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Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 1 London - Londres 7 -- VII -- 2005.

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Presentation on theme: "Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 1 London - Londres 7 -- VII -- 2005."— Presentation transcript:

1 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 1 London - Londres 7 -- VII -- 2005

2 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 2 International Trade of Higher Education The GATS

3 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 3 Three main focuses The globalization of higher education International trade of higher education The GATS

4 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 4 Globalization Social phenomena. (Inevitable and unstoppable) Information and communication technologies Global information Global economy Global trade

5 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 5 How the Globalization 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)

6 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 6 What is Higher Education? What is Higher Education? Merchandise Merchandise Commodity Commodity Public service Public service Public good Public good Service Service National value National value

7 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 7 Branches Students OCDE (2000) 1.6 M students Internet E-learning (2002) $2500 MM US$ Modes of supply and emerging models Professors Mobility Internacional University Transnational University Virtual University

8 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 8 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

9 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 9 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 1947. 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).

10 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 10 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 (does not require the physical movement of the consumer) Consumption abroad. Mainly involve the education of foreign students (require movement of the consumer to the country of the supplier) Commercial presence. Foreign universities, institutions or investors in another country (provider establishes facilities in another country) Presence of natural persons. Ability of people to move between countries to provide educational services.

11 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 11 Where are European Universities today? International relations Trade Internet Trends Students

12 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 12 Internationalization of higher education European joint programs Technical and Administrative Staff Professors Students

13 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 13 Differences between internationalization and globalization of HE Economic Geographic Information and Knowledge

14 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 14 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

15 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 15 Previous references of trade in Higher Education Languages B A Schools Internet Materials

16 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 16 Teaching in Internet Graduate and Postgraduate courses Continuous education (Long life learning) Specific training courses

17 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 17 USA references Internet Trends Colleges and universties are the most wired community on the Web – 83% of all higher education institutions and 100% of universities are online. College students represent the single largest nongender-based online demographic, constituting 24% of the total number of adult Internet users. College students spend approximately $105 billion annually, online $1.5 billion, its expected to almost triple to $3.9 billion by 2002.

18 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 18 Other references African Virtual University 2001, 24.000 students since 1997, from 17 countries 2003 restructured – shared site by 34 universities RMIT Melbourne latest program provider Tengtu China – 12.000 schools connected early 2003 networking 6 million students 2002, 19% of corporate training in US was on-line Globally $150 billion industry by 2025

19 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 19 Other references Tertiary distance education – worlds fastest growing sub-sector Canada – 500.000 students – many on-line Asia has 3.5 million students (2000) – China Central Radio and TV University has 1.5 million – enrolls over 100.000 each year 30% of all tertiary courses in Russia are distance – 26% in Turkey – 37% in Thailand –Europe approx 900.000

20 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 20 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.

21 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 21 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.

22 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 22 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 2002.

23 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 23 Students in USA(2003) Total in HE 15.756.000 Postgraduate students (14%) 2.219.400 Foreign students (PG) (17%) 377.300

24 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 24 Percentage of tertiary foreign students Switzerland17% Australia 13% Austria/U.K/Belgium11% Germany 9% Demark/France/Sweden 6% USA 3% Spain 1%

25 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 25 Students in European Union EU (15) 12.563.000 EU (15 + 10) 15.207.000 Students mobility (15) 290.000 within EU(2.3 %) (15+10) 350.000

26 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 26 Other references Over 1.6 million international tertiary students abroad in OECD countries in 2001 Over 580.000 in USA – approx 35% of world total (6,4% inc from 2000) – 6740 in top 20 US business schools Other significant share of global market include – UK (14%) – Germany (12%) – Australia (9%) – France (8%) UK in 2001, students from China increased by 67% from previous year – 31% increase from India New Zealand 300% growth between 1999 and 2002

27 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 27 Is there a relation between globalization and international trade? Yes How will this affect the higher education? Positive view Negative view

28 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 28 Positives values Innovation New providers Greater student access Increased economic gain New hybridization and fusion of cultures through mobility of people

29 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 29 Negative aspects The threat to the role of government Public service / Public good Quality of education Homogenization of culture

30 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 30 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 objectives

31 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 31 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.

32 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 32 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.

