Analysing Australia’s global higher ed export industry

The globalization of higher education and research is creating and attracting new players and new analysts. Credit ratings agencies have, for example, started to pay more attention to the fiscal health of universities, while fund managers are seeking to play a role in guiding the investment strategies of university endowments in the United States, and more recently Saudi Arabia.

On this broad theme, and further to our recent entry (‘New foreign student and export income geographies in the UK and Australia‘), the Reserve Bank of Australia released a June 2008 report titled ‘Australia’s Exports of Education Services‘. The Reserve Bank of Australia‘s:

main responsibility is monetary policy. Policy decisions are made by the Reserve Bank Board, with the objective of achieving low and stable inflation over the medium term. Other major roles are maintaining financial system stability and promoting the safety and efficiency of the payments system. The Bank is an active participant in financial markets, manages Australia’s foreign reserves, issues Australian currency notes and serves as banker to the Australian Government. The information provided by the Reserve Bank includes statistics – for example, on interest rates, exchange rates and money and credit growth – and a range of publications on its operations and research.

The scale and economic impact of this new industry is reflected in the Bank’s interest in the topic.

‘Australia’s Exports of Education Services‘ highlights key dimensions of the development of what is now one of Australia’s leading export industries such that it now generates $12.6 billion (2007 figures), and is Australia’s third largest export industry (see the two figures below from the report).

While the report is succinct, and can be downloaded for free here, I would like to flag three key themes from the perspective of the GlobalHigherEd analytical agenda.

First, reading through the report one cannot help but note the mercantilist approach that is infused in the analytical terms and data categories associated with the report, and Australian higher education ‘industry’ discussions more generally. From the dominant Australian perspective, global higher ed is unabashedly an export industry that needed to be created in a regulatory and ideological sense, and then subsequently, nurtured, reshaped over time, and more generally planned with strategic effect. Global higher ed is also situated within a broader array of educational services:

  • Higher Education
  • English Language Intensive Courses for Overseas Students (ELICOS)
  • Vocational Education and Training (VET)
  • Schools
  • Other Awards Sectors (e.g., “bridging courses and studies that do not lead to formal qualifications”)

Data on international student enrollments (1994-2007) using these categories is also available at the Australian Education International website (see the site too for clarification about source data and a key methodological change in 2001).

This strategic cum assertive/aggressive approach to the creation of ‘customers’ means that Australia will also ensure it has a capacity to monitor its primary competitors (especially New Zealand, the United States and the UK), and its emerging competitors (especially the group of countries that make up the European Higher Education Area, as well as Malaysia, Singapore, and China). Competition can occur through enhanced capacity to attract the mobile students who should have come to Australia, enhanced capacity to keep them at ‘home’ (via “import-substitution” policies and programs), or the external profile of weaknesses in the quality of Australia’s higher educational offerings, especially for fee-paying foreign students.

Second, the emergence of China and India as sources of mobile students is abundantly evident in the report (see Graph 5 and Table 4). Recall our 22 June entry, too, which presented data on Asian student numbers from the new Asian Development Bank (2008) report titled Education and Skills: Strategies for Accelerated Development in Asia and the Pacific. In short, Australia has strategically hooked into the highly uneven development wave evident in the ADB report, and shifted from ‘scholarship to dollarship’ (a phrase Katharyne Mitchell has used more generally) with respect to the country’s primary overseas student target. As the Bank’s report puts it:

Until the mid 1980s Australia’s involvement in providing education services to non-residents was directed by the Australian Government’s foreign aid program. Nearly all overseas students studying in Australia over this period were either fully or partly subsidised by the Australian Government, with the number of overseas students capped by an annual quota. Following reviews into Australia’s approach to the education of overseas students, including the 1984 Jackson Report, a new policy was released in 1985. This policy introduced a number of measures, such as allowing universities and other educational institutions to offer places to full fee-paying overseas students, which encouraged the development of Australia’s education exports sector. There were also changes in overseas student visa procedures aimed at helping educational institutions market their courses internationally. As a result of these changes, overseas student numbers increased significantly, and there has been a rise in the proportion of university funding sourced from fee-paying overseas students.

