The learning business
Can trade in international education work?
By Kurt Larsen and Stéphan Vincent-Lancrin
Published on: March 06, 2003
Education is largely a national affair, but
it is fast becoming a worldwide service industry too, even for publicly-funded
systems. Does trade in education help and can education be traded on the
global market without compromising on issues like cultural independence or
quality? These questions raise important challenges for governments, educators
and students alike that will grow in the years ahead.
Until recently, it would have been incongruous
to refer to international student mobility as international trade in educational
services. Today in some OECD countries, there are clearly business motives
as well as traditional cultural and political rationales behind policies
to internationalise higher education. These two separate approaches have
fuelled the growth in trade in educational services over the past decade.
The current talks on “educational services” in the General Agreement on Trade
in Services (GATS) negotiations in the World Trade Organisation (WTO) highlight
the importance of these trends, as well as raising awareness of issues, especially
in relation to post-secondary education.
International student mobility to OECD countries
has doubled over the past 20 years. Between 1995 and 1999, the number of
foreign students rose almost twice as fast as the total number of tertiary-level
students in OECD countries (9% for the former as against 5% for the latter).
Most international trade in higher education services takes place within
the OECD area, which received 85% of the world’s foreign students. Foreign
students represent an important source of export revenue in some OECD countries.
They incur large expenditures for their travel expenses, education costs
and living expenses. Export revenue in education services amounted to an
estimated minimum of US$30 billion in 1999, not much less than the financial
services sector.
Every OECD country finances student and teacher
mobility to some extent via university bursary schemes, bilateral or multilateral
agreements and, increasingly, ambitious regional schemes. However, in recent
years, problems have mounted in the funding of higher education, largely
as a result of greater scale and demand. This situation encouraged some countries
to look for commercial solutions.
Although the extent to which higher education
is subsidised varies considerably across countries, higher education is largely
publicly funded in the OECD area; domestic or home students pay over 30%
of the real cost of their tertiary education in only three of the 22 OECD
countries for which data are available (Korea, Japan and the US). The main
feature of the commercial approach is to offer educational services to students
from abroad at unsubsidised rates, with the students covering at least the
cost of their education. Australia and New Zealand have rules that actually
prevent universities from providing subsidised educational services to such
students. But, as with any other marketed service, the commercial challenge
is how to attract a large number of international students or corner a large
share of the market.
International trade in educational services
has not only increased substantially in the OECD area, in some cases it has
also taken new forms, including educational institutions operating abroad,
and educational services being supplied across borders through e-learning.
Australia is a striking example of a country whose exports of post-secondary
educational services are increasingly delivered in the student’s home country:
between 1996 and 2001, such “offshore” enrolments increased from 24% to 37%
of all international students enrolled in Australian institutions. Most of
these students attended offshore campuses (28% of all international students
in 2001) and fewer (9% of all international students) were enrolled offshore
in distance education, although this number is growing. More than half of
the international students from Singapore and Hong Kong-China studying in
an Australian educational institution are enrolled in offshore courses. This
involves lower personal costs than studying abroad, and although such services
might not offer the same cultural and linguistic experiences as foreign study,
they are likely to meet a growing demand in the future. The international
market for educational services has to a large extent been demand-driven,
particularly by students from the rapidly emerging countries of north and
south-east Asia. These students may face capacity constraints in their home
countries, while there is the appeal of more widely recognised qualifications,
in mainly high-income and English-speaking countries.
But high demand leads to supply pressures,
whether on traditional universities, distance-learning institutions, or private
education and training companies. Initiatives are being taken, and providers
are joining together in partnerships to meet demand more effectively.
TRADE ISSUE
But is liberalisation the answer? Not according
to the 2002 Porto Alegre Declaration, which was signed by Iberian and Latin
American associations and public universities. The Declaration is radically
opposed to international trade in educational services. The signatories maintain
that promoting international trade would lead to deregulation in the education
sector with the removal of legal, political and fiscal quality controls,
that national governments would abandon their social responsibilities, and
that other outcomes would include an increase in social inequalities, the
weakening of ethical and cultural values, and a standardisation of education,
thus negating the sovereignty of the people.
