The international trade of Higher Education

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1 The international trade of Higher Education Luciano Galán-Casado Universidad Autónoma de Madrid luciano.galan Luciano Galán Universidad Autónoma de Madrid Fribourg, september

2 The economy of Bologna Process a. Local. Universities and regional governments b. National. States c. World wide consequences Luciano Galán Universidad Autónoma de Madrid Fribourg, september

3 Three main focuses The globalization of higher education International trade of higher education The GATS Luciano Galán Universidad Autónoma de Madrid Fribourg, september

4 Globalization Social phenomena. (Inevitable and unstoppable) Information and communication technologies Global information Global economy Global trade Luciano Galán Universidad Autónoma de Madrid Fribourg, september

5 Where are we? International relations Trade Internet Trends Luciano Galán Universidad Autónoma de Madrid Fribourg, september 5 200

6 Internationalization of higher education European joint programs Technical and Administrative Staff Professors Students Luciano Galán Universidad Autónoma de Madrid Fribourg, september

7 Students in USA(2003) Total in HE Postgraduate students (14%) Foreign students (PG) (17%) Luciano Galán Universidad Autónoma de Madrid Fribourg, september

8 Percentage of tertiary foreign students Switzerland 17% Australia 13% Austria/U.K/Belgium 11% Germany 9% Demark/France/Sweden 6% USA 3% Spain 1% Luciano Galán Universidad Autónoma de Madrid Fribourg, september

9 Students in European Union EU (15) EU ( ) Students mobility (15) within EU(2.3 %) (15+10) Luciano Galán Universidad Autónoma de Madrid Fribourg, september

10 How will students influence the demand? Dramatically According to the information reported by Merrill Lynch (USA investment house) the number of students in 2025 will be around 160 millions which is the double of students in Luciano Galán Universidad Autónoma de Madrid Fribourg, september

11 Previous references of trade in Higher Education Languages B A Schools Internet Materials Luciano Galán Universidad Autónoma de Madrid Fribourg, september

12 Teaching in Internet Graduate and Postgraduate courses Continuous education (Long life learning) Specific training courses Luciano Galán Universidad Autónoma de Madrid Fribourg, september

13 Trends in HE Use of ICT for domestic and cross border HE activities. Rapid increase of for-profit entities providing HE domestically and internationally. Increasing cost and tuition fees paid by students of public and private institutions. Need of public institutions to seek alternative sources of funding. Luciano Galán Universidad Autónoma de Madrid Fribourg, september

14 Trends in HE Ability or inability of governments to fund the increasing demand for HE The fact that the business of transnational HE was alive and active before the GATS. The increasing of private providers is questioning the quality of the programs. Luciano Galán Universidad Autónoma de Madrid Fribourg, september

15 From International to Global Relations in HE Social. Governments Information and communication technologies. Information. Property rights Economic. Trade and mobility Regulations. GATS Luciano Galán Universidad Autónoma de Madrid Fribourg, september

16 Differences between internationalization and globalization of HE Economic Geographic Information and Knowledge Luciano Galán Universidad Autónoma de Madrid Fribourg, september

17 Key difference Internationalisation: Can be shaped and influenced by Higher Education Institutions (e.g. mobility, joint curricula, consortia) Globalisation: An external macro socio-economic process, hardly to be influenced by Higher Education Institutions Luciano Galán Universidad Autónoma de Madrid Fribourg, september

18 Is there a relation between globalization and international trade? Yes How will this affect the higher education? Positive view Negative view 18 Luciano Galán Universidad Autónoma de Madrid

19 Positives values 19 Innovation New providers Greater student access Increased economic gain New hybridization and fusion of cultures through mobility of people Luciano Galán Universidad Autónoma de Madrid

20 Negative aspects The threat to the role of government Public service / Public good Quality of education Homogenization of culture 20 Luciano Galán Universidad Autónoma de Madrid

21 What is Higher Education? Merchandise Commodity Public service Public good Service National value Luciano Galán Universidad Autónoma de Madrid Fribourg, september