Third, the expansion of such a market, and the creation of significant export earnings, has created dependency upon full fee paying foreign students to bankroll a major component of the budgets of Australian universities (see Graph 4 above).

Thus, when between 15-20% of average annual revenue comes from “fee-paying foreign students”, especially the parents of Asian students, a condition of broad structural dependency exists, all ultimately shouldered upon household decision-making dynamics in places like Kuala Lumpur, Beijing, Mumbai, Seoul and Singapore. And it should also be noted that the income streams being generated from these students are proportionally being reinvested into the enhancement of the faculty base; indeed, as the figure below from a new Association of Universities and Colleges of Canada report (Trends in higher education – Volume 3: Finance) demonstrates, Australia has seen a massive increase in student numbers (local + foreign) but relatively little faculty growth.

Is it any wonder then, that the Brisbane Communiqué Initiative, an initiative that we will profile in early August, was developed in 2006, largely in response to the Bologna Process?

The Brisbane Communiqué, and related initiatives in Australia, remind us that structural dependency upon foreign (Asian) students exists. Given this, Australia cannot help but be concerned about any initiative that might lead to the possible realignment of Pacific Asian (especially China), and South Asian (especially India) higher education systems to the west (aka Europe), versus the south (Australia), when it comes to the mechanisms that enable international student mobility.

Kris Olds

Surveying US dominance in science and technology for the Secretary of Defense

The global higher education and research landscape is a fast changing one at this point in history. Amongst many indicators we have increasingly powerful players (e.g., Kaplan, Thomson Reuters), new interregional and global imaginaries starting to generate broad effects (e.g., via the global dimensions of the Bologna Process), a series of coordinated multi-university attempts to create action on what some stakeholders deem “global challenges” (e.g., see The Global Colloquium of University Presidents), and a recent US-based attempt to create ostensibly global higher education action for global development.

On this latter initiative, deemed the Higher Education Summit for Global Development, I can’t help but think that the cost to organize and operate such a ‘summit’ was significant when compared to the related announcement of “$1 million [644,000 euro] to fund 20 partnership-planning grants of $50,000 to plan long-term collaborations between African and U.S. institutions of higher education“. Money of that scale is characteristically snatched from a dormant account inside some department to produce a ‘deliverable’ and seems somewhat incommensurate (in material and symbolic terms) with the stated ambition of the event, even if it is just the marker of a new phase of action.

The pace of globally-framed higher education and research change was abundantly clear to me last week when I was in Brussels (pictured to the left) meeting with a wide variety of informed and creative stakeholders; stakeholders who are actively creating elements of this new global higher ed/research architecture. The combination of insight and resources was impressive, and another reminder of what happens when states focus on building intellectual infrastructure for the medium to long term.

In this context, today’s entry briefly profiles one new contribution to challenging dominant views on the status quo of thinking about aspects of the globalization of higher education and research, though from the other side of the Atlantic – in the USA.

On 12 June the Rand Corporation released a major report titled U.S. Competitiveness in Science and Technology. The associated press release can be accessed here, and a summary Research Brief here.

This new report is a 2008 “companion report” to the 2007 collection, Perspectives on U.S. Competitiveness in Science and Technology, in which we flagged the Rand Corporation’s inclusion of one chapter by Jonathon Adams, a UK-based private consultant whose firm (Evidence Ltd) provides services in relation to the UK Research Assessment Exercise (RAE).

