International Development Research Project. Prepared for: Prepared by:

Transcription

1 International Development Research Project Prepared for: Prepared by:

2 There are few sectors of the UK economy with the capacity to grow and generate export earnings as impressive as education. David Willets, Minister for Universities & Science, UK Government July 2013 Page 2

3 Executive Summary NSW Trade & Investment (NSW T&I) commissioned EduWorld and AFG Venture Group (AFG) to: identify export opportunities for NSW VET 1 providers; maximise the State s strengths to provide offshore delivery of education and training (referred to as Transnational Education or TNE) 2 to meet global workforce needs; and to profile NSW s capabilities to inform business development and promotional activities for the VET sector. Our approach to this project involved both secondary and primary research: Secondary research to identify which two countries from an initial selection of 13 appear to represent the greatest short to medium term TNE opportunity for NSW VET providers and to explore both identified markets in more detail. Primary research in the form of qualitative in-depth interviews with VET providers involved in TNE to better understand some of the pull and push factors contributing to VET providers undertaking or not pursuing TNE. Primary Research The interviews conducted with VET providers already active in TNE revealed some common themes and key findings including: The need to undertake comprehensive due diligence before undertaking any TNE initiative. This includes assessing: the actual market in respect to the demand for the courses you offer; the ability of potential students in the market to pay for your courses at a rate that makes your investment both sustainable and profitable; the regulatory environment for both clarity and support for foreign educational services. As one private provider noted, Act slowly and deliberately and be patient yet persistent. 1 For the purposes of the research, vocational education and training (VET) is defined as education and training which is skills-focussed, typically related to a trade, occupation or vocation. This includes the English Language (ELICOS) training, pathways, registered training organisations (RTOs), non-registered training providers, education technology organisations delivering skills training, and any other organisation delivering industry skills development. 2 Transnational demand (TNE) this encompasses all types of education, or educational services (including those of distance education) in which the learners are located in a country different from the one where the awarding institution is based. Such programs may belong to the education system of a State different from the State in which it operates, or may operate independently of any national education system. 2 This is sometimes also known as offshore delivery i.e. the delivery of the education occurs offshore/in a different country from where the awarding institution is located. For the purpose of this report this target group will be referred to as TNE students. Page 3

4 The need to conduct due diligence in selecting local partners was also well cited by the interviewees. One TAFE respondent noted that, You need to have choice in potential partners so do due diligence on up to three and make sure one ticks your boxes. If not be prepared to walk away. English language was seen as a potential entrée into a market and a forerunner to the introduction of other courses as the case studies for Korea and Vietnam illustrate. English as the lingua franca of the new ASEAN Free Trade Zone, due to come into effect in 2015, was seen as a key factor for some TNE providers and a reason they stated for offering English language training as their initial TNE courses. Cross-cultural challenges, communication and an understanding of the support required both on the ground in the selected TNE location and within your home institution were also areas highlighted by respondents as key factors to take into consideration to mitigate against risk. This included ensuring: o staff involved in TNE operations know how to work cross-culturally particularly in the selected country o staff establish strong communication channels and o staff effectively set expectations from the beginning One private provider suggested having someone from your implementation team on the ground as early as possible who can be based there during the set up and negotiations as a way to ensure a good start. There were a varied set of reasons why institutions have undertaken a TNE initiative according to the respondents but there were some reoccurring themes including: the forging of international links and the two way flow of benefits that result from these activities; meeting an unmet demand for quality skills training in country; and as an additional revenue stream for institutions. However, in connection with the latter, many of those interviewed heeded caution in believing that TNE was all about profits with one respondent suggesting that providers set aside a budget for three years to develop your TNE programme. On a final note, interviewees emphasised the importance of having government support on both sides i.e. in the selected TNE location in terms of the ease of establishing a foreign entity in the selected country and assistance given by state and federal bodies in Australia. As one provider stated highlighting this: Page 4

5 The Singapore Government was supportive at every step of the way for selected education training providers including support subsidies for business improvement including computer systems and support for conference attendance. Secondary Research The secondary research set out to identify two priority markets that represented the greatest potential in the short to medium term for NSW VET providers looking to deliver offshore. Our research identified the top five markets that appeared to represent the greatest potential as China, Vietnam, India, Indonesia and South Korea (Korea). NSW T&I, in consultation with the sector, initially confirmed China and Vietnam as the markets to focus on, but given the work currently being undertaken by Austrade to look specifically at TNE opportunities for VET providers in China, the decision was made to substitute Korea for China. The following summarises the conclusions from the more in-depth review of the TNE opportunities for VET providers in these two countries. However, it must be highlighted here, that this report represents an initial review of these markets and potential opportunities and we strongly recommend that any institution considering TNE in either market (or any market for that matter) undertakes comprehensive due diligence, including in-country research, before proceeding with any commitments. Vietnam It is clear that there is growing demand for VET in Vietnam and despite significant increases in both provision and enrolments in recent years, there are still many areas of unmet demand. The Government recognises the importance of improving both the quality and quantity of VET in Vietnam and has openly stated that it considers participation from foreign providers essential to the achievement of this agenda. Australian education enjoys a high profile in Vietnam (it s the most popular destination for Vietnamese students studying overseas and a prominent, if not the leading, TNE provider in Vietnam). Vietnam s growing affluence means increasing numbers of people are both willing and able to pay for their education, particularly given the cultural priority given to educational achievement. Page 5