22 Main categories of trade in education Cross border supply. Includes any type of course provided through distance education or internet, testing services or education material which can cross national boundaries Consumption abroad. Mainly involve the education of foreign students Commercial presence. Foreign universities, institutions or investors in another country Presence of natural persons. Ability of people to move between countries to provide educational services. Luciano Galán Universidad Autónoma de Madrid Fribourg, september

23 Supports to the trade Business of transnational education was alive and active before the advent of GATS. Education is in a large extent a government function and the agreement do not seek to displace the educational system and the right of governments to regulate and meet domestic policy Luciano Galán Universidad Autónoma de Madrid Fribourg, september

24 Critics to the trade GATS is a very new instrument and it is too soon to predict.. The whole question of the protection of public service is very uncertain and potentially at risk by the narrow interpretation of what means.. Any subsides given to domestic providers must also be given to foreign providers. If a foreign provider establishes a branch in a country this must permit to all WTO members the same opportunity and treatment. Luciano Galán Universidad Autónoma de Madrid Fribourg, september

25 How much money are we talking about? Global expenditures on education services exceed 2.3 trillion. The OCDE in 2001 estimate the value of the international trade in HE in 1999 en 34 billions in 1995 was estimated in 30 billion.. USA with 33% was clearly the first supplier followed by Australia and UK. In 1995 HE was on fifth place of most exported services in USA. Investment house like Merrill Lynch predict that public education will be globally privatized over the next decade and say there is an untold amount of profit to be made when this happens. Luciano Galán Universidad Autónoma de Madrid Fribourg, september

26 What is GATS? The General Agreement on Trade in Services is the first ever set of multilateral rules covering international trade in services. Agreement (WTO status equivalent UN) General (140 members) Trade Services Luciano Galán Universidad Autónoma de Madrid Fribourg, september

27 Structure of GATS First part. Framework containing the general principles and rules. Second part. National schedules with the list of countries specific commitments on access to their markets by foreign providers. Third part. Annex that detail specific limitations for each sector. Luciano Galán Universidad Autónoma de Madrid Fribourg, september

28 When the GATS was created and why? At the end of the 2nd. world war and with the objective of promoting the international trade GATT (General Agreement on Tariffs and Trade) was created in After the famous Uruguay Round from 1986 to 1994 it was decided the transformation of GATT to WTO (World Trade Organization) and an agreement for the liberalization of services (GATS)) was adopted. Negotiations began 5 year later (2000). Luciano Galán Universidad Autónoma de Madrid Fribourg, september

29 What other services related to higher education are included? Language testing Student recruitment Quality assessment of programmes. Luciano Galán Universidad Autónoma de Madrid Fribourg, september

30 What we think about this related services? Technological services. Quality assessment of programmes. These are areas where international trade may grow very quickly under consulting formulas. Luciano Galán Universidad Autónoma de Madrid Fribourg, september

31 Barriers to trade in HE The existence of government s monopoly High government subsidisation of local institutions Difficulties for the recognition of foreign degrees at both academic and professional fields The differential treatment of students enrolled in foreign institutions Luciano Galán Universidad Autónoma de Madrid Fribourg, september

32 Barriers to trade in HE Measures that limit direct investment by foreign education providers. (Equity ceilings) National requirements (Government Grants) Restrictions on recruiting foreign teachers Luciano Galán Universidad Autónoma de Madrid Fribourg, september

33 Barriers to trade in HE Direct restrictions that limit the students right of to study in other countries (Visa, currency control, etc.) Difficulties in translating degrees into national equivalents. Unequal access to resources for students. Restrictive use of national satellites or receiving platforms Luciano Galán Universidad Autónoma de Madrid Fribourg, september

34 How the GATS affects universities? Globalization effects on the universities will be more drastic than industrialization, urbanization and secularization combined. It is the biggest challenge the University has faced for more than a century and a half. (Castells) Luciano Galán Universidad Autónoma de Madrid Fribourg, september

35 How the GATS affects the Bologna process? If we want a European HE area that is characterised by the fluid mobility of students in terms of geographical, economic and social equity it looks very difficult to follow the GATS model The debate between competitiveness and cooperation is crucial in the EU area. Employers should be deeply involved in the HE space construction according to the Bologna process. Luciano Galán Universidad Autónoma de Madrid Fribourg, september