U.S. Competitiveness in Science and Technology presents findings that challenge notions of a slide in the dominance of the United States in the global science and technology landscape, especially with respect to research. In summary fashion, Rand notes:

Is the United States in danger of losing its competitive edge in science and technology (S&T)? This concern has been raised repeatedly since the end of the Cold War, most recently in a wave of reports in the mid-2000s suggesting that globalization and the growing strength of other nations in S&T, coupled with inadequate U.S. investments in research and education, threaten the United States’ position of leadership in S&T. Galama and Hosek [the Rand authors] examine these claims and contrast them with relevant data, including trends in research and development investment; information on the size, composition, and pay of the U.S. science and engineering workforce; and domestic and international education statistics. They find that the United States continues to lead the world in science and technology and has kept pace or grown faster than other nations on several measurements of S&T performance; that it generally benefits from the influx of foreign S&T students and workers; and that the United States will continue to benefit from the development of new technologies by other nations as long as it maintains the capability to acquire and implement such technologies. However, U.S. leadership in science and technology must not be taken for granted, and Galama and Hosek conclude with recommendations to strengthen the U.S. S&T enterprise, including measures to facilitate the immigration of highly skilled labor and improve the U.S. education system.

Coverage of the report is now emerging in outlets like the Economist, in the general media, and in the blogosphere (e.g., see this critique of the Rand message in the Computing Research Policy blog)

U.S. Competitiveness in Science and Technology is also noteworthy for it is produced by Rand for the Office of the Secretary of Defense (OSD), a relatively sprawling institution as is evident in this organizational diagram:

As the inside page to the report puts it:

The research described in this report was prepared for the Office of the Secretary of Defense (OSD). The research was conducted in the RAND National Defense Research Institute [NDRI], a federally funded research and development center sponsored by the OSD, the Joint Staff, the Unified Combatant Commands, the Department of the Navy, the Marine Corps, the defense agencies, and the defense Intelligence Community under Contract W74V8H-06-C-0002.

The logic of the OSD funding NDRI-produced research likely relates to the US defense establishment’s concern about emerging science and technology (and research) ‘footprints’ of powers like China, India, and Europe vis a vis intra-US capacities to educate, produce knowledge, and have this knowledge disseminated (and generate effects) at a range of scales and via a variety of channels. Yet the report also seeks to use data and analytical narratives to prick holes in the emerging taken-for-granted assumptions that the era of American hegemony, with respect to global knowledge production, is over. It reminds me, a little, of the informed testimony of Michael S. Teitelbaum, Vice President, Alfred P. Sloan Foundation, on 6 November 2007 before the Subcommittee on Technology and Innovation, Committee on Science and Technology, U.S. House of Representatives. Finally, the report is very clear in flagging the dependency of US science and technology capacity, and the US’ global research presence/impact, upon highly educated foreigners.

In an overall sense, then, U.S. Competitiveness in Science and Technology could be read as a detailed and insightful contribution to ongoing deliberations about the scale of US science and technology might, and an effort to reshape the contours of a critically important debate. I’m not sure if it could be classified as a contribution to thinking about “war by other means”, but rather as a reflection of a “new threat environment ” where thinking and analysis focuses on:

[h]ow and in what way do new challenges–from terrorists, insurgents, weapons of mass destruction, and the proliferation of technology–that the United States faces at home and abroad color America´s definition of and approach to national security? How will changes in the international economic, diplomatic, political, and alliance environments affect U.S. interests and capabilities? How will those changes and threats–from states, non–states, and other traditional and non–traditional sources– affect the United States´ ability to engage and project its power?

Regardless of the logics behind it, the report is thought provoking, laden with data and well designed graphic images, and is clearly written.

Finally, readership. I can imagine the current Secretary of Defense quite enjoying this read given that he was most recently President of Texas A&M University, and “also served on the Board of Directors and Executive Committee of the American Council on Education” and “the Board of Directors of the National Association of State Universities and Land-Grant Colleges”. I am not as sure about the previous one, though. If he is still on the OSD mailing list perhaps he’ll be perusing the text for indicators of the declining health of “old Europe”!

Kris Olds

29 June update: This letter to the Economist (26 June 2008) is worth reading:

SIR – Referring to the conclusions of a RAND report on research and development in science and technology, you claimed that fears that America is losing its competitive edge in innovation are “overblown” (“What crisis?”, June 14th). Your evidence is that “America has lots of sources of R&D spending: federal money accounted for only $86 billion of the $288 billion it spent on R&D in 2004” and that “spending on the life sciences is increasing rapidly, a reasonable bet on the future.” The important point to be made here is that the composition of American R&D has changed markedly over the years.