6 In addition to the growing demand from students for VET courses, industry in Vietnam reports significant and diverse skill shortages at the vocational level, the magnitude of which, if not effectively addressed, threatens to stifle the Country s growth. Industries which currently lack sufficient skilled workers and which represent potential opportunities for NSW VET providers include: o o o o o o o o automotive technology electrical and mechanical manufacturing hospitality and tourism information and communication technology navigation and shipping industries English language soft skills (project management, people management and leadership) specific technical skills sets needed by each industry. However, despite the potential demand from both students and industry for better quality and increased VET provision in Vietnam, there are a number of challenges including: o The operating environment. Vietnam scores poorly in terms of the level of transparency with corruption widely reported across all sectors, including the education sector. o The legislation covering foreign education provision in Vietnam is complex. o Quality assurance conditions within VET in Vietnam are inadequate and the availability and qualifications of vocational training teachers and trainers are insufficient 3. o The mechanism and policies on management and development of vocational training in Vietnam are not comprehensive 4. o Whilst there is recognition of the importance of industry as a key stakeholder in VET in Vietnam, a close and institutionalised linkage between enterprises and vocational training institutions has not yet been established. Enterprises participation in vocational training has been largely passive; there is still a lack of underlying legal documents and regulations on the business community and its role as a TVET stakeholder 5. 3 TVET Quality Breakthrough: Vietnamese TVET Background Paper: MOLISA October TVET Quality Breakthrough: Vietnamese TVET Background Paper: MOLISA October ibid Page 6

7 o Vietnam is a relatively new player in the TNE space and is still developing capacity to deliver western style education mmes. Where TNE programmes are to be delivered in English, there are challenges finding academic staff with sufficiently strong English language capacity and most students do not typically have the required English language skills, hence language training is usually part of the student service provision for commencement 6. South Korea (Korea) Education at all levels is a high priority for Koreans. Korea has one of the highest post-secondary participation rates in the World. Furthermore, Korean families are willing and accustomed to spending on education i.e. private tuition is the highest as a proportion of GDP among all OECD countries. Korea s post secondary enrolments have increased rapidly over the last few decades, but in recent years increasing numbers of students are choosing to pursue university over VET programmes, to the extent that there is now an over supply of higher education graduates and a shortage of people with the right VET qualifications. Australia enjoys strong relationships with Korea, as illustrated by the following. o o o o The Country is Australia s third largest global export market and Australia is well positioned to attract greater investment from South Korea. It is a known quantity with a reliable, well regulated and transparent investment environment projected to continue delivering economic growth 7. Korea remains an important source of onshore international enrolments for Australian VET providers. Overall Korea is Australia s third largest source of international student enrolments and despite recent softening in demand Korean VET onshore international enrolments in Australia appear to have started to recover in Whilst it is difficult, if not near impossible, to accurately determine TNE demand in Korea given the lack of TNE enrolment data and without undertaking primary research, the evidence gathered indicates that there is growing interest at both a student and parental level in TNE options and significant government support to encourage TNE provision, particularly at the higher education and school levels. 6 Issues in TNE regulation in Vietnam: George Nguyen; Dr Anna Shillabeer; RMIT International University Vietnam; 7 Austrade: South Korea Briefing Page 7

8 The Government appears to be viewing TNE as a way to: o o o o Increase the nation s competitiveness; Help improve the overall quality of the system and the number of quality providers; Position South Korea as an education hub (and in turn attract foreign students and income) and Prevent the outflow of local students going overseas to study. There appears to be TNE opportunities for NSW VET providers in Korea in areas such as: ELICOS; niche areas with skills shortages; VET programmes targeting non-traditional students i.e. career changers, people with degrees needing additional skills for employment, working adults; and VET delivered in partnership with industry. However, there are also some challenges which need to be taken into consideration in regards to TNE development in Korea including: o o o The declining youth population in Korea; Parental and student preference for higher education over VET (despite growing unemployment amongst university graduates and job opportunities for people with VET qualifications); and Significant competition at both the VET and Higher Education levels, particularly with the latter where there are growing numbers of graduates who cannot got jobs. In conclusion, it seems that there may well be some opportunities in South Korea for NSW VET providers but that additional research is required as these are unlikely to be in mainstream VET provision given the comprehensive nature of VET in South Korea and the decline in student demand for VET programmes. Page 8

9 Table of Contents Section Page 1. Introduction Global Overview of Post Secondary Education Overview of TNE TNE Enrolments Review of 13 Selected Markets Identified Priority Markets South Korea Vietnam 81 Appendix 1: TNE Markets Raw Data 115 Appendix 2: Country Scoring Matrix 116 Appendix 3: Qualitative Research Report 117 Page 9

10 1. Introduction This report is part of an initiative being undertaken by NSW Trade and Investment which aims to: Identify export opportunities for NSW VET 8 providers; Maximise NSW strengths to provide offshore delivery of education and training (for the purposes of this report we shall refer to this market segment as Transnational Education or TNE) 9 to meet global workforce needs; and Profile NSW s capabilities to inform business development and promotional activities such as missions, exhibitions and events, as well as inform other areas of NSW T&I so that they are able to identify opportunities for the sector This project reviews the demand and supply factors driving TNE, specifically to: From the demand side 1) Identifying two markets (countries) with the greatest opportunity for NSW providers to deliver offshore VET programmes and profile the top industry skill needs within each market a. Triangulate data from a range of sources including industry growth rates, education & training revenues, enrolment growth by subject area, analysis of Austrade opportunities and other sources as required. b. Identify markets and needs through an analysis of demand, barriers to offshore delivery, skills transferability, ease of doing business, operating environment and other factors as required. 8 For the purposes of the research, vocational education and training (VET) is defined as education and training which is skills-focussed, typically related to a trade, occupation or vocation. This includes the English Language (ELICOS) training, pathways, registered training organisations (RTOs), non-registered training providers, education technology organisations delivering skills training, and any other organisation delivering industry skills development. 9 Transnational demand (TNE) this encompasses all types of education, or educational services (including those of distance education) in which the learners are located in a country different from the one where the awarding institution is based. Such programmes may belong to the education system of a State different from the State in which it operates, or may operate independently of any national education system. 9 This is sometimes also known as offshore delivery i.e. the delivery of the education occurs offshore/in a different country from where the awarding institution is located. For the purpose of this report this target group will be referred to as TNE students. Page 10

