education New Zealand; Institute for International Education (US); UK Council for International Education
Universities as exporters Universities as exporters (3): source markets(3): source markets
Table 3: Source Regions of On-shore International Students in Higher Education (2003)
Australia New Zealand United Kingdom United States
Total from Africa 3.7% 0.7% 8.3% 6.9%
Total from Asia 71.4% 84.2% 40.8% 62.8%
Total from Europe 9.5% 6.0% 40.3% 13.1%
of which, from EU 2.9% 4.5% 35.3% 7.7%
Total from North America 4.2% 4.8% 8.5% 10.4%
Total from Oceania 3.9% 3.9% 0.8% 0.8%
Total from Latin America 1.0% 0.5% 1.0% 6.0%
Not specified 6.3% - 0.3% -
Total 100.0% 100.0% 100.0% 100.0%Source: OECD Education at a Glance 2005
Universities as exporters Universities as exporters (4): virtual exports(4): virtual exports
Distance-learning = ‘virtual’ higher education exports, but: boundaries between on-campus and distance-learning constantly
changing (WebCT and Blackboard, now merging)
boundaries between virtual exports and franchising/joint ventures changing (where foreign students have local support)
no good data sources on distance learning (only OBHE)
But clearly big: University of Phoenix – 170,00 graduates since 1976
Open University – graduated 200,000th student in 1998, presently has 180,000 enrolments
Universities as franchisersUniversities as franchisers
Franchising = licensing production
For universities:
franchising = licensing a foreign partner, normally a private for-profit college to offer part or all of a degree (1+2, 2+1, 3+0, etc)
sometimes termed ‘McDonaldization’ of higher education
Universities as franchisers Universities as franchisers (2): how big?(2): how big?
UK: no definitive data British Council in 2004 estimated:
180,000 off-shore international students studying UK degrees vs 270,000 on-shore
3m exam invigilated in 2003 by BC UK’s Quality Assurance Agency audits
franchised degrees since 1976:18 Malaysia, 14 Greece, 10 Spain, 8 Israel, 7
Singapore…
Universities as franchisers Universities as franchisers (3): how big?(3): how big?
Australia: only systematic collector of data on its universities’ off-shore activities
But host governments monitoring foreign universities’ activities, eg: Indian National Assessment and Accreditation
Council, 1994
South African Higher Education Quality Committee, 1997
Singapore Quality Class for Private Education Organisations, 2003
Universities as franchisers Universities as franchisers (4): how big in Australia?(4): how big in Australia?
Table 5: Australian On-Shore and Off-Shore International Students
2001 2002 2003
Total On-Shore 83,992 131,639 151,884
Total Off-Shore 28,266 53,419 58,513
Total 112,258 185,058 210,397
Source: Australian Vice-Chancellors Committee
Universities as franchisers Universities as franchisers (5): how big in Australia?(5): how big in Australia?
Table 6: Number of Australian Off-Shore Programmes
Pre-2000 2000 2001 2002 2003
Cumul-ative Total
China 98 30 22 24 24 200
Hong Kong 154 21 26 23 16 227
Indonesia 15 3 2 1 3 25
Malaysia 174 59 28 24 29 321
Singapore 194 43 30 58 53 375
Other 260 62 39 43 18 421
Total 895 218 147 173 143 1569
Source: Australian Vice-Chancellors Committee
Universities as foreign Universities as foreign investors: the ‘third wave’investors: the ‘third wave’
Foreign investment = offshore production and distribution facilities, part– or wholly-owned by universities
Many ‘branch campuses’ are small executive training centres or joint ventures by MESDC universities sharing space on the host’s campus:
University of Chicago – Singapore
University of Stanford – Nanyang Technological University
Universities as foreign Universities as foreign investors (2): joint venturesinvestors (2): joint ventures
Table 7: Stand-alone Branch Campuses in Malaysia and Singapore
Malaysia Singapore
Foreign Partner Estab. Foreign Partner Estab.
Monash University, Australia
1998 INSEAD, France 2000
University of Nottingham, UK
2000
Universities as foreign Universities as foreign investors (3): joint venturesinvestors (3): joint ventures
2003 ‘Regulations of the People's Republic of China on Chinese-Foreign Cooperation in Running Schools’
University of Nottingham Ningbo joint-venture with the Wanli Education Group and Zhejiang Wanli University
University of Liverpool joint venture with Xi'an Jiaotong University and Laureate Educational Limited
Universities as foreign Universities as foreign investors (4): sole venturesinvestors (4): sole ventures
University of New South Wales’ campus in Singapore
‘UNSW Asia is Singapore's first comprehensive private University, due to open in 2007... UNSW Asia is owned and operated by the University of New South Wales …[and] is the first wholly owned research and teaching institution to be established overseas by an Australian university’
A business perspective on A business perspective on universities’ internationalisationuniversities’ internationalisation
Prima facie evidence that universities are following the Uppsala sequential model of internationalisation…
…and universities fit criteria in economic literature for horizontal integration across countries: they have ‘ownership-specific advantages over local
universities (research base, curricula, faculty)
these are best exploited by the universities rather than being sold (product linked to faculty, principal agent problem)
it is more profitable to deliver in foreign market than home market (access to new student base)
A business perspective on A business perspective on universities’ internationalisation (2)universities’ internationalisation (2)
So… isn’t it clear?
Higher education is following the Uppsala model of internationalisation…and
…this model should allow us to predict the future shape of higher education across the world: the continued proliferation of branch campuses?
the emergence of truly multinational universities (University of Nottingham, UNSW)?
the development of regional clusters (eg, Singapore and Malaysia)?
An alternative explanation: An alternative explanation: the supply-sidethe supply-side
Why do (MESDC) universities want foreign students?