36 Where are we? The last negotiation round was open in Doha in December 2001 and country members could send their proposals until June (USA, New Zeeland, Australia and Japan) March Possible trading partners meetings and discussions GATS negotiations conclude Luciano Galán Universidad Autónoma de Madrid Fribourg, september

37 What universities and universities associations said? The 2002 Porto Alegre Declaration, which was signed by Iberian and Latin American associations and public universities is radically opposed to international trade in education. The Joint Declaration on Higher Education and the GATS, signed by four associations representing American, Canadian and European universities, rather than coming out against international trade, call for a freeze on WTO negotiations on educational services. Luciano Galán Universidad Autónoma de Madrid Fribourg, september

38 What countries have shown interest? USA. Education to a large extent is a government function, but most countries permit private education. The proposal envisions that private education will continue to supplement, not to displace, public education New Zeeland HE sector is vitally important to all countries. Reduction of barriers to trade in HE does not equate to erosion of core public education systems and standards. Australia Governments must retain their sovereign right to determine their own domestic founding. Japan It has become extremely important for each country to improve the quality of education and research. Primary interest should be improving quality Luciano Galán Universidad Autónoma de Madrid Fribourg, september

39 Experiences in other countries Malaysia (Invitation to foreign universities to establish under a clear regulatory framework) South Africa (Branch or Australian Universities) Canada (42% of the universities are actively involved in the export of HE services) Belgium (HE must be out of GATS) Rumania (In 10 years, 1/3 of the students are in private universities) Cameroon (1/3 of the students from secondary have no place at state universities) Luciano Galán Universidad Autónoma de Madrid Fribourg, september

40 Some key features a. Students mobility b. Freedom for mobility and recruitment of professors. c. Capitals mobility. Investments and benefits expatriation. d. Technological compatibility for transmission and reception through the satellites and national informatics networks. e. Difficulties in translating degrees into national equivalents and corresponding legal consequences Luciano Galán Universidad Autónoma de Madrid Fribourg, september

41 Quality and Accreditation Increasing transnational education and new legal trade rules require more attention to quality assurance and accreditation of cross border education programs and providers. Authority for QA, regulation and accreditation for cross border education must be guided by stakeholders of education and not left to trade officials or market. Luciano Galán Universidad Autónoma de Madrid Fribourg, september

42 Conclusions At present, the idea that there is a global concept of education in the world, is something that in a way or another everybody accepts; with nuances or sustantial discrepancies but at the same time with the recognition of the fact. Luciano Galán Universidad Autónoma de Madrid Fribourg, september

43 Conclusions The Bologna's process could be affected by the evolution of the international trade in HE that is taking place at these moments and by the interpretation and development of GATS. Luciano Galán Universidad Autónoma de Madrid Fribourg, september

44 Conclusions Some universities and governments have the idea that the rules of international trade are not applicable to the sector of education. The low cost of tuition fees for HE is incompatible whit the principles of commercial services. Luciano Galán Universidad Autónoma de Madrid Fribourg, september

45 Conclusions The higher education s world market will affect and increase the mobility of the main agents that would have the opportunity to establish and develop their activities in different countries in a more easy way than until now Luciano Galán Universidad Autónoma de Madrid Fribourg, september

46 Conclusions The advantages of a free HE market may fall in an unbalance way on the side of globalizators. Even if there are some positive effects for less developed countries, the benefits will mainly go to the agent that provides the service. Luciano Galán Universidad Autónoma de Madrid Fribourg, september

47 Conclusions The national authorities for Trade and Economy are the only official representatives at the GATS negotiations. Sectors concerns (as HE) are not directly represented. It is of the utmost importance that Ministers of Education have full information about the process; analyze the specific national needs and agree with the official representatives the proposals and political actions for HE within the GATS. Luciano Galán Universidad Autónoma de Madrid Fribourg, september

48 Conclusions Quality must be among the main objectives for future trade in HE. Higher Education authorities, agencies, students, professors and the university community as a global, should demand the quality improvement of the overall system. Not just from the point of view of the mobility and the fees but mainly the quality of teaching and research. Luciano Galán Universidad Autónoma de Madrid Fribourg, september

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