11 From the supply side 2) Identifying motivating push and pull factors contributing to VET providers undertaking offshore delivery a. Detailing push and pull factors present in the domestic market, including, but not limited to, regulatory issues. b. Develop recommendations for overcoming factors that are preventing VET providers from pursuing offshore opportunities. Approach This project comprises three distinct components as summarised in the following table. The main body of the report contains the findings for the secondary research, with the findings from the primary research contained in Appendix 3. Page 11

12 Component Deliverable Secondary research A review of an agreed to 13 potential countries for NSW VET providers, to include an assessment of: Existing demand from that market for Australian TNE and Australian onshore enrolments (our research shows that those markets where Australia already enjoys high levels of awareness and enrolments typically represent the greatest potential for TNE delivery) Tertiary and in particular VET level enrolments Ratio of tertiary education enrolment GDP per capita International trade as proportion of GDP and total world trade Bilateral trade between Australia and the country Trade between country and NSW Service sector as proportion of economic growth Openness to TNE Internet penetration and usage Number of TNE students as % of total domestic enrolments Identification of 2 markets representing greatest opportunity in the short term Primary Research 8 qualitative interviews with NSW public and private sector VET providers and industry experts to better understand some of the pull and push factors contributing to VET providers undertaking or not pursuing TNE. Report summarising the findings against key areas explored Secondary Research More comprehensive review of the two identified (and agreed to) markets that appear to represent the greatest short term potential for TNE for NSW VET providers. The scope of this would be determined based upon the outcomes of Phases I and II but we anticipate would include for each country an assessment of: Detailed report on two selected priority markets Page 12

13 The Country (demography, language, tertiary participation rates, economy and economic influences on education) Education system, operating and regulatory environment vis a vis foreign provision and in particular TNE provision and at the VET level Gap between supply and demand Demand for TNE and specifically Australian VET TNE Barriers to offshore delivery, skills transferability, ease of doing business in the market Government education hub ambitions Existing education infrastructure Regulation and recognition of foreign education providers Quality assurance frameworks for foreign providers Profile of the top industry skills required in each market and any data on industry skills shortages (to the extent that this data exists) Possible areas of course/discipline demand at the VET level Possible case studies of successful VET TNE delivery from other either Australian or other country institutions or government bodies EduWorld would like to stress that the information about education and particularly this segment of the market, TNE, (and especially at the VET level) is extremely limited and what data that is available is not comprehensive. Consequently, there are inevitable gaps in the information presented in this report and inconsistencies between the data reported between markets. Methodology Research for this report drew from a wide variety of sources including: global data sources e.g. World Bank, OECD; in country data sources; a general literature search; and conference reports and papers. Any report of this nature, covering a relatively broad range of topics, obviously has Page 13

14 its limitations and that is particularly the case with the education industry that is a service sector in its relative infancy operating in a rapidly changing environment with a diverse and growing set of influences. While all countries produce data on their education systems enrolments, they do so in different ways and sometimes with different definitions. This is particularly the case in the VET space for which even a common definition of this category of education across countries does not exist and with regards to TNE where the majority of countries do not report TNE The key data sources regarding student enrolments contained in this document are taken from UNESCO and OECD as well as in-country based data sets. The latter, whilst not directly comparable across markets because of the different ways in which the countries reviewed actually collect the data, is included as it is generally more accurate and up to date than OECD data. This report and the opinions expressed by EduWorld rely predominantly on data and information in the public domain. As many organizations operating in the international education arena do not fully disclose all their data and information, there are inevitably apparent, as well as unidentifiable, gaps in the data and information. Report Limitations EduWorld has taken all reasonable care in researching and preparing this report. As noted above, EduWorld has necessarily had to rely and base opinions upon various external third party data and information sources when preparing this report and reaching the opinions, views and assumptions expressed in this report. To the extent that such reliance on third party source data and information has occurred, EduWorld has assumed the accuracy, reasonableness and reliability of the source data and information without independent verification. Whilst at the date of this report EduWorld is not aware of any reason why any of the third party source data and information referred to or used in this report is not accurate, reasonable or reliable for the purposes for which this report has been prepared, EduWorld does not and is unable to represent that such third party information and data is accurate, reasonable or reliable and the report is released upon this basis. Page 14

15 Key Definitions For the purposes of this report, the following key definitions are relevant in describing the specific segment that this report focuses on. Post-Secondary Education Post-secondary education is the educational level following the completion of a school providing a secondary education, such as a high school or secondary school it encompasses both higher education (HE) and vocational education and training (VET). Vocational Education and Training (VET) Vocational Education and Training prepares learners for jobs that are typically based in manual or practical activities, traditionally nonacademic and totally related to a specific trade, occupation, or vocation. Vocational education and training beyond secondary education is generally known as continuing education in the US; further education (FE) in the UK; and vocational education and training (VET) in Australia. Strictly speaking, vocational education falls under levels 3C and 4 of UNESCO s ISCED. Higher Education (HE) Higher education includes various types of education given in post-secondary institutions of learning and usually affording, at the end of the course of study, a named degree, diploma, or certificate of higher studies. Under UNESCO s International Standard Classification of Education (ISCED), higher education would fall under ISCED levels 5 and 6. Page 15