Federal support for basic research at universities in the physical sciences and engineering—the type of research most directly coupled to technological innovation—has withered relative to spending on research in the life sciences and R&D carried out by industry. The increase in privately financed product-development (often the D in R&D) and biomedical research are both good, but neglecting basic research investments of the type that gave us the internet, solid-state electronics and medical imaging is not a recipe for future success.

Given that it typically takes 15 years for new ideas dreamed up in the laboratory to become commercial, America may be losing the technology race even while seeming to remain on top. At the very least, America’s relative position in the world is slipping, which bodes ill for the future economic standing of the United States.

George Scalise
President
Semiconductor Industry Association
San Jose, California

‘Malaysia Education’: strategic branding leads to growth in international student numbers 2006-8?

Several months back in our round-up of the global higher education student mobility market, we reported that Malaysia might be viewed as an emerging contender with 2% of the world market in 2006 (this was using the Observatory for Borderless Higher Education figures which reports only on the higher education sector).

Last week, Malaysia’s leading newspaper The Star reported that figures had increased between 2006 and 2008 by 30%, bringing the overall numbers of international students in Malaysian international schools and higher education institutions to 65,000. According to the following calculations by industry analyst (see pamjitsingh.ppt) the Malaysian government is well on target to realise its 2010 goal of 100,000 international students.

Taking into account the forecast in world demand by 2010, the Malaysian government estimates that their market share would need to grow from its current world share of international students (schools and higher education) of 3.9% in 2004 to 6.6% in 2010. In comparison to the global average annual growth rate of international students which is around 7.4% p.a, the Malaysian target growth rate would need to be in the order of 24.0% per annum to achieve the 2010 target.

In order to realize this goal, a new Higher Education Ministry Marketing and International Education Division was created.

    dr-nasser.jpg

    Dr Mohamed Nasser Mohamed Noor took on the post of Division Director in January 2006. According to Dr. Nasser, the success of this rapid increase can be attributed to Malaysia’s ‘branding’ of its education sector – ‘Malaysia Education’. It would seem that Malaysia is not far off course to realize their 2010 target if they maintain their current progress of 30% increase over two years (2006-2008).

    Branding has emerged as an important strategy for governments seeking to strategically develop their higher education markets. Nick Lewis’s entry on Brand New Zealand carried on GlobalHigherEd late last year illustrates how cultural re/sources, such as ‘clean’, ‘safe’, ‘green’ New Zealand, are being drawn upon to realise value and to reposition New Zealand in a highly competitive market.

    Similarly Europe (see this report destination-europe.pdf) has been casting around for an identifiable ‘brand’ to market itself as a significant player with an identifiable ‘product’ in the global higher education market. This means finding a combination of distinctive elements that enable the country or region to position themselves in relation to the competition.

    The ‘Malaysian Education’ brand draws on deep cultural, religious and political resonances to promote its product – one that emphasizes lifestyle, culture and quality of education. This includes the value to be gained from its unique multicultural population of Malay, Indian and Chinese; its Islamic religion; and its experience of colonialism. Despite the contradictions inherent in this new form of neo-colonialism, these cultural values and symbols are being (effectively?) mobilized to open up the African, Arab, Chinese and Indonesian markets.

    Malaysia’s story demonstrates the high level of fluidity in globalising the higher education market. It requires players to be highly competitive, constantly utilize intelligence, be attentive to strategies as to how to open new markets, and have a way of representing the sector as an attractive and unique brand.

    Will Malaysia leave behind its ’emerging contender’ crown and don the mantle of a major player in the region? Much depends clearly on what the other players in the region do – Singapore, China and Australia. Let’s see what 2010 reveals.

    Susan Robertson

    Interregionalism and the globalization of higher education: new Euro-Asia initiatives

    One of the interesting aspects of change in higher education systems is how they are being denationalized; reshaped, as it were, by forces and actors that are thinking at, and operating at, scales other than the national. In social science terms (e.g., see the work of Neil Brenner) this is often deemed the “relativization of scale”; the process whereby actors operating at the global scale, the inter-regional (e.g., Europe-Asia) scale, the supranational regional (e.g., European, Asian) scale, the national scale (e.g., Germany), the subnational regional (e.g., Silicon Valley) scale, and the urban scale, all come to play increasingly important roles in shaping a “multiscalar” development process. See, for example, these two recent reports by the European University Association (EUA) and the OECD on higher education for regional development in a globalizing era:

    euacover.jpg

    oecdcover.jpg

    In this case we have a regional stakeholder organization (the EUA), and a multilateral organization (the OECD), both framing development processes simultaneously at the urban, regional, and global scales, with the national scale present, though clearly not dominant. Don’t forget, as well, that the OECD is a creation of member states, and its global thinking is therefore animated by, and mediated by, the nation-state. This is a point Saskia Sassen has insightfully driven home, most recently in Territory, Authority, Rights: From Medieval to Global Assemblages (Princeton University Press, 2006).

    On the higher education and research policy front one emerging phenomenon worth taking note of is interregional dialogue. For example there is a now a decade long series of formal Transatlantic Dialogues, anchored by the American Council on Education (ACE), the Association of Universities and Colleges of Canada (AUCC), and the European University Association (EUA). These meetings are always framed by ‘global’ thinking, but focus on achieving interregional objectives and enhanced understandings of what is going on on both sides of the Atlantic.

    In this context the EUA announced, on 21 February, that it is partnering with the German Academic Exchange Service (DAAD), and the Netherlands Organisation for International Cooperation in Higher Education (Nuffic), to “establish an EU-Asia Higher Education Platform for European and Asian academics and policy makers”. This initiative is being facilitated by the European Commission’s Asia Link programme. As the EUA puts it, the purpose of the two-year project is to:

    • Provide a means for enhancing information exchange, dialogue, and cooperation in higher education and research between the two regions;
    • Develop best practices for institutional development and cooperation, and foster mobility of students and academics between the two regions;
    • Draw attention to the role and situation of universities in developing countries.

    Throughout the course of 2008-9, a series of workshops and round tables in Asia and Europe will be organised, targeting institutional development and cooperation issues. Amongst the themes that are expected to be covered will be higher education governance and management, decentralisation, cooperation in graduate education, and interregional and inter-institutional cooperation in quality assurance.

    While this is a complement to other forms of engagement also underway, and it is only targeted at parts of Asia, it is a noteworthy one.

    First, and most importantly, there is much to learn in Asia about European developments over the last ten years given that Europe is grappling with the ‘modernization’ of its higher education system at a regional scale, though in a manner that blurs scales of action and intent, and takes into account national sensitivities and differential capacities for statecraft.

    Second, it differs from the nature of North America-Asia and Australasia-Asia engagement, both of which tend to be relatively more person to person (e.g., the Australian Scholarships, the Fulbright awards) or event-oriented (e.g., student recruitment fairs, the US University Presidents’ Delegation to Southeast Asia).

    In contrast, the EU-Asia Higher Education Platform is a truly post-national/interregional initiative, of a programmatic nature, and with an associated development agenda that focuses on systemic change.

    In addition, and tying back to the start of this entry, note the presence of the nation-state in enabling EU-Asia relations to be forged, both directly and indirectly. This initiative is one that will also inevitably be forced to grapple with huge national variations in Asian higher education systems, and the lack of institutional capacity to operate at a regional scale in Asia, with respect to higher education. Yet while nation-states in Asia have not (yet) prioritized the construction of a regional higher education imaginary, it is only a matter of time given the structural forces that are reshaping Asian societies and economies. The complexion of the changes that will eventually emerge, and the nature of the intra-Asia and Asia-Other dialogue(s) facilitating them, have really yet to be determined.

    Kris Olds