33 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 33 Subsectors in Education Services Primary pre-school and other primary education services Secondary Higher Adult Other general secondary, higher secondary, technical and vocational secondary, and technical and vocational secondary education services for handicapped students post-secondary technical and vocational and other higher education services education services for adults who are not in the regular school and university system and includes education services through radio or television broadcasting or by correspondence education services at the first and second levels in specific subject matters not elsewhere classified and all other education services that are not definable by level

34 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 34 World Bank. Trends in Lending Primary & Secondary Education Vocational post-secondary education / Tertiary education

35 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 35 Enrollment in Private Higher Education (% of total)

36 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 36 What other services related to higher education are included? Language testing Student recruitment Quality assessment of programmes.

37 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 37 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.

38 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 38 Typology of Barriers to Trade as identified by USA, New Zealand, Australia and Japan Prohibition for foreign providers Administrative burden and lack of transparency No possibility for foreign supplier to offer its services (all modes of supply) Domestic laws and regulations unclear and administered in unfair manner (all modes of supply) When governmental approval required for foreign suppliers, extremely long delays encountered; when approval denied, no explication given, no information about necessary improvements to obtain it in the future (all modes of supply) Denial of permission for private sector suppliers to enter into and exit from joint ventures with local or non-local partners on a voluntary basis (modes 1 and 3) Barriers to tradeExamples and modes of supply concerned

39 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 39 Fiscal discrimination Accreditation / recognition discrimination Subsidies for education are not made known in a clear and transparent manner (all modes of supply) Repatriation of earnings is subject to excessively costly fees and / or taxes for currency conversion (all modes of supply) Excessive fees / taxes imposed on licensing or royalty payments (modes 1 and 3) No recognition of titles delivered by foreign providers (all modes of supply) No recognition of foreign diplomes (mode 2) No accreditation delivered nationally for foreign providers (modes 1 and 3) Barriers to tradeExamples and modes of supply concerned Typology of Barriers to Trade as identified by USA, New Zealand, Australia and Japan Technical discrimination Restrictive use of national satellites or receiving platforms Restrictive use of satellites dishes

40 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 40 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.

41 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 41 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 5.500 American, Canadian and European universities, rather than coming out against international trade, call for a freeze on WTO negotiations on educational services.

42 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 42 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.

43 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 43 How much money are we talking about? Public expenditure on education continues to grow faster than total government spending, but not as fast as GDP. OECD countries spent an average of 5,5% of their GDP. (Source: Education at a Glance 2002) 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.

44 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 44 Five Mayor Exporters ES $US million 2000 Prevalence of English speaking countries

45 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 45 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

46 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 46 Where are we? The last negotiation round was open in Doha in December 2001 Participants shall submit initial requests for specific commitments by 30 June 2002 Participants shall submit initial offers by 31 May 2003 March 2003. Possible trading partners meetings and discussions Improved offers before spring of 2004 2005. GATS negotiations conclude

47 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 47 Experiences in other countries Malaysia (Invitation to foreign universities to establish under a clear regulatory framework) South Africa (Branch of 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)

48 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 48 Quality and Accreditation Free trade is not trade in the absence of quality standards 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.

49 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 49 Quality and Accreditation Recognition of academic titles and certificates across countries is directly related to the issues of quality and accreditation Accreditation and quality services labelled as Other in GATS may be the key of the international trade

50 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 50 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 f. Quality assurance

51 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 51 Potencial Donors Others Investment in Companies Non Profit Institutions DOMESTIC MARKET Tuition & Research Public University Public Funds Private Funds INTERNATIONAL TRADE For Profit Entity Private Investment Strategic Alliances Tuition Branches Virtual Franchise Corporate Academic brokers Others Research?

52 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 52 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. It would be a mistake to expect that the Doha negotiation Round would either stop the trend towards internationalisation, nor would an agreement dramatically accelerate the trend.

53 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 53 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.

54 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 54 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. Education is a multi-faceted undertaking characterised by a multitude of convergent and divergent interest of multiple stakeholders. It cannot be limited only to consideration of free choice and price efficiency criteria.

55 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 55 Conclusions The higher educations 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

56 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 56 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. A balance has to be achieved between legitimate requests for consumer protection and sovereignty rights by governments.

57 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 57 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.

58 Luciano Galán Universidad Autónoma de Madrid UNICA U. Complutense, 2005 58 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.


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