16 2. Global Overview of Post-Secondary Education 2.1 Introduction The education sector is the second largest sector in the World after healthcare. Estimates of its value vary depending on what is included but one estimate for total global expenditure in 2012 was US$4.5tr 10. Education is likely to continue to grow partly due to demographic changes with the world s total population forecast to grow from 6.9 billion in 2010 to over 7.6 billion in 2020 and as part of this the school and tertiary age cohorts of the population will grow. At the same time governments globally are encouraging more people to pursue education at all levels so more people within the age cohorts participate in education. The growth in education enrolments globally over the last four decades is shown below: Figure 2: Education Enrolment Growth Total education expenditure is predicted to continue to grow through 2017, with forecasts suggesting it will increase by a Compound Annual Growth Rate (CAGR) of 7% to $6.4 tr in Although in some segments, such as post secondary, expenditure is forecast to grow at an even higher rate of 8% and for e-learning expenditure by a significant CAGR of 23%. 10 Education Sector Factbook GSV EDU Page 16

17 2.2 Definitions As mentioned earlier, this report focuses on the demand for post-secondary education at the VET level. The demand for education at this level can be split into three main components, as follows: Domestic demand students staying in their own country studying with a domestic provider for the purpose of this report this group will be referred to as domestic students. International demand students leaving their home country to study in another country where the institution providing that qualification is located for the purpose of this report these will be referred to as international students. Transnational demand (TNE) this encompasses all types of education, or educational services (including those of distance education) in which the learners are located in a country different from the one where the awarding institution is based. Such programmes may belong to the education system of a State different from the State in which it operates, or may operate independently of any national education system. 11 This is sometimes also known as offshore delivery i.e. the delivery of the education occurs offshore/in a different country from where the awarding institution is located. For the purpose of this report this market segment will be called transnational education (TNE) and the target group will be referred to as TNE students. It is this latter area of demand, the demand for TNE, and specifically at the VET level that this research and report is focused on. 2.3 Global Demand for Post Secondary Education The demand for post-secondary education, both VET and HE, has seen massive expansion over the last few decades and is predicted to continue to grow strongly over the next fifteen years. Higher Education As indicated earlier based on the latest data available from the UNESCO Institute for Statistics (UIS) total global HE enrolments reached 170 million in 2009, of which just four countries (China, India, Russia and the US) have a combined market share of 45 per cent of total global tertiary 11 OECD Page 17

18 enrolments. Global tertiary enrolments in 1990 were only 65 million, so have increased by 160 per cent in 20 years or on an average by five per cent per annum. This significant growth is a product of a range of factors, explored in the subsequent section (Growth Drivers), but in particular: the increasing global population and specifically the growing number of people in the post-secondary age cohort of year olds worldwide (and by extension the year old segment); and widening participation more people within the age group pursuing post-secondary education. Figure: 2.1: Global Demand for Higher Education As the adjacent chart shows the demand for higher education is predicted to continue to grow strongly through 2025 when total demand is estimated to reach 263 million. As the chart highlights the vast majority of this demand will occur domestically i.e. students staying in their own country to pursue higher education either through a local, domestic provider or through a transnational education provider located in their own or in a third country. Page 18

19 VET Whilst the data collection is not as comprehensive (and not as clear as different countries collect VET data differently) UNESCO does provide enrolment data categories for Upper Secondary VET (Vocational ISCD 3) and Post Secondary Non-Tertiary (usually referred to ISCD 4). However, consolidated data is only available for Upper Secondary VET. Based on UNSECO data, global Upper Secondary VET enrolments grew from 45.2 million in 1998 to 54.6 million in 2011 a CAGR since 2007 of approximately 3.1 per cent. Figure 2.2: Upper and Lower Secondary VET Enrolments (000s): Global Total, Geographically, China reported Upper Secondary VET enrolments of 20.2 million or 37.1 per cent of global total, according to UNESCO data. Indian data suggests a much lower figure of approximately 829,000 students in 2008 but has not been supplied in recent years. The India data suggests either (a) a flawed data set due to reporting problems or (b) an incredibly low level of VET enrolments at upper secondary levels despite high vocational skills demand. The adjacent chart illustrates recent trends in Upper Secondary VET enrolments with Lower Secondary Enrolments also included for reference. Page 19

20 2.4 Growth Drivers Many factors are driving the demand for post-secondary education around the world, including: The world s population is growing from 6.9 billion in 2010 to an estimated 7.6 billion in resulting in significant increases to the post-secondary aged population. According to the UN, the world s population of years olds is expected to increase from 1.18 billion in 2005 to 1.26 billion in Most of this growth is expected to occur between 2020 and 2030 and be concentrated in developing countries. By 2020, just four countries (Brazil, India, China and the US) will account for over half of the World s population, with a further quarter coming from Pakistan, Nigeria, Bangladesh, Ethiopia, Philippines, Mexico, Egypt and Vietnam 12. However, there are significant differences across countries with countries like China by 2020 reaching a very large (90 million) but static year old population and then declining through the following decade, similarly with some other large markets like Russia, whilst in contrast the year old populations of countries like Nigeria, India, Ethiopia, Philippines and Pakistan are predicted to grow by 3.9 million, 2.9 million, 1.9 million, 1.2 million and 0.9 million over the next decade 13. Governments widening participation agendas with governments in both developed and developing countries encouraging more people to pursue post-secondary education at both the HE and VET levels. Governments increasingly see education as a major contributor to national wealth and economic development 14. In response governments in many developing countries are expanding their public provision and encouraging private and foreign provision to cater to increased demand and to accommodate their desired increases in participation rates as they move to further develop their economies. This has resulted in significant expansion of postsecondary education in many developing countries such as China and India. Between 2003 and 2012, the percentage of adults worldwide who have received tertiary education rose from 23 per cent to 32 percent according to UNESCO data 15, and all estimates suggest that this growth will continue, albeit at a slower pace. However, despite this growth in post secondary participation rates, the statistic is considerably short of what the OECD believes is required with the 12 The shape of things to come: higher education global trends and emerging opportunities to 2020: Going Global Ibid 14 ibid 15 UNESCO: Institute of Statistics; Data Centre Page 20