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 good’
therefore higher education publicly subsidised, tuition free in many countries
why foreign students? - geo-political motives
An alternative explanation: An alternative explanation: the supply-side (2)the supply-side (2)
Higher education ‘superior good’, participation rates have increased from 3-5% in 1960 to >50% in OECD
Challenges to traditional view:
private rate of return so high, no practical need for public subsidies; no impact from higher tuition fees on participation in UK, NZ and Australia
public subsidies lead to regressive distribution of income
governments have had to reduce real value of public subsidies as participation has increased
An alternative explanation: An alternative explanation: the supply-side (3)the supply-side (3)
Most OECD countries now have, or are considering, tuition fees for domestic students…
…but domestic fees still regulated, even though public subsidies inadequate
Fees for international student deregulated first MESDC governments have encouraged recruitment of
international students, especially in high-margin subjects (eg, business) to cross-subsidise research and domestic students
HE exports are not a product of commercial profit-maximisation, but the distortionary effect of government policy and regulation
An alternative explanation: An alternative explanation: the supply-side (4)the supply-side (4)
Why franchise?
as MESDC universities became dependent on exports, so early partners get increased bargaining power to move from 1+2 to 3+0
scrutiny by home/host agencies increases compliance costs, may deter franchising
Why foreign investment?
few real examples and these are all the result of host government policy – Singapore, Malaysia, China, inviting top universities to build up domestic capacity
An alternative explanation: An alternative explanation: the demand sidethe demand side
Why do students (in developing countries) want to study in foreign (MESDC) universities?
MESDCs have most of the world’s top universities; elite students have always wanted to study at Harvard or Oxford
English is the world’s common second language
But…
25% of World's (THES) Top 50 universities now outside MESDCs – Beijing (15th), Tokyo (16th), HKU (41st), NTU (498th), IIT (50)
many non-MESDC universities teach in English
An alternative explanation: An alternative explanation: the demand side (2)the demand side (2)
Main drivers of demand for higher education in developing countries are:
High per capita GDP growth
• higher education is a ‘superior good’
• per capita GDP growth leads to proportionately greater demand for higher education
Population demographics (growing proportion of young people)
Income distribution (‘size of middle class’)
• 200-300m in India, 60-100m in China
An alternative explanation: An alternative explanation: the demand side (3)the demand side (3)
0
50
100
150
200
250
300
2000 2005 2010 2015 2020 2025
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Figure 1: IDP Estimates for Global Demand for Higher Education
An alternative explanation: An alternative explanation: the demand side (4)the demand side (4)
Now factor in the domestic supply-side:
expansion constrained by high fixed costs to set up universities
shortage of trained faculty (nationally and globally)
long lead times
So the demand for international higher education in developing countries is driven by:
unsatisfied excess demand for domestic higher education (eg IIM success rates 0.15-0.4%)
ability to pay for higher education in MESDC
Growth in per capita GDP reinforces both drivers (excess demand and ability to pay)
An alternative explanation: An alternative explanation: the demand side (5)the demand side (5)
Figure 2: IDP Estimates of Demand for International H.E.
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1
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3
4
5
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7
8
2000 2005 2010 2015 2020 2025
Mil
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An alternative An alternative explanation: summaryexplanation: summary
MESDC (mostly public) universities have been driven into internationalisation by domestic government policy, which has:
reduced public tuition subsidies for domestic students
continued to regulate domestic tuition fees
deregulated international tuition fees
Internationalisation is a product of government intervention and policy, not a profit-maximising response to overseas opportunities
An alternative explanation: An alternative explanation: summary (2)summary (2)
Evidence for the government interference thesis: The US has the highest proportion of private universities
(no fee maxima) and the lowest percentage (4%) of international students
The UK (13%) and NZ (14%) are all public universities; Australia is the highest (18%), with some private schools but a fee maxima
Lower status universities which have less research and other income (endowments) have been most active in international recruitment and franchising
The highest percentage international enrolments are in high-margin subjects and the lowest in expensive subjects
An alternative explanation: An alternative explanation: summary (3)summary (3)
The demand for international education is driven by:
excess demand for higher education within fast growing developing countries
But:
supply-side response faster than foreseen by West
• Eg, ‘Project 211’, China’s massive investment in its top 100 universities
perceived value of degrees from lower status MESDC universities falling as consumers become more sophisticated (eg, Shanghai Jiao Tong University rankings since 2003)
An alternative An alternative explanation: summary (4)explanation: summary (4)
“If you can get into one of the top 10 Chinese universities, such as Beijing Normal University, Beda, Xinhuan, Fudan, Wuhan etc, then you are set up for life. You will acquire permanent guanxi (a relationship of influence) with the elite of China. You would be very unlikely to give up a place at one of these for a stint at [a foreign] University [like..] XXX or XXX.”
BBC - “Britain and the Chinese “sea-turtles”
The outlook for the The outlook for the internationalisation of higher internationalisation of higher education?education?
The Uppsala model suggests continuing globalisation of higher education
But if the drivers are government policy in the MESDCs and exceeds demand in the developing world, then within the MESDCs: pressure to deregulate domestic tuition fees could reduce the
attractiveness of international students; and
regulatory scrutiny could curb franchise activity
…and in the developing world: increasing domestic supply may cut demand for international
education faster than expected; and
growing market sophistication may reduce demand for lower status universities
ConclusionsConclusions
Globalisation is everywhere
Universities are more internationally integrated than ever before in terms of faculty, students, curricula, etc
Prima facie, universities appear to be internationalising in the same way as businesses
But:
universities have an educational mission and operate in a highly regulated, politicised environment
the rapid internationalisation of the student body for MESDCs over the period 1990-2005 may prove to be a transitional phenomenon, cased by special factors, rather than part of along-term trend