1. Global Higher Education... a changing landscape Ron Perkinson Principal Education Specialist International Finance Corporation (World Bank Group) www.ifc.org Presentation to - VTA State Conference, Melbourne 21/22 April 2005 education and training opportunities in the international marketplace

2. Total $2.3 trillion+ – approx one third of market in USA – around 15% only in the developing worldTotal $2.3 trillion+ – approx one third of market in USA – around 15% only in the developing world Teachers – 5% of global labor forceTeachers – 5% of global labor force Primary & Secondary Education – substantially public fundedPrimary & Secondary Education – substantially public funded Tertiary & Adult Education – changing landscape - free provision disappearing – regulatory - governments more liberalized – private sector participation growingTertiary & Adult Education – changing landscape - free provision disappearing – regulatory - governments more liberalized – private sector participation growing The Global Education Market Sources: Merrill Lynch 2000; OECD 2002; World Bank; IFC:

3. Yr 2000 – there were over 90 million students enrolled in higher education worldwideYr 2000 – there were over 90 million students enrolled in higher education worldwide By 2003 est. over 100 million students worldwide – approx 4 m of the 11%+ inc. was in China alone – around 2 m increase in India the same periodBy 2003 est. over 100 million students worldwide – approx 4 m of the 11%+ inc. was in China alone – around 2 m increase in India the same period The Private higher education market is estimated to be worth more than $300 billion worldwide on current expenditures alone – and growingThe Private higher education market is estimated to be worth more than $300 billion worldwide on current expenditures alone – and growing Higher Education Worldwide Sources: Merryl Lynch 2000; IFC staff estimates; World Bank

4. Higher Education – the perfect storm... the seven converging forces of change The increasing importance of knowledge The change in demographics Decline in public financing – sourcing alternative financing The further impact of globalization The impact of increasing competition The continued impact of internationalization The continuing Information & Communications Technologies revolution Source: World Bank Constructing Knowledge Economies 2002; The Changing Enterprise – ACE 2002; International Finance Corporation

5. World Population Growth Year Population Time Per Billion Yr 1 250 m – 1800 1 b 1800 yrs 1930 2 b 130 yrs 1960 3 b 30 yrs 1975 4 b 15 yrs 1988 5 b 13 yrs 2001 6 b 13 yrs 2012 * 7 b 11 yrs Source: 6 Billion Human Beings: - Musée de l'Homme Muséum National d'Histoire Naturelle, Paris –France; * = World Bank/ IFC

6. Financing of Higher Education

7. 1313352 Other education * 1525433020 Tertiary education including teacher training 79273324 Vocational post- secondary education 151581952 Secondary Education 503819132 Primary Education 00 - 02 90 - 99 80 - 89 70 - 79 63 - 69 Percent Category - Fiscal Year By Education Level * = Projects supporting more than one level of education or projects such as those supporting lifelong learning that do not fit well into one of the other categories World Bank Group 4 decades of education lending 22% 65%

8. Between 2003 to 2005 – the % of lending for higher education declines further Average 12% 03 to 05

9. Funding Comparatives Funding Comparatives... the most populous examples Sources: UNESCO 1999 & 2000; World Bank 2001; US Department of Education 2001; Department of Education & Skills UK, 2002; China National Center for Education, 2002/3; OECD 2002 * All Sth & East Asian countries without China & India IndiaChina S&E Asia* LACUKUSA Total Population approx 1000126060052060280 Public Expenditure on Education ($B) 1645189472480 % Global Budget 0.7%2.0%0.8%4.2%3.2%22% Per 10 million Population 0.16 b $0.36 b $0.3 b $1.8 b $12 b $17 b

10. Tertiary Education in Biggest 40 Developing Countries Public Spending on Tertiary Ed, % Total Public Spending on Education Public Spending per Tertiary Student Sources: World Bank Development Indicators; World Bank Edstats; UNESCO Global Education Digest; OECD Education at a Glance; IFC calculations *Developing 40 includes: Angola, Argentina, Bangladesh, Bolivia, Brazil, Bulgaria, Cambodia, Chile, China,Colombia, Dominican Republic, Ecuador, Egypt, Ghana, Guatemala, Hungary, India, Indonesia, Jamaica, Jordan, Kenya, Madagascar, Malaysia, Mauritius, Mexico, Mozambique, Pakistan, Peru, Philippines, Poland, Romania, Russia, Senegal, South Africa, Thailand, Trinidad & Tobago, Turkey, Uganda, Uruguay, and Vietnam $618 OECD $7,712 2001 Note: All amounts are in constant 1995 US$ Values

11. Enrollments – Tertiary Sector Sources: World Bank Development Indicators; World Bank Edstats; UNESCO Global Education Digest; OECD Education at a Glance; IFC calculations **Developing Asia includes: Bangladesh, China, India, Indonesia, Malaysia, Philippines, Thailand, and Vietnam *32 Developing Country Sample includes: Angola, Argentina, Bolivia, Brazil, Bulgaria,Chile,Colombia, Dominican Republic, Ecuador, Egypt, Ghana, Guatemala, Hungary, Jamaica, Jordan, Kenya, Madagascar, Mauritius, Mexico, Mozambique, Pakistan, Peru,Poland, Romania, Russia, Senegal, South Africa, Trinidad & Tobago, Turkey, Uganda, and Uruguay Developing Asias Global Peers*

12. Spending Per Student – Tertiary Sector Sources: World Bank Development Indicators; World Bank Edstats; UNESCO Global Education Digest; OECD Education at a Glance; IFC calculations **Developing Asia includes: Bangladesh, China, India, Indonesia, Malaysia, Philippines, Thailand, and Vietnam $278 $405 46% increase $899 16% decrease $1,067 Developing Asias Global Peers* *Developing Asias Global Peers include: Angola, Argentina, Bolivia, Brazil, Bulgaria,Chile,Colombia, Dominican Republic, Ecuador, Egypt, Ghana, Guatemala, Hungary, Jamaica, Jordan, Kenya, Madagascar, Mauritius, Mexico, Mozambique, Pakistan, Peru,Poland, Romania, Russia, Senegal, South Africa, Trinidad & Tobago, Turkey, Uganda, and Uruguay OECD $5,737 1990 OECD $7,712 2001 34% increase

13. Sources: EdStats, World Bank; IFC; OECD; Various Government Statistics; Chile includes 7 publicly funded Private Catholic Universities; Enrollment in Private Higher Education (as a % of total)

14. Knowledge Drives Economic Development... important impact comes from skills literacy Knowledge is an all important driver of economic developmentKnowledge is an all important driver of economic development Not just about putting more highly qualified people in to higher paying jobsNot just about putting more highly qualified people in to higher paying jobs Proven impact on economic development comes from increasing skills literacy – mid & higher level skills are not just about degrees – indications show quite the opposite (University of British Colombia Literacy Survey)Proven impact on economic development comes from increasing skills literacy – mid & higher level skills are not just about degrees – indications show quite the opposite (University of British Colombia Literacy Survey) New skills training & knowledge dissemination of economic relevance need to reach larger firms, private sector, SMEs, micro-enterprise, individuals and the unemployed – reach traditional sectors (agriculture, small manufacturing, services, crafts, tourism, etc) – to help economies be more productive and competitiveNew skills training & knowledge dissemination of economic relevance need to reach larger firms, private sector, SMEs, micro-enterprise, individuals and the unemployed – reach traditional sectors (agriculture, small manufacturing, services, crafts, tourism, etc) – to help economies be more productive and competitive More highly skilled workforce isnt just for big firms and governmentMore highly skilled workforce isnt just for big firms and government Need to turn countrys human resources into strategic advantageNeed to turn countrys human resources into strategic advantage Source: University of British Columbia – Literacy Survey – Ana Ferrer, David A. Green, and W. Craig Riddell - The International Adult Literacy Survey (IALS) was a 22-country initiative conducted between 1994 and 1998. http://www.statcan.ca/english/research/89-552-MIE/89-552-MIE2004012.pdf

15. Adults with tertiary qualifications – increased from 22% to 41% over last 25 years in OECD countries Over 40% of undergraduates in US & 30% of Canadas undergraduate students are over 25 yrs Yr 2000 – over 20% of first year university students were over 27 yrs – in Australia, NZ, Denmark, Norway & Sweden Lifelong learning attracting new learners – more diversified – older and part time students Lifelong Learning Changing Student Profiles Sources: OECD 2000; The Changing Enterprise – ACE 2002;

16. Lifelong Learning Developing a Lifelong Learning Framework – Requires fundamental changes to the education system HEIs need to adapt – change Missions, pedagogical processes, accommodate different learning models (formal education / on-the-job training / at home learners) The role of technology – can expand access and change the nature of learning – facilitating new modes of delivery (e.g. distance / online learning); and mixed modes The framework will accommodate the constant updating of skills, to develop a highly qualified and flexible labor force with new sets of skills and competencies Becoming increasingly important in Asian markets

17. Globalization & Internationalization

18. Since Yr 2000: Laureate (previously Sylvan International Universities) invested in Spain, France, Switzerland, Mexico, Chile, Ecuador, Panama, Costa Rica, Peru – and looking elsewhere; Apollo International invested in Mexico, India, Holland, Brazil; University of Nottingham & CIBT/Apollo in China; RMIT in Vietnam; Monash in South Africa; Universitas 21 in Singapore; Manipal in Nepal and Malaysia Cross Border Investment HEI Campuses In Foreign Countries Sources: Chronicle June 2003; Company 10-K Reports; IFC 2004

19. University of Nottingham – first foreign HEI to open a campus in China (Sept 2004) – same degrees awarded – sit same exams – foreign/cultural & language immersion alternatives – over 50% UK academic involvement – improving internationalization Napier University of Edinburgh – NU opening an international franchise campus on Zhengzhou University of Light Industry, Henan Province, China – Chinese students study for Scottish degree in China – Now exploring potential for undergraduate and postgraduate exchange programs, as well as research UK – recent foreign campus examples in China Sources: The Scotsman – 1 st October 2004; Business China 14 March 2005; IFC 2005

20. Yr 2000 - >1.6 million international tertiary students abroad in OECD countries alone – over 2 million across the world – estimate 8 million students by 2025Yr 2000 - >1.6 million international tertiary students abroad in OECD countries alone – over 2 million across the world – estimate 8 million students by 2025 In 2004 USA dropped to 576,000 – or about 35% of OECD total –In 2004 USA dropped to 576,000 – or about 35% of OECD total – UK (14%) – Australia (13%) – Germany (12%) – France ( 8% ) – NZ ( 5% ) – most from developing countries – Chinese students – Australia (+43% last year) & NZ (60% of total univ) ChinaChina – > 60,000 foreign students in 2002 – of which approx 70% from Asia – 12% from Europe – 11% from the USA – & growing RussiaRussia – In 2001, 90,000 students – 40,000 from CIS countries – around 100,000 today MalaysiaMalaysia – 37,000 students today Students Studying Abroad Sources: OECD 2000, 2002; AUSTRADE 2003; NZ Trade 2003; China Education Yearbook, 2002; Education World 2003; Malaysia MoE 2004

21. AustraliaAustralia – 210,000+ foreign students in Yr 2003 - with 18,000 in off-shore VET, in 24 countries - more than 50% were located in China – predicting 560,000 foreign students by 2025 – double again in distance programs % of Service Exports% of Service Exports – 13% and 8% respectively of Australia and NZs in Yr 2003 – 4.2% and 3.2%* respectively of US and UKs Sources: OECD; IFC; World Bank; Report commissioned by IDP Education Australia; AIEA Fact Sheet & NCVER Australia 2005; China Education Yearbook, 2002; World Bank – Bashir 2005; * = last figure Yr 2000 International Students – Big Business

22. But the trends are changing - 1 In 2003 Australia became second most expensive country to study in after the UK, with tuition costs more than doubling since 2001In 2003 Australia became second most expensive country to study in after the UK, with tuition costs more than doubling since 2001 Annual living costs for students in popular English speaking countries - UK (US$11,152); Australia (US$9,519); Canada and US (just under US$9,000); NZ (US$8,686)Annual living costs for students in popular English speaking countries - UK (US$11,152); Australia (US$9,519); Canada and US (just under US$9,000); NZ (US$8,686) Competition increasing from Asian countries – Hong Kong (US$7,081); India (US$1,515)Competition increasing from Asian countries – Hong Kong (US$7,081); India (US$1,515) Australia impacted by Aus $ FOREX increase – plus 12% pa inc in tuition fees and living expenses – plus other factorsAustralia impacted by Aus $ FOREX increase – plus 12% pa inc in tuition fees and living expenses – plus other factors Sources: Comparative Costs of Higher Education for International Students 2004 – IDP, Australia

23. But the trends are changing - 2 China Record 20 million students enrolled in Chinese colleges in 2004 – the largest college-student population in the worldRecord 20 million students enrolled in Chinese colleges in 2004 – the largest college-student population in the world 4.2 million freshmen accepted - double the number of 19984.2 million freshmen accepted - double the number of 1998 College acceptance rate this year was about 60%College acceptance rate this year was about 60% University & TVET students see growing attractiveness to study at home - Less Visa complicationsUniversity & TVET students see growing attractiveness to study at home - Less Visa complications Growing two-way relationships with foreign partnersGrowing two-way relationships with foreign partners Singapore – 170 private tertiary providers with 119,000 students – 75% of them study in foreign joint/affiliate programs – 35% were over 30yrs – 30% were 25yrs to 29 yrs – most were lifelong learners Sources: Business China 14 March 2005; IFC 2005

24. But the trends are changing - 3 British universities also rely heavily on the Chinese marketBritish universities also rely heavily on the Chinese market In 2004 overseas students grew to around 200,000, bringing in over £1.25 billion or $2.4 billion in feesIn 2004 overseas students grew to around 200,000, bringing in over £1.25 billion or $2.4 billion in fees International student numbers fell by 5.3% in 2005International student numbers fell by 5.3% in 2005 China made up 25% of UK 2004 international student numbersChina made up 25% of UK 2004 international student numbers UK feedback - Reasons for changing trends in China include: – the perceived improvement of institutional quality in China - more appealing to study at home – the Chinese labor market no longer putting such a large premium on foreign degrees – local and foreign qualifications, joint foreign degrees and local work experience count for greater employability – Certified training and LL/Lng programs growing in appealUK feedback - Reasons for changing trends in China include: – the perceived improvement of institutional quality in China - more appealing to study at home – the Chinese labor market no longer putting such a large premium on foreign degrees – local and foreign qualifications, joint foreign degrees and local work experience count for greater employability – Certified training and LL/Lng programs growing in appeal In 2005 British HEIs have around 160 joint program affiliations with Chinese HEIs, with many more plannedIn 2005 British HEIs have around 160 joint program affiliations with Chinese HEIs, with many more planned Source: Economist - March 2005; IFC

25. Beyond Retirement Age Training for the unemployed Adult learners Government Failure – students out of school Basic Education Secondary Higher Ed Labour Force (750m) Remedial/ Updating/ Upskilling the Participating Workforce Formal Education (244m) Chinas Learning Needs Beyond Formal Education

26. International student preferences and destinations are changing Greater competition from LAC, EU, Central AmericaGreater competition from LAC, EU, Central America Partial international study can satisfy cultural immersion needsPartial international study can satisfy cultural immersion needs Universities used to hold the high ground – new systems of education, training and lifelong learning are demanding programs of greater economic relevance – both university and non-university tertiaryUniversities used to hold the high ground – new systems of education, training and lifelong learning are demanding programs of greater economic relevance – both university and non-university tertiary – the educational, social and commercial gains from University / TAFE partnerships in cross border trade in education services are yet to be optimized

27. And – are AID and TRADE talking to each other? AID needs TRADE in selected projects to convert Technical Assistance in to downstream sustainabilityAID needs TRADE in selected projects to convert Technical Assistance in to downstream sustainability TRADE in some cases can leverage alternative downstream resources that governments can no longer afford to carryTRADE in some cases can leverage alternative downstream resources that governments can no longer afford to carry

28. Demand For Greater Program Diversity Employers in region requiring educational credentials or certified training – important for job marketEmployers in region requiring educational credentials or certified training – important for job market Employers seeking greater flexibility of program choice – want training and job preparation for jobs that exist and improved competencies for career enhancementEmployers seeking greater flexibility of program choice – want training and job preparation for jobs that exist and improved competencies for career enhancement Typical local career providers can include – Professional schools – accounting, languageProfessional schools – accounting, language Business schoolsBusiness schools Engineering schoolsEngineering schools Training in ICTs – low / med / high-end technologiesTraining in ICTs – low / med / high-end technologies Industry schools (tourism; agri-business; forestry; fishing; etc)Industry schools (tourism; agri-business; forestry; fishing; etc)

29. What is the role of government – enabler or controller? Local education policy objectives – and what is the effectiveness of local policies and frameworks Adequacy of student financial support Understanding of economic and social development – demand for fee-paying programs – demand, supply & gaps in public provision – relevance of current programs – needs of traditional sectors Historic educational traditions, social & cultural values – or in past political ideology (Africa, CEE, India) Local Context Is All Important

30. Changing modus operandi – Public goes Commercial / Private – new forms of competition Shift from venue-driven to market-driven delivery systems Market demand for flexible delivery options (evenings; weekends; distance learning; use of new learning technologies) The campus-based to web-based Continuum, is changing models – academic and investment confidence in e-learning is growing From isolated university models – to linked HEI courses – QA and credit transfer systems – broader options and career pathways Separation of institutional management and academic power of faculty – different control over business administration Changing Business Models

31. Tertiary distance education – fastest growing sub-sector – represents at least 15% of all higher educations students Asia has 3.5 m students (2000) 30% of all tertiary courses in Russia are distance LAC has over 1 million tertiary distance education students E.A.D.T.U. – 18 members – 14 countries – > 900,000 students British Open University with over 154,000 students – also delivers in to developing countries Australia – over 50% of foreign students enrolled on Australian campuses from Singapore and Hong Kong, are distance Distance Education Source: The Changing Enterprise – ACE 2002; World Bank & IFC; IDP Education Australia 2002

32. On-Line Education – steady growth Yr 2002, 19% of corporate training in US was on-line – up from around 7% three years earlier – est $150 billion industry by 2025 – major growth predicted in developing countries Estimate approaching 1m students on-line in China Tec de Monterrey has over 100,000 students – Universidad Virtual has >80,000 doing part or all courses on-line – over 5,000 outside of Mexico In the US - 1.9 million students studying on-line in 2003 – 2.6 million students (16% over all) in 2004, or 24% increase. Approx 40% of these are fully on-line (18% inc) Sources: IDC; IFC; Tec de Monterrey 2003; World Bank / AVU 2003; Sloan Consortium 2004

33. University of Phoenix On-Line Enrollment Growth 109,800 10,000 18000 29000 49400 79,400 0 20000 40000 60000 80000 100,000 120,000 199920002001200220032004 Average age 34 yrsAverage age 34 yrs Tuition typically $30,750 per undergraduate degreeTuition typically $30,750 per undergraduate degree 7000 faculty – 95% part time7000 faculty – 95% part time 65% graduation rate65% graduation rate > 50% receive employer reimbursement> 50% receive employer reimbursement Typical class size 11 – 13Typical class size 11 – 13 International students from 91 countriesInternational students from 91 countries Source: Chronicle Nov 2002; Charles Schwab Sept 15 th 2004

34. Cross border education opportunities Internationalization provides easy and low risk stepping-off point – for customizing and disseminating new types of knowledge and skills – program partnerships - for improving curriculum content, development & research – opportunities for student and faculty exchange – plus joint programs that accommodate cultural immersion – adding value by facilitating transferability of credits and qualifications (Are the advantages of having a qualifications framework at home, being optimized?) – Internationalization can lead to other commercial initiatives

35. PPP Example - Blended Campus/On-line Joint Degree Stevens Institute of Technology - China Hybrid Program 1/3 taught online by Stevens faculty / 1/3 taught by Chinese faculty using Stevens curriculum / 1/3 taught by Stevens faculty onsite in Beijing Tuition - Revenues split 50-50 between schools Chinese pay for classrooms, Chinese faculty, local software and workstations Stevens pays for Stevens faculty, travel, housing Stevens is university of record & holds student transcripts and history Chinese manage classrooms, logistics and Ministry of Education Partner Institutions in China Beijing Institute of Technology; Shanghai Jiao Tong University; Central University of Finance & Economics

36. For International Consulting... Local governments are World Bank clientsLocal governments are World Bank clients Local market will hold the greatest power and influence when deciding who to use – so it bodes well for those that Internationalize and get on the ground first!Local market will hold the greatest power and influence when deciding who to use – so it bodes well for those that Internationalize and get on the ground first! Decision making – local experience is important – Internationalization and program affiliations the quickest way to obtain local experience & supportDecision making – local experience is important – Internationalization and program affiliations the quickest way to obtain local experience & support Private higher education providers – not to be underestimated – tend to respond more quickly to joint initiatives – strong reputations for quality & relevance of local programs, with high employability of graduatesPrivate higher education providers – not to be underestimated – tend to respond more quickly to joint initiatives – strong reputations for quality & relevance of local programs, with high employability of graduates Use of donor/ grant/ trust funds – to assist with positioningUse of donor/ grant/ trust funds – to assist with positioning Promote successes – publish case studiesPromote successes – publish case studies

37. Future Outlook Financing of education will tighten – demographics outweigh fiscal realities – growth in non-public financing New business models – Public going Private trend will grow Knowledge societies and lifelong learning – important for economic development – more flexible mass & e-delivery – new systems for education and training Globalization and Internationalization – changing the future landscape of higher education, national and cross-border – transferability of credits & qualifications, national & foreign – optimizing Education/AID/Trade efforts & investments essential ICTs and the Internet – optimizing use of new technologies – models advancing quality-based mass education delivery

38. There is nothing permanent... except change! Heraclitus