21 Organization estimating that a participation rate of 40% or 50% is vital for economic growth. This growth in participation rates has been accompanied by a rapid expansion of the higher education capacity in countries such as China, India, Malaysia and Singapore. The move by dozens of countries towards a knowledge-based economy, including highly developed countries such as most OECD members as well as more recent aspirants such as Malaysia. A core requirement of a knowledge economy is a well-educated workforce that can master and manipulate information, technology tools and platforms and continue to adapt to innovation pressures. This has accelerated the importance of post-secondary education in two ways: firstly by replacing low-skilled jobs, demand for workers without a higher level of education has begun to recede; and secondly by requiring workers with more advanced skills to develop, maintain and operate value-generating processes and products. Demand for post-secondary education therefore has increased alongside this transition to a knowledge economy. 16 In the transition towards a knowledge economy, education has become the cornerstone on which national competitiveness is built. 17 Policy makers see this as the route to long-term prosperity and influence for their country, while individuals aim to gain the education, skills and experience that they will need to succeed in careers that are increasingly likely to have an international dimension 18. Increasing expenditure both private and public on post-secondary education continues to grow. In particular, many emerging economies see education as a priority and are spending comparatively high proportions of household income on education e.g. 13% in China, 11% in India and 10% in Brazil DFAIT: Best Practices on Managing the Delivery of Canadian Education Marketing produced by The Illuminate Consulting Group. ibid Making it happen; The Prime Minister s Initiative for International Education; British Council. Bureau of Labour Statistcs, Office of national Statistics and Credit Suisse quote in Pearson 2012 results presentation Page 21

22 Figure: 2.3: GDP PPP per capita and tertiary enrolment ration Economics: there is a strong correlation between wealth (GDP per capita) at purchasing power parity (PPP) and tertiary enrolment particularly up to US$10,000 annual household income as illustrated in the adjacent chart. Many of the economies that performed well in the 2000s are forecast to continue to grow strongly i.e. both China and India are forecast to continue to be at the top of global growth league tables, followed closely by economies such as Angola, Vietnam, Bangladesh, Sri Lanka, Indonesia, Nigeria, Pakistan, Malaysia and Brazil. That said some of these countries are still forecast to have household incomes below $10,000 by 2020 (Brazil, Sri Lanka, Pakistan, Nigeria, India, and Indonesia) Private Sector Whilst much of the growth in post-secondary enrolments has occurred in the public sector, the private sector has also experienced dramatic growth over the last two decades and particularly in recent years. For example: in per cent of total educational expenditure in OECD 20 British Council: The shape of things to come: higher education global trends and emerging opportunities: Going Global 2012 Page 22

23 countries for all levels of education came from private sources, compared to 12.2 per cent in 2000 or from an index of 100 in the year 2000, private expenditure reached an index of 186 across OECD countries by 2009, with some countries like the UK and Mexico experiencing even greater growth rates doubling and tripling respectively 21. The private share in expenditure increased even more at the tertiary level from 22.9 per cent to 30 per cent and from 7.1 per cent to 8.8 per cent at the post-secondary non-tertiary level in OECD countries 22. Interestingly the increase in private expenditure is not linked to a decrease in public spending on education but rather both sources of education expenditure grew at different rates. By 2012 it was estimated that the private higher education market was worth almost $591 billion worldwide, with forecasts predicting that it will more than double in the five years to 2017 to $1.3 trillion representing a CAGR of 17 % 23. The following comment further illustrates its critical role. In the coming years we will see a significant increase globally in private education provision, and in partnerships between government and private education providers, between public and private providers. The future for quality independent private providers beyond 2010 is an extremely positive one. 24 While some countries like Australia have not had a long history or necessarily a strong community acceptance, of private post-secondary education until recently and its post-secondary education system has predominantly been a public one, this is not the case in other parts of the world. In fact, by 2010 it is estimated that more than 30% of all higher education enrolments globally are in the private sector. The figure is much higher for countries in Latin America where it is nearly 45% 25 and Asia - e.g. in South Korea and Japan where it accounts for 80.1 per cent and 79.9 per cent respectively and even in the US where over a quarter of all higher education enrolments are in the private sector. Today, private education is making a significant contribution to many countries and particularly many emerging market countries where governments encourage private provision to: expand capacity and access; support their widening participation agendas; help meet growing demand; and fill in gaps in domestic public provision. In support of this the last decade has seen the emergence of a number of multi-billion dollar, global private education providers such as: Pearson, Apollo Group, Benesse Education, Laureate, Kaplan, Career Education Group, Corinthian Colleges, Cengage Learning and McGraw Hill Education Indicators in Focus: OECD October 2012 ibid Education Sector Factbook GSV EDU Navitas: The Future for Private Providers Beyond 2010: AIEC 2009 Conference. Private Higher Education: Patterns and Trends. Page 23