The Joint Declaration on Higher Education
and the GATS, signed by four associations representing 5,500 American, Canadian
and European institutions, takes a cautious, though more ambivalent stance:
rather than coming out against international trade in educational services,
the signatories call for a freeze on WTO trade negotiations on educational
services. In their view, there is no need for trade negotiations, particularly
since they might significantly jeopardise the quality, accessibility and
equity of higher education and restrict the right of national authorities
to regulate and publicly subsidise their higher education systems. Meanwhile,
student representatives from OECD countries see trade and market competition
in the education sector as a threat to public funding and intellectual freedom
in higher education.
There is clearly uncertainty about the repercussions
that open trade and direct competition among educational service providers
will have on national higher education systems, especially as far as funding,
cost, quality, diversity and stability are concerned. But as international
trade in educational services has had no need of the GATS to achieve high
growth in the past, the WTO negotiations will probably not have a major impact
on growth in the near future. They may accelerate the development of international
trade in educational services with no student mobility (offshore campuses,
e-learning, etc.), but not in trade involving student mobility. More important
there are the potential barriers from host-country visa and immigration policies,
and these do not fall within the scope of the GATS. Nor does the assurance
of quality in international educational services, which is one of the major
brakes on the expansion of trade in education (see below).
Most requests for market opening under GATS
concern educational services in the private sector. The United States, for
instance, has confined its request for market opening to private post-secondary
education, making it explicit that it does not apply to public higher education.
EDUCATION FOR ALL
One of the notions of the last ten years has
been the need to close the so-called knowledge divide between rich and poor
countries. Undeniably, international trade in post-secondary education could
help improve access to post-secondary education in the developing world.
In most developing countries, less than 5% of the population currently has
access to post-secondary education. The number who wish to enrol is bound
to increase substantially in the coming years as the internationally-driven
goal of providing basic education for all is progressively achieved.
Clearly, many developing countries will have
difficulty meeting this demand in the near future. Initiatives in distance-learning
programmes that are linked with educational infrastructure in other countries
can help. Offshore campuses of foreign educational institutions are another
means, and they might also help contain the “brain drain” caused by students
leaving their home country. Programmes currently underway in China and India
show that widening access in these ways can work.
But the growth of international trade in educational
services also raises a number of questions for OECD governments. What should
their direct or indirect roles be in funding, regulating, monitoring and
delivering post-secondary education? They must respond to a more complex
environment with a wider range of education and training providers becoming
involved, increased connectivity and interdependence among national education
systems, and pressure for greater coherence among the national frameworks
of postsecondary education. Moves towards greater coherence are already evident,
for instance, with the European Higher Education Area, but the challenge
is just beginning.
QUALITY BATTLE
Quality is another hotly debated subject.
At present, very diverse quality assurance and accreditation mechanisms for
higher education are in place in different OECD countries. Almost all current
quality assurance models are confined to the educational activities of institutions
within national boundaries. These are supplemented by international initiatives
such as the UNESCO/Council of Europe Lisbon Convention and the European Bologna
process to secure better consumer protection against low-quality programmes
and to enhance transparency. However, the prospects for convergence or even
compatibility between these models are still as remote as they are uncertain.
Most student mobility programmes and existing schemes of credit recognition
and transfer do not involve any quality control. Some international procedures
for validation, and sometimes even accreditation, of programmes and institutions
have been established by professional organisations such as in engineering
and accounting, and within the information and communication technology sector.
The importance of such accreditation procedures will undoubtedly grow, and
with it, the pressure to co-ordinate quality assurance and accreditation
across borders.
A comprehensive international quality assurance
system is unlikely to be developed in the near future that could substitute
national policies and procedures. But given developments in transnational
education, including e-learning, a new global educational market may emerge
that will challenge current national quality assurance and accreditation
systems. Pressure would then mount for education to become more global.
References
OECD (2002), “The growth of cross-border education”, Education Policy Analysis 2002, Paris.
Larsen, K., and Vincent-Lancrin, S., (2002), “International trade in educational services: good or bad?”, Higher Education Management and Policy, vol. 14, No.3, Paris
© OECD Observer No. 235, December 2002
Related links