24 3. Overview of TNE 3.1 Definition of TNE As mentioned earlier transnational education (TNE) generally refers to educational qualifications being delivered in a different country to the one where the awarding institution is based. Such programs may belong to the education system from a State different from the State in which it operates or may operate independently of any national education system 26. It is separate to the traditional international student recruitment market and includes many different modes of delivery. The most commonly understood delivery method is through the international branch campus, but these foreign outposts are responsible for just a tiny fraction of the degrees being delivered by institutions across borders. More common are in-country partner arrangements that might include the franchising, twinning or validating of degree programmes to teaching institutions and other organisations by awarding institutions in countries like Australia and Great Britain 27. TNE, in fact, includes a range of different models namely and explained further in the subsequent table: International branch campuses Joint degrees/qualifications Double degrees Franchise licence arrangements Distance learning models including online delivery Figure 3. 1: TNE Program Definitions Type of Programme Explanation 28 Distance education Traditionally distance learning is used to describe a learning experience, which has little or no face-to-face contact and involved the sending of materials to students. Students study at their own pace and have limited interaction with students or tutors on their course. In recent years many distance-learning programmes have evolved to incorporate face-to-face teaching support; these are often described as supported distance education OECD World Education News and Reviews (WENR): Understanding Transnational Education, Its Growth and Implications 28 The shape of things to come: higher education global trends and emerging opportunities to 2020: Going Global 2012 Page 24

25 learning. An increased number have evolved to either partial or fully online delivery instead of the traditional sending of printed materials. These programmes are often seen as part-time study by students rather than distance learning. In-country delivery/ collaborative provision/partnerships: In-country delivery is used to describe programmes where the delivery mode is predominantly face-to-face (for the whole of a course or part of it). Teaching is typically delivered through a partner institution or through a branch campus. The majority of the teaching will be delivered through locally based tutors. The level of programme input and delivery from origin institutions varies. Models of in country-delivery include: o o o o o branch campuses; twinning programmes; dual/joint awards; franchising; and validation. Additional information about these different models is contained in Appendix 1. Page 25

26 3.2 TNE Overview Today the dynamics of internationalisation are changing. Many of the students who traditionally would have traveled overseas to study for an international qualification (international students) are now pursuing foreign qualifications in their home, or neighboring countries at local institutions through an array of TNE arrangements. Students in this segment of the international education market, referred to as transnational education (TNE), study for foreign qualifications in a manner of ways outlined in the previous table. Within the global post secondary landscape, the dominant recruiters of international students (the UK, US and Australia) are also currently the major sources/suppliers of TNE programmes as is illustrated in the following map. Figure 3.2: TNE host and source countries Source: JWT Education However, more recently counties such as Canada, China, India, Germany, Malaysia and Singapore are emerging as sources of TNE programmes. The major hosts of TNE programmes have been the Middle East and East Asia but this is changing with Africa, Central Asia and the Caribbean emerging hosts. The top five sources of TNE students are all Asian - Singapore, China, Malaysia, Hong Kong and Vietnam. The TNE landscape varies significantly from country to country and is linked with the rationales for TNE. For example TNE represents a significant Page 26

27 proportion of the higher education system in UAE and Malaysia, but is a very small component of higher education in China and 29 : In China, TNE is helping local universities to build capacity and learn programme delivery and administrative skills from their international partners. In Malaysia, TNE is contributing to economic goals by helping to stem the outflow of students and currency and by attracting international students to Malaysia. In the UAE, TNE is up-skilling the labour force by providing increased higher education access to the country s large expatriate population. 3.3 Global TNE Enrolments TNE Enrolments in post-secondary transnational education are growing very fast in many parts of the world and transnational education is widely acknowledged as an emerging global trend 30. However, despite its rapid development, the research undertaken on, and data about, TNE is still very limited 31. Only three providing countries, the UK, Australia and Germany and publish TNE enrolments (Ireland has recently collected but is yet to release enrolment data) and only seven host countries publish data about TNE enrolments in their country: China, Hong Kong, Malaysia, Mauritius, Singapore, Thailand, and Vietnam. The UAE reports collecting TNE data but without publishing it. In addition, what data is published is focused on higher education enrolments, with only limited, and in most instances no, data about the VET sector. Furthermore, cross-country comparisons are difficult due to a lack of consistency in definitions and in collecting and reporting data. Despite the data collection challenges, what data that is available shows significant growth in enrolments in TNE programs for example: Enrolments in TNE HE programmes in the UK have grown substantially in recent years to nearly 572,000 TNE students representing a 47% per cent increase in only three years (from 388,000 in 2008/09 enrolments); and 29 British Council: TNE Research Study Highlights: The Shape of Things to Come: The Evolution of TNE: Going Global The Development of Transnational Higher Education in China: A Comparative Study of Research and Teaching Universities: Wenhong Fang: Journal of Studies in International Education ibid Page 27

28 Similarly enrolments in Australian HE and VET TNE courses have grown substantially over the last decade. In fact, VET TNE enrolments in public VET providers nearly doubled over the period 2006 to 2012 (from 30,894 enrolments to 56, ). In fact, some sources predict that, by 2020, 40% of higher education delivered by English-speaking countries (the UK, US, Australia, Canada, NZ, Ireland and the US) will be delivered transnationally to around 1.4 million students Growth Drivers There is a range of supply and demand factors driving the growth in the demand for post-secondary TNE programmes some of the key ones being: Figure: 3.3 Demand and Supply Higher Education Inadequate domestic supply: the growing demand for postsecondary education globally (explored earlier) and particularly in many developing markets has led to supply shortages (e.g. China, Malaysia, Hong Kong and the Middle East) both in terms of the number of places and in some countries the quality of provision leading to real gaps between demand and supply. Local governments in many of these countries have allowed, and in some instances, encouraged both private provision and TNE providers to help address these shortages. 32 AEI 33 Good practice in offshore delivery: a guide for Australian providers, IEAA June 2008 Page 28

29 TNE courses are an attractive option to students seeking to gain a foreign qualification without having to move from their country of residence. This may be a product of a range of reasons including: o o o o o o o a student s desire to obtain a foreign qualification because: a local option is not available (either local providers do not offer or there are insufficient places in local providers); a foreign qualification is more highly sought after (it may be considered more prestigious or offering the student more options on completing than obtaining a comparable local qualification); a foreign qualification delivered locally is likely to be more reasonably priced (than going overseas to study); a foreign qualification delivered locally maybe appealing to women wishing to gain an overseas qualification who would not be able to travel otherwise as a result of for example religious reasons/ family commitments etc. a foreign qualification delivered locally may represent a cost effective and attractive pathway to further study overseas; a foreign qualification delivered locally may represent an effective pathway to migration (recent research conducted in Australia provides empirical evidence of the relationship between enrolment in TNE and subsequent skilled migration to the country that provided the educational services. Based on macro-level panel data, the analysis shows a close link between offshore enrolment in Australian higher education and subsequent skilled migration to Australia 34 ); and for some students seeking to study part time while remaining in the workforce a foreign qualification delivered transnationally may be the only option. Changing international student preferences while significant numbers of students still want to travel overseas for their entire education qualification, for some students, partial international study can satisfy English language and cultural immersion needs 35. Consequently, some students may be satisfied with obtaining only part, if not all, of their qualification locally finding that this type of study provides them with sufficient exposure to education in an English-speaking country and to a different culture. TNE has a number of advantages over traditional overseas study that many students find attractive. These include: o potentially lower cost, 34 Offshore enrolment in higher education and migration: Some evidence from Australia: Antonina Levantino; University of Oxford; Paper 85 March Trends in Global Higher Education and the Changing Landscape Across South East Asia. Presentation to APPLE Conference, Singapore, August Page 29

30 o o o the ability to study from home, more flexible study environments, and the ability to work and not lose out on experiences and opportunities in the local job market. For reasons outlined earlier TNE is appealing to a number of countries governments looking to supplement and enhance local provision and in some instances to seek alternative funding sources for their post-secondary education agendas. For employers TNE provides options for human resource development, including multinational or global corporations with a geographically dispersed workforce. For education providers, particularly those in more developed countries; looking to expand their enrolments internationally TNE can provide some attractive options. From the Australian Government perspective, The Australia in the Asian Century White Paper includes a number of Government commitments to international education. One of its stated priorities to help meet the challenges of the Asian Century involves expanding VET services throughout the Asian region, this includes working with business to open market opportunities especially in education including building in-country partnerships. The Australian Government has announced its commitment to ensuring that Australia continues to be recognised as a partner of choice for education and that education providers adapt their existing practices to improve links with and access into the region 36. Growing global demand for internationally recognised qualifications. To date these have typically been provided by institutions in the developed markets and TNE courses delivered locally provide students in developing countries the option to access these courses without having to leave their home country. The growth in the use of English language as a medium of global communication and business has been continuing for several decades. This is a product of a myriad of factors including the: escalating use of English worldwide for business, education and leisure purposes; English being the dominant language of the internet and being much of the world s knowledge (much of which is in English and not translated) 37 ; and today English language learning is increasingly considered a global requirement, a near universal, mandatory 21 st 36 Australia Educating Globally Advice from the International Education Advisory Council February Key Issues in English as a Global Language; Michael Carrier; Going Global 2012 Page 30

31 century skill. This growth in the demand for English language has led to an expanding demand for post-secondary courses delivered in English fuelling the demand for TNE programmes taught in English. The significant developments in information and communications technology (ICT) have helped to facilitate the delivery of programmes globally. 38 The efficient exploitation of technology has been, and remains, a key feature and enabler of this growth 39. Increasing household disposable income will support higher demand for industry services, especially for online courses taken for leisure Trans-national education and higher education institutions: DIUS Research Report 08 07, Exploring Patterns of HE Institutional activity. International Education: Global Growth and Prosperity: UK Government, July 2013 Page 31

32 4. TNE Enrolments 4.1 Global TNE Enrolments As already indicated the data available about global TNE enrolments is extremely limited as only three countries publish their institutions TNE enrolments the UK, Germany and Australia. The US, another major provider of TNE courses, does not comprehensively collect data, nor do any of the other providing markets. Furthermore what data that is available on TNE enrolments focuses on TNE enrolments at the HE level and not at the VET level. Figure 4.1 outlines EduWorld s estimate for TNE HE enrolments for the major providers of TNE programmes. It is included to give some perspective about the potential size of the TNE HE market globally. Data for all except, Australia and the UK, are estimates, but at least provide some indication of the scope of the higher education market and in turn the potential for VET providers. Fig 4.1: Consolidated Data for 2011/12: Major TNE Source Countries Page 32

33 4.2 Australian TNE Enrolments Today TNE is an important component of Australia s international education strategy and forms a significant part of Australia s total VET and HE international enrolments as is outlined in the subsequent sections Australian Higher Education TNE Market In 2012 there were 323,612 international students studying in Australian higher education institutions. Of these, 82,468 were enrolled at campuses outside Australia and a further 25,552 were distance education students. Together, these 108,020 TNE students represent a third (33.4%) of all higher education international students enrolled with Australian institutions 40. This represents an increase of 0.3% on 2011 enrolments, at the same time onshore international student enrolments in Australian institutions decreased by 4.1%. AEI provides some further information about this sub-segment of Australian international students, as follows 41 : The majority of TNE enrolments were at the Bachelors level (70.2%), followed by Masters degree by coursework (19.6%). Pertinent to the VET sector is that only a small percentage of TNE enrolments with HE institutions (3%) were enrolled in an Advanced Diploma or Diploma. More than half (57.2%) were studying Management and Commerce; followed by Information Technology (7.7%); Engineering and Related Technologies (7.5%); Society and Culture (7.2%) and Health (5.9%) The majority of TNE students were aged between 19 and 22, slightly younger than their onshore counterparts where the majority of students are aged between 20 and 23. The top five nationalities of students pursuing TNE qualifications with Australian HE institutions are: Singapore, China, Malaysia, Vietnam and Hong Kong. 40 AEI: Research Snapshot: TNE in the Higher Education Sector; March ibid Page 33

34 4.2.2 Australian VET TNE Market 42 Data on TNE enrolments for public sector VET providers has been collected for a number of years, however, data on private sector VET TNE enrolments has not been, except in 2012 when the Australian Council for Private Education and Training (ACPET) undertook a survey of its members. A summary of this data is available and included in Figure 4.2. Additional data about public sector VET TNE enrolments is contained in the subsequent paragraphs. Figure 4.2: Public VET Students by location (onshore and offshore) Public Sector: In 2012, there were 37 public institutions delivering Australian VET qualifications offshore to 57,122 students. This is a larger number of institutions, although a smaller number of students than in Onshore and offshore VET enrolments in public providers increased between 2006 and 2009 with average annual growth rates of 23% and of 28% respectively. However, since 2009, onshore and offshore enrolments in public VET has decreased over the three years to 2012 (an annual average decline of 14% in Australia and 4% for overseas). Source: AEI Private sector: Offshore VET enrolments in private VET providers have not been as comprehensively collected, but in 2012 ACPET undertook a survey of its members which showed that there were a total of 6,771 offshore enrolments in Australian private VET providers. As this was the first survey of its kind for ACPET members, the survey is considered a pilot and it must be highlighted that the data most likely underestimates the total number of offshore enrollments. Figure 4.3 provides a summary of offshore enrolments in public sector VET providers between 2008 to Research Snapshot, AEI, Transnational education in the public VET sector, March 2014 and NCVER Page 34

35 Figure 4.3: Public Sector VET TNE Enrolments As summarised in the accompanying table the majority of offshore VET students are young (aged 24 or less). However, there has been a steady increase in the number of older students over the last four years. In 2012 students aged 25 + had the highest enrolments in non-award courses, whilst older students are more likely to be enrolled in diploma courses. Of the 37 public sector VET providers delivering offshore, only seven were from NSW. The enrolment share of NSW providers has also decreased over the period from 12.9% to 7.7%. Source: NCVER In 2012 Australian public sector VET providers delivered courses in 32 countries, with Asia Pacific the main market. China is the main market for public VET TNE enrolments with nearly two thirds of providers supplying their services in China (22 providers), the majority of courses (198) being delivered in China and Chinese TNE enrolments accounting for 73.9 per cent of total offshore enrolments. The other four countries accounting for large portions of offshore courses after China were Fiji and Papua New Guinea (43 Courses), Kuwait (29 courses) and Vietnam (21 courses). Page 35

36 Nearly half of Australia s VET public sector TNE enrolments (52.9%) were at the diploma level, with Certificate I and II having the smallest enrolment share. Management and Commerce accounted for the majority of enrolments (57.6%), followed by Society and Culture and Engineering and related technologies each accounting for 13 per cent of enrolments. The top three narrow fields of education that continued to account for almost two thirds of all student enrolments were business and management, language and literature, and banking and finance and related fields. The vast majority of delivery was in classrooms (453 courses), with 45 courses undertaken in the form of employment or work related experience. Australian public providers deliver VET offshore through either stand-alone or partnership arrangements. In a stand-alone arrangement, the Australian provider takes sole responsibility for the provision of all aspects of the course. A partnership is a joint venture with a local entity, whereby responsibility for course delivery is shared. However, the Australian provider in the partnership is responsible for the academic oversight of the course. o o o o The number of offshore courses delivered through a stand-alone operation accounted for a smaller share of total offshore courses (13.2%) compared to courses delivered through a partnership arrangement (86.8%). The majority of Australian public providers (89.2%) delivered offshore VET courses through a partnership arrangement. There was a growth in the number of providers delivering offshore VET courses through the stand-alone aspect (from six providers in 2011 to 11 providers in 2012). This could indicate that the confidence level of the Australian public providers has started to improve in the global market after the decline in the number of providers under the stand-alone operations from nine providers in 2010 to six providers in Offshore VET courses can be delivered by Australian public providers under contract to governments or non-government entities. Offshore training courses that were delivered under the contract to a company or other non- government business entity had the largest share (40.3%). The second highest share belonged to courses delivered under contract to Page 36

37 governments (29.0%), followed by courses delivered without contract to any clients (24.6%), and courses delivered under other types of clients (6.1%). Almost half of the Australian public VET providers were contracted by governments to deliver VET courses overseas. There has been an increasing trend in the number of providers supplying offshore training without any contract (change from 8 providers in 2010 to 13 providers in 2012). This could imply that the Australian public VET providers have been more active in searching new training markets and expanding their operations to meet global demand without any contract initiatives. NSW VET TNE Enrolments in Public Sector Providers As already indicated according to NCVER data in 2012 of the 37 public sector VET providers delivering offshore, only seven were from NSW. The enrolment share of NSW providers has also decreased over the period from 12.9% to 7.7%. Figure: 4.4: TNE Enrolments in NSW Public Providers Delivering Offshore As Figure 4.4 illustrates the vast majority of NSW TNE enrolments were from China as they were for all states. Fiji, Malaysia, Philippines, Iran, Hong Kong and New Zealand were also prominent destinations for NSW providers, although at much lower enrolment levels. Source: NCVER